Development = Industrialization?

But these indicators only give a partial picture of how well development is going — at least as the term has been understood over the last few centuries. From late 15th century England all the way up to the East Asian Tigers of recent renown, development has generally been taken as a synonym for “industrialization.” Rich countries figured out long ago, if economies are not moving out of dead-end activities that only provide diminishing returns over time (primary agriculture and extractive activities such as mining, logging, and fisheries), and into activities that provide increasing returns over time (manufacturing and services), then you can’t really say they are developing.

What’s striking … is that [Time and The Economist] don’t mention manufacturing, or its disturbing absence, in Africa. And that, in turn, confirms once again the extent to which the idea of development as industrialization has been completely abandoned in the last few decades.

An excerpt from a much longer article in Foreign Policy in which the author discusses more of the same. That is, how can we say Africa is developing when Africa isn’t industrializing?

But is development industrialization? Not everyone agrees as to what “development” means, but for most economists, development means increased standards of living, which are best measured via economic statistics such as gross domestic product (GDP) per capita, which may or may not reflect growth in the manufacturing and services sector of the economy.

Even more refined definitions of “development” such as the United Nations’ Millennium Development Goals — which include things like freedom from hunger, universal primary (and sometimes secondary) education, gender equality, reduced child mortality rates, improved maternal health, freedom from disease, and environmental sustainability — rarely ever say anything about industrialization.

Not only are most definitions of development silent about industrialization, industrialization is meaningless in and of itself for development. A sweatshop-based economy would be heavily industrialized, but would it be “developed”?

In my view, the “development = industrialization” equation is likely to mistake cause for effect. As people get wealthier and their most elementary wants — food, shelter — are satisfied, they are more likely to demand the good and services which, because of transaction costs, are best produced and procured locally, thereby spurring industrialization.

It’s easy for one to deconstruct the so-called myth of a rising Africa when one decides to change the definition “rising.” The truth of the matter is that if you believe the statistics (and for a host of good reasons not to believe them, listen to this EconTalk podcast with Morten Jerven), Africa is rising.

I, too, am weary of unthinking Africa boosterism and “Africa is rising” memes. Just like I am weary of those who see Africa as a hopeless basket case and “Dark Continent” memes. As with almost everything else, the truth lies somewhere in between those two extremes. See here for a good example of a middle-of-the-road point of view on the African Arguments blog, by the always excellent Richard Dowden.

HT: Chau Tung Le.