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Are there lessons for Africa from China's success against poverty?

Policy Research Working Paper 4463

Martin Ravallion

World Bank

January 2008

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In China’s relations with Africa—as in most areas of China’s policy making—ideology has given way to the pragmatic pursuit of economic advancement.1 China’s efforts in the 1950s and early 1960s at “exporting revolution” to the subcontinent have given way to importing oil— and building roads, ports, schools and hospitals.2 China’s new role as a major investor and aid donor in Africa has attracted much attention in the region and elsewhere, not least among the Western European countries that have been prominent in Africa since colonial times. Some observers are keenly watching this new “south-south” relationship for signs of how China’s foreign policy will evolve in the future.3

From an African perspective, it may well be that the implications for domestic policy in fighting poverty that matter more. Among the ways that China differs from Europe, one surely stands out: China is a developing country, which (unlike Africa) has made great progress against absolute poverty in the last 25 years. The best data currently available indicate that in 1981 two out of three mainland Chinese lived below about $1 a day (at 1993 international prices).4 At the same time, that was only true of around 40% of the population of Sub-Saharan Africa (SSA). By 2004, less than one in ten people in China lived in poverty by the same (real) standard; yet the proportion in SSA was still around 40%. Figure 1 gives the poverty rates for China and SSA (and the developing world as a whole outside China). The trend rate of poverty reduction in China was about 1.9% points per year over 1981-2004, versus 0.1% in SSA.5 Even ignoring the first (1981), unusually high, observation for China, the trend is -1.4% points per year. (For the developing world outside China the trend was -0.4% points per year.) With population growth, the divergence in the numbers of poor is even more dramatic. In 1981, China’s poor outnumbered Africa’s by almost 4:1. Yet by 1996, SSA had overtaken China in the total count of the poor. 500 million fewer Chinese lived below $1 a day in 2004 than in 1981, but 130 million more Africans did so.

Given such divergent fortunes for their poor since the early 1980s, many people are naturally asking whether China should be Africa’s “economic role model,” as Juma (2007) suggests. Private investment and aid flows from China may well bring benefits to Africa’s poor. But are there also domestic policy lessons with potentially even larger long-term benefits?

The popular public image of strife-torn Africa contrasts so markedly with that of stable China that one might be immediately skeptical of any attempt to draw policy inferences from such comparisons. In the 1960s, three-quarters of African leaders left power by violent means, and until the mid-1990s this was still true of the majority of leadership changes.6 Certainly China has not experienced anything comparable in the last 30 years to Africa’s internal upheavals, including civil wars, which have come with state collapses in roughly a quarter of the countries in SSA (van de Walle, 2001). However, the more relevant comparison for the present discussion is with China in the 1960s and 1970s, prior to its reforms. Then the difference is not so obvious. The Great Leap Forward and the Cultural Revolution were massive, life-threatening, upheavals, including (in the former case) the world’s worst famine of the 20th century.7 Yet major policy change was possible in the wake of such upheavals. In more recent times, Africa too has seen formal institutional rules displacing coups and assassinations as the main means by which executive power changes hands; in 2000-05, power changed hands by regular, non-violent, means in 80% of cases (Posner and Young, 2007).

However, there are reasons for caution in drawing lessons for Africa from China’s success against poverty. A respected observer of African development has bemoaned the “...focus on transplanting institutional practices from the West with little attention to their fit in the African context” (Hyden, 2007, p.16752). There is possibly as great a risk in transplanting ideas from the East. It would be naive to assume that all Africa needs to do is copy China’s specific policies to achieve China’s success. The period since 1980 has seen a sequence of (often radical) economic reforms in China, which moved the economy from being highly controlled to more market-oriented. Those reforms naturally reflected (relatively unusual) circumstances in China, and may make little or no sense as a blueprint for policy making anywhere else.

There are other reasons for caution. The lessons for Africa are not all about Chinese successes; some relate to aspects of China’s development path that Africa would prefer to avoid, such as the steep rise in inequality, which I return to. Nor is China the only success story that Africa might want to study. Neighboring Vietnam has done as well in terms of its pace of poverty reduction, and with some interesting policy differences to China.8 And it can be argued that Africa should look first within its own region before turning to the Far East. There are many (old and new) success stories within Africa, and there is a body of research and practice related to African poverty, which Africans can already draw on.

It must also be acknowledged that there are constraints on Africa’s progress against poverty that China did not face. In this context, three differences stand out between China at the outset of its reform period and the typical African country today: African countries tend to have higher inequality, higher dependency rates and lower population density. On the first, at the time China had roughly the same “$1 a day” poverty rate as SSA today—namely a poverty rate of roughly 40% around the mid-1980s—income inequality was lower in China (a Gini index well under 30%) than found in all but a couple of countries in SSA today (Ethiopia and Mauritius).9 This almost certainly means that African countries will need even higher growth in mean income than China to achieve the same pace of poverty reduction that China has enjoyed, given that the elasticity of poverty incidence to the rate of growth tends to be appreciably lower in high inequality countries.10 The extent of “horizontal inequalities” in non-income dimensions associated with ethno-linguistic differences is probably also higher in the typical African county.

