Economic development is a process by which an economy is transformed from one that is dominantly rural and agricultural to one that is dominantly urban, industrial, and service-oriented in composition. The objectives of the process can be usefully categorized as increased social wealth, equity, and stability. But because these objectives require a diversification of the economy away from agriculture (no high-income, equitable, stable nations have agriculture as their dominant activity), the process is one of major structural transformation [Mellor, 1990, p. 70].
Following the prevailing view, expressed so well here by Mellor, practically all African economies are seriously underdeveloped. While the agrarian nations are almost exclusively agricultural--and hence, by the common definition, more underdeveloped than their moderately industrialized neighbors--it is less clear that the agrarian nations are any less stable and egalitarian than the remaining thirty nations of Africa, or the eighteen Asian and Latin American economies listed in Table 2. Indeed, political difficulties in Nigeria, CС„te d'Ivoire, Sierra Leone, and Kenya in the 1990s suggest that stability may have little to do with the usual economic indicators of development.
The fundamental question remains paramount for policy guidance: does the "end state" of development--that is, a highly industrialized and highly urbanized economy in which agriculture is virtually unnoticed and economically insignificant--serve as the sole compelling and pertinent teleology for most of Africa? Is there but one possible outcome? Are all countries to wind up urbanized and industrialized? Is it possible that there are paths other than that followed in Western Europe? Can the term "developed" be applied only to economies that are urbanized and industrialized? By tradition, in the academic and donor community, this is the case.
If a country with less than 10 percent of its labor force engaged in agriculture is regarded as developed, most nations of Africa will remain underdeveloped into the 21st century3. The share of the labor force in agriculture is not likely to fall from the average of 63 percent for Africa as a whole, in the mid-1990s, to less than 10 percent. Will they be regarded as developed if that percentage falls to, say, 40 percent? Does development require that it drop to 20 percent, which was the European and Japanese average in 1970?
There is an obvious problem. As long as the definition of development is structural in nature, that very definition--that concept of economic development--is driven by the metaphor of the Industrial Revolution in Western Europe at the turn of the 19th century.
Economists, perhaps inadvertently, have come to regard a developed economy as superior to an undeveloped one. That judgment is couched in seemingly objective statistical evidence of higher income, increased urbanization, more industrial workers as a share of the total, and a better investment climate.
We may insist that it is the leaders of these nations who seek the Holy Grail of development and that economists are really quite neutral and scientific about it. But this does not obviate the reality that the theoretical construct we use to prescribe and describe development is fraught with its own ideological components. Higher per capita income might not be a true measure of individual well-being. A highly urbanized setting might not be superior to one that is rural.
We may remain silent as to whether or not societies should develop. But, having done so, we are not free thereafter to call them underdeveloped or backwards if they should choose to follow a different path. There is no scientific basis to pronounce a developed economy as superior--or Pareto preferred--to one that is not developed. The mere fact that the prevailing view of development is widely shared among western-trained economists and political leaders does not, in any way, remove that teleology from the domain of value judgments.
There are two aspects of the so-called development problem in Africa: (1) the institutional problem; and (2) the existential problem. The institutional problem speaks to the role that a nation's legal and social infrastructure play in determining feasible courses of action in particular situations. The existential problem speaks to the empirical reality in which a particular nation state finds itself in terms of location, climate, and natural resource base.
The institutional problem
If we consider the development problem in rather stark terms, it is possible to envision a production possibilities frontier (PPF) showing the technically feasible boundary for the production of industrial goods and agricultural commodities (see Figure 1). The location of this frontier is a combination of at least two factors: (1) the physical endowment of a particular nation-state; and (2) the technological artifacts that are brought to bear on that physical endowment. For instance, panel (a) of Figure 1 shows a PPF for a nation that is reasonably well situated for industrial pursuits; it has good access to sea routes and a long tradition of entrepreneurial activity. A major river provides adequate water for agricultural production. However, imagine a situation in which irrigated agriculture were not prevalent in this hypothetical country. If that were the case, panel (b) rather than panel (a) in Figure 1 might more accurately depict the situation. The difference between points A and B in the two panels is a reflection of the investment in irrigated agriculture, as well as the other infrastructural developments that are part of its modernizing agricultural sector.
The location of the PPF in Figure 1 is also dependent on something else. The nation's institutional setup has a profound impact on its production possibilities. If crime, sloth, and other detrimental forces were widespread, then the locus I-I' would be relevant. In essence, the PPF represents the production possibilities frontier, assuming institutional arrangements are not seriously deleterious to general economic condition4. In welfare theory, the PPF is usually abstracted from the institutional domain in which the economy must function. In consequence, we too often forget about the fundamental role that institutions, a collective good, play in defining the nation's production set [Bromley 1989, 1993; Bromley and Chavas 1989].
