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.

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8 comments

  1. Marc F. Bellemare

    Thanks for the book recommendation, but I read Development as Freedom some 13 years ago.

    Does Sen include industrialization in his definition of development? Right, I didn’t think so.

  2. Adam Smith

    Interesting piece. I think you are right in disentangling development–whatever that means–from industrialization. Africa is still largely agrarian and attempts by people like Mw. Nyerere to attempt to industrialize agricultural production failed spectacularly. That said, I’m not sure its a chicken or the egg scenario either.

    For instance, I don’t agree that “…they are more likely to demand the good and services which, because of transaction costs, are best produced and procured locally, thereby spurring industrialization.” Services: yes; goods: only partly. In places I spend time in Africa cheap Chinese goods are circulated massively, whereas local goods are primarily food and other “excess commodities” like fashion items, music and other cultural goods not subject to pressures to head economies of scale.

    Industrialization has taken a new tenor in a globalized world, and even deep pockets of African life are increasingly integrated (unequally) in global commodity flows. Industrialization was process with history and place, it is not a universal telos. Africa needn’t industrialize as the western model has attempted to define, rather, technology, interconnection, service economies and, unfortunately, extractive economies are the future, not just the past.

  3. Marc F. Bellemare

    Very good point about industrialization not being the end toward which every society should tend. Much like Africa leapfrogged some technologies, it might well leapfrog the secondary sector altogether. And point well taken about the demand for goods. Thanks for your comment, whoever you are!

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