There has been little, if any, news of major international industrial companies moving into Africa to build factories for export. This is because the African business and regulatory environment is too challenging, and savings rates too low to enable a sophisticated division of labor to develop what could compete with Asia or the West. It is easier to take raw commodities out of Africa in exchange for final products, rather than to attempt to produce these products within. - The Africa story is therefore one of large and growing higher order goods sectors (more distant from the consumer — i.e., mining and agriculture) and lower order sectors (nearest the consumer — i.e., wholesale and retail). There’s mining and some farming, and there’s retail, but the middle is missing — that middle is diversified manufacturing, the productive heartland of any truly developing country. Africa sits with production structure consisting mostly of final consumer goods and services, and very basic resource extraction processes, with a hollow middle. - Only by increasing real savings through a voluntary lowering of societal time preference, can Africa ever become a true diversified and sound continent economically. This is the only way for the African economy to progress. Until African people in general save more and create better policy environments for saving, investment gains will likely be unsustainable, and exposed to the whims of Western printing presses. The reality is that because this is not the direction Africa is moving in, Africa is embarking on another major boom/bust economic cycle. mises.org/daily/6511/Africa-The-Next-Major-BoomBust-Cycle
Posted on: Thu, 22 Aug 2013 12:39:18 +0000
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