Second, Africa’s high dependency rates—due to higher fertility rates and high workingage adult mortality due to HIV/AIDS—are likely to constrain growth and poverty reduction. In 2006, 43% of the population of SSA was in the 0-14 age group, more than double China’s proportion in 2006 and also appreciably higher than around 1980.11 The current population growth rate of SSA (2.3% per annum in 2000-06) is well above China’s rate now (0.6%) or China’s rate at the outset of its reform period (1.6% per annum in 1978). China had started to enter the period of “demographic transition” (with both birth rates and death rates falling) well before the time the reforms began around 1980.12 Thankfully, many African countries have begun the demographic transition (with faltering cases, such as Kenya in which birth rates have started to rise again13).

Third, the average African country has a much lower population density than China. A number of arguments have been made about the costs to African development of low population density. Herbst (2000) argues that Africa’s relative land abundance entailed less inter-country conflict, which he argues (based on European history) helped forge stronger states in the longer term.14 (Nor has Africa’s political geography—borders based on rather arbitrary, but now fixed, colonial partitions—helped in fostering cohesive and strong states.) It has been argued that there may well be other costs of low population; for example, high density is believed to help in stimulating technological innovation.15 Low population density also makes it more expensive to supply certain forms of basic infrastructure, such as roads.

At least two of these differences—the high inequality (along various dimensions) and low population density—are believed to have influenced another way in which Africa differs from China: Africa tends to have weaker state institutions.16 And this clearly has an adverse feedback effect on (inter alia) the quality and quantity of key social services (including family planning) and infrastructure.

These are all important differences between China around 1980 and the typical African country today. However, even if there were no such differences, it is also relevant that SSA is 48 countries not one. There is a quite fundamental difference in the degree of internal (economic, social and political) cohesion found in China, compared to SSA. Being one large and relatively homogeneous country—rather than many smaller, ethnically diverse and geographically dispersed countries—brings economic advantages in (inter alia) public administration, the provision of domestic public goods, external trade negotiations, access to external markets, labor migration (which raises aggregate output by reducing geographic disparities in labor productivity) and in reducing and managing conflict.

None of this implies that Africa cannot learn from China. This paper will argue that the most important lessons are found at a level deeper than China’s specific policies; rather they are found by understanding how the country’s radical reform process came about—borne out of a time of internal upheaval and crisis—and why it succeeded. Some of the lessons are obvious enough, but there are possible surprises too. The paper begins by looking more closely at the causes of China’s success against poverty, before turning to the possible lessons for Africa.

  1. For an overview of the history of China’s relations with Africa since 1949 see Anshan (2007).
  2. The “China-Africa Development Fund” was endowed in 2007 with $5 billion for aid to Africa and at a meeting of the African Development Bank in Shanghai 2007, the Chinese government announced its intention to provide $20 billion in infrastructure and trade financing over the next three years (Gill et al., 2007; Anderlini, 2007).
  3. For further discussion see Alden (2005), Gill et al. (2007) and Anshan (2007).
  4. The poverty counts by the “$1 a day” standard are those of Chen and Ravallion (2007). The poverty line is $32.74 per person per month at 1993 international prices, using the World Bank’s purchasing power parity exchange rate for consumption. This is converted to local currency in 1993 and then adjusted to a constant value over time using each country’s Consumer Price Index. The China PPP is based on price data for 1986 (the latest available at the time of writing). Preliminary results using new price data for 2005 suggest a higher poverty rate relative to other countries, although the same decline is observed over time. Note also that the analysis reported later in this paper uses a slightly lower national poverty line for China, as documented in Ravallion and Chen (2007). However, the main lessons from this analysis are likely to be robust to this choice.
  5. These are regression coefficients on time. The China trend is significantly different from zero (s.e.=0.31; prob.=0.0004), but the coefficient for SSA is not (s.e.=0.11) Note that there was an increase in the SSA poverty rate between 1981 and 1996, after which there was a more encouraging reduction, on a par with other regions (Chen and Ravallion, 2007). Nonetheless, the poverty rate in 2004 was only slightly lower than its value in 1981.
  6. See Posner and Young (2007) who counted the proportion of African leaders who left power through “coup/violent overthrow or assassination” as compared to “natural death, voluntary resignation or losing election.”
  7. Estimates of the mortality in the Chinese famine of 1959-61 vary from 15 to 30 million (Ravallion, 1997).
  8. See, for example, Ravallion and van de Walle (2008).
  9. See the inequality measures by country in World Bank (2005, Figure 2.9).
  10. For recent evidence on this point using country-level panel data see Ravallion (2007).
  11. Tabulations from the 1982 Census indicate that 36% of the population of China were in the 0-15 age group.
  12. This process of demographic transition probably began around 1970. Note that 1980 was also the year in which the controversial “one-child policy” was introduced, though with the widespread exceptions allowed locally (particularly in rural areas); the target level of fertility is closer to 1.5 children per couple; see Baochang et al. (2007). While fertility rates had started to fall well before the one-child policy, there can be little doubt that this policy helped in bringing the birth rate below replacement levels from the early 1990s.
  13. See Cleland et al. (2006).
  14. For a critical perspective on Herbst’s theory see Robinson (2002). Also see the discussion in Clapham (2001) on the role played by colonialism and post-colonial international relations.
  15. For evidence on this point at a global level see Klasen and Nestmann (2006).
  16. On Africa’s weak state institutions see Herbst (2000), Clapham (2001) and van de Walle (2001).

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