Wednesday, 19 November 2014

The Illusionary Rise of Africa

St Andrews logo from name tag Are the BRIC countries intensifying Africa’s dependent position in the global political economy?  This was the question presented by Professor Ian Taylor yesterday at his presentation in Chicago.

This Little Leo had the privilege of attending the program, which was hosted by the University of St. Andrews, thanks to the graciousness of her little sister.  (Her sister studied abroad there, and so took her along as ‘friend of an alum’ despite the topic not being on the top of her “interesting things to do on a Tuesday night” list.)

Africa Rising?

We are all very familiar with the “Africa Rising” language.  On this blog alone, we’ve covered it many times: as early as a 2008 review of Vijay Mahajan’s book titled Africa Rising, a 2010 JIPLP article review, INTA’s Africa Rising initiative in 2012, an update on it in 2014, highlighting The Economist’s 2013 “Africa Rising” cover, WIPO’s 2013 announcement to open regional offices on the continent, and recently the EU and US desires to be part of the movement with their summits.  Look at all this great stuff happening!  Look at all the attention!  Surely, Africa must be rising.  Everyone says so, and after all, three people produce a tiger.  Could we really all be wrong?

Yes, says Professor Taylor.  Africa is not really rising.  It is an illusion.  This illusion is accepted by so many people because it is produced by applying economic measuring tools that work (or at least are presumed to work)* for developed countries to developing country economies.  Namely, GDP growth is used as the measuring stick for development.  However, Professor Taylor points out, GDP is computed using the location of value origin without considering where the value actually winds up.  In the case of most African countries, the rising GDP numbers are triggered by exporting of commodities, raw resources whose true value is added and kept outside of the source countries.

The true direction of change

Professor Taylor explained his point with some charts and graphs.  One showed the mimicking shadow of Africa’s GDP against the global commodities market.  The former is nearly completely reliant on the later.  For the continent as a whole, 80% of all exports are commodities, for Western Africa, 90%; for Central, a whopping 98%.  Because commodity prices are high and the commodities Africa has are in high demand, many African countries have increasing GDP numbers, which makes it look like they’re developing.  To understand the real “growth” (or lack of it), Professor Taylor recommends using a different measuring tool called Genuine Savings.  To compute genuine savings you use the following equation:

genuine savings

When this formula is used, none of the African countries on the Top 10 Growth Charts show positive numbers.  Nigeria, for example, often hailed for its development, had GDP growth of 6.7% in 2012, but it’s Genuine Savings “growth” was -10.2%.  Ouch.  Even South Africa, the usual outlier with a comparatively diversified economy is not in clear water, showing 2012 GDP growth of 2.5%, it’s 2012 Genuine Savings growth was -0.9%.  (Little Leo would like to point out a particularly interesting comment by Professor Taylor: Genuine Savings is actually the method of calculation preferred by the World Bank. Why isn’t it the standard?)

Deja Vu

The scary part is this is not new.  Africa has seen this before, particularly in the 1960s.  (This is where everyone’s alarm bells should be going off.)  This is how things were around the time that many countries were becoming independent.  Commodity prices were high and Africa’s commodities were in high demand.  Now, in this decade of jubilee celebrations, are we really just back where we started? 

There is one difference this time, it’s not the former colonists finishing up the grabs they started back in the long lost years when the Brits were the prude ones. (eg.) The current biggest exporters of these commodities are BRIC countries.  The time-frame when Africa’s “growth” started is the same time when BRIC countries became really interested in getting commodities from Africa.

BRICs Walling in Africa?

Wait a minute. (Pause for Little Leo’s comments.)  Aren’t the BRIC countries our friends, our brothers and sisters in the Global South?  They’re the ones that stood with us at Doha, that helped us create a Development Agenda at WIPO, that rally with us to tweak the global IP regime ever so much so that it can almost start to work for us.  They’re the ones that lead our collective oomph in these arenas.  Are they really hurting us by trading with us?

Again, Professor Taylor says yes.  (Unpause.)  Commodities are finite resources.  When they’re gone, they’re gone.  Relying on commodity exports to fuel the economy wedges countries into a “resource corner.”  If African countries do not start adding value within their borders, they’re going to be in trouble as soon as prices fall and needs wane.

Give Us More!

Professor Taylor ended his presentation with a call for more research on the following four issues:

  1. How can emerging economies promote sustainable development? (This is a question also asked by many IP scholars.  Perhaps there’s a chance for some overlap here or the *This section (above) is a summary of Professor Taylor’s presentation. Little Leo’s comments are in red so as to prevent her getting credit for his brilliancy or him for her lack thereof.opportunity to work with Professor Taylor.) 
  2. Exploring the difference between B, R, I, and C, etc.
  3. Implications for governance in Africa. (Little Leo sees conversations about this frequently on Twitter. The younger generation seems very much aware of the loss of value-add opportunities and understands the current barriers.)
  4. Implications for the West.

*This section (above) is a summary of Professor Taylor’s presentation. Little Leo’s comments are in red so as to prevent her getting credit for his brilliancy or him for her lack thereof.

Little Leo wasn’t able to ask her questions, like how the population’s youngness or the growing number of highly educated and influential active members of society might change the trajectory such that the next few decades are not a repeat of the 1970s and ‘80s. --She and her sister had to run to the station to catch the last train home.  (Sadly, there are no minibuses or pikipiki between Chicago and Milwaukee.)--  Before she could raise her hand, a gentleman near the back blurted out his I-clearly-know-nothing-about-Africa question, which she could have forgiven him for a little more easily if he’d at least raised his hand. 

What he asked was what anyone who hadn’t experienced the answers first-hand might have asked, “Why isn’t value being added in country?”  Professor Taylor began listing the reasons: poor infrastructure, bureaucracy, corruption, unsecure nature of property rights, etc.  So what can be done to change this?  And, primarily for our interest (because this is, after all, an IP blog and Little Leo had to get there eventually), how can IP practitioners and scholars and the IP regime help bring about value-adding within Africa’s borders?  Let’s add that question to Professor Taylor’s list above.

IP’s Role in Changing the Trajectory

A few simplistic answers to get us started.  We’ve already seen some ways in which we, collectively as the IP-savvy African movers and shakers (this Little muzungu Leo should stop lying, she cannot move or shake like an African), have worked towards increasing the ability of companies to add value within our borders.  Many of the posts linked to above in the “Africa Rising” discourse paragraph discuss these things.  Strengthening of IP enforcement is a big one and addresses part of the insecurity of property rights Professor Taylor mentioned.  A lot of this enforcement so far has been criminal enforcement against counterfeit goods, but increasing enforcement capabilities through less bureaucracy in the court system for civil enforcement and removing corruption from registration agencies are additional approaches.  Caroline Ncube’s IP Policy Reviews are a great resource to help us identify additional areas needing further improvement.

If the current “rise” is really just the balloon of Africa being blown sky high by the gusty winds of the BRIC countries’ whims, let’s switch it to a hot air balloon powered internally by our own needs, creations and developments.

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