Figure 1 reminds us that ecological conditions and technology are but a part of the story of the economy. In one sense, the process of development is often concerned with getting the "rules right" such that the economy moves from the locus I-I' to the production possibilities frontier C-A [Bromley 1993]. Notice that "getting the rules right" also plays a profound role in shifting the PPF to the northeast, which indicates better technology and better infrastructure.
Efforts to address the development challenge for the mixed African economies must start by recognizing the important role of the locus I-I', which is referred to here as the Institutional Feasibility Locus (IFL). One might think of the IFL as the institutionally pertinent PPF.
The relevance of the IFL serves to remind us that the process of development as traditionally conceived is not a natural state of affairs but is rather something that must be purposefully set in motion and sustained with vigilance and collective commitment. It is hard work to create the circumstances in which a nation-state might move closer to its largely hypothetical production possibilities frontier. Indeed, development, as we have come to understand that idea, must often be imposed on countries. What else can one conclude from the experience with structural adjustment programs in many countries?
Structural adjustment programs are precisely concerned with moving nations closer to the imagined PPF through the expedient of eliminating the institutional impediments that keep it on the IFL. More correctly, structural adjustment programs move the IFL to the northeast until--when the rules are finally right--the IFL becomes precisely coincidental with the PPF.
The existential problem
So far we have considered countries that might be regarded as reasonably well endowed in terms of their physical and locational aspects, or their existential situation. For agriculture, this can be taken to mean that they have favorable rainfall patterns or irrigation is feasible. This notion of endowment can be extended to physical attributes, such as access to ocean shipping, fertile soils, etc. These nations have a moderate chance at economic progress if they can but get their institutional climate conducive to entrepreneurial activity. But are there countries for which this is not the case?
The eighteen agrarian nations in Africa have a setting (a "situational endowment") that is much less favorable to the activities that are central to the traditional idea of development. Twelve nations in Africa are landlocked and nine of them are agrarian states as defined here. Only Botswana, Zambia, and Zimbabwe are landlocked nations that fall in the mixed economies group. Of the eighteen agrarian nations, nine are landlocked, seven are arid or semi-arid, and ten are "small."5 Nine countries have two of these three traits. Burkina Faso has all three; it is arid, small, and landlocked.
Being small, landlocked, and arid (or semi-arid) cannot but have profound impacts on the nature and position of a nation's production possibilities frontier. Being landlocked and arid, but large, opens up economic possibilities that are not there when constrained by national boundaries. Being arid and small, but having access to oceans, opens up prospects for development not available to an arid and small landlocked nation. And being small and landlocked, but well endowed in rainfall, would relax the constraint of extreme aridity.
In Figure 2, a stylized PPF is drawn for a hypothetical agrarian African nation that is arid, small, and perhaps without access to oceans for trade. This PPF is labelled "AE" for agrarian economies, which is in contrast to the PPF for the mixed economies of Africa ("ME"). The institutional feasibility locus (IFL) is superimposed from Figure 1 to illustrate something implicit in Table 2. Even if the agrarian nations did everything right in an institutional and technical sense, it would perhaps be difficult to move out in production space to the vicinity of the IFL for the mixed economies.
The development "problem" for Africa looks different if the status quo is found to be institutionally determined (as in some of the mixed economies), rather than existentially determined. Even this distinction is somewhat arbitrary. For instance, if Senegal, the Gambia, Guinnea-Bisseau, Mali, Burkina Faso, Ghana, and Benin were one nation rather than seven, it would have profound implications for a new production possibilities frontier.
The development challenge is very different when one is working on an institutional feasibility locus that offers room for material improvement. On the other hand, when a nation-state is boxed in by a PPF such as AE in Figure 2, the future of development is probably bleak.
- In Europe, between 1970 and 1990, the share of the total labor force in agriculture fell by more than half (from 20 percent to 9 percent). In the United States it fell exactly by half (from 4 percent to 2 percent). In Japan the drop was even more precipitous, falling from 20 percent to 6 percent over this same period.
- The difficulties created by civil turmoil pose a serious threat to any economy. In panel (a), such actions tend to render the locus I-I' more pertinent than the PPF given by C-A. The locus I-I' is itself a production possibility frontier if the current institutional structure is taken into account. In that sense, it (I-I') is no less relevant to economic analysis than is the PPF (C-A) in panel (a).
- Being a "small" nation is, of course, arbitrary. I have simply regarded as "small" those that are less than one-half the size of Kenya, itself a rather small African nation.