I’ve finished reading a book by economist Jeffrey Sachs called The End of Poverty. The book was entirely interesting and informative, but one part I found most interesting was his description of various economic factors that can contribute to a thriving or failing economy. He’s careful to point out that one of these factors alone does not necessarily determine the rise or fall, but a combination certainly does.
I made a chart with some of his points (notice that there are far more negative factors):
|‘Thrive’ factors||‘Fail’ factors|
|? Savings – save money to invest or buy things||? Lack of saving – people need to use all their income just to survive therefore cannot advance out of extreme poverty; countries lack capital savings to invest in infrastructure that allows for trade|
|? Trade – specialize in something and trade it for other necessities||? Absence of trade – trade is hampered by violence, monetary chaos, price controls, etc.|
|? Technology – advances in technology allow for increased production, better returns||? Technological reversal – people are untrained and can’t continue with the necessary skills|
|? Resource boom – more resources mean more production, exports, etc.||? Resource decline – fewer resources means lower production, trade, etc.|
|? Adverse productivity shock – less productivity due to illness, natural disaster, etc.|
|? Lack of taxation – population is too poor to be taxed so the country cannot gain capital that way|
|? Debt – debt limits the available money for investment|
|? Government failures – government is too corrupt to properly collect taxes or invest revenue; doesn’t properly invest in infrastructure; fails to keep domestic peace|
|? Cultural barriers – denying women’s rights, etc.; lack of education; prevention of certain groups from public services|
|? Geopolitics – trade sanctions between nations|
|? Lack of innovation – little incentive for research and development sector; little market for new products; difficult and expensive (or unhelpful) to import new technology|
|? Demographics – poorer people tend to have larger families so each person gets fewer resources; population growth means that more people need more resources|
What struck me most about these ‘fail’ factors is that Zambia, indeed most of Africa, is suffering most of these. A few stand out:
Lack of saving: Families here don’t save, and here it’s not a question about saving for the next family vacation, the latest style of jeans, or “a rainy day”—it’s a question of the next meal, school fees, or blankets for the winter. Families cannot save simply because they don’t even have enough for basic needs today, let alone tomorrow.
Government failures: This is a big one for Africa. Many people, when they think of Africa, they think corruption. It’s a terrible stereotype, but unfortunately in many cases it’s true. It’s much too big an issue to delve into here (and furthermore, politics is definitely something I know much too little about to attempt explanation), but it goes without saying that a country cannot dig itself out of extreme poverty without a strong, reliable government.
Debt: This is something that has been in the news in the past (thank you, Bono) in regards to many African nations. Debt, as anyone who’s borrowed money to pay for university, for example, has experienced, really saddles you with a heavy load; it holds you back from properly saving (like noted above) and investing in the future.
Absence of trade: Without the investments in infrastructure—due to government failures, debt, lack of taxation, geopolitics, resource decline, or whatever—trade cannot happen. Something as seemingly basic as roads (which here are often scattered with potholes, or just nonexistent) can stop a company from investing in a country or setting up a factory. Even clean water is hugely unavailable here. Electricity is frequently disrupted. Why invest in production here when these basic needs are not readily available?
Demographics: I cannot count the number of children I see in a day here because there are just too many. These large families mean that resources—already scarce—are spread thinly to each person, or concentrated on a few while others are left with nothing. Many times we have been told that a child is not at school because they can only afford school fees for their older sibling.
Cultural barriers: Due to a lack of education, many people don’t have the skills necessary to lead a productive lifestyle. In fact, Sachs pointed out that skills can actually fall backwards from one generation to the next: a trained person vacates the position and, because of a lack of human capital thanks to a failing education system, the position is left to someone unskilled and unable to continue at the same capacity. With a seemingly entire adult generation dead from AIDS, as we’ve mentioned in earlier blogs, it does feel like this is what’s happening here: a whole potential workforce has vacated and left few people to take up the positions.
It’s that last one that brings me here to Zambia. With a solid education, children can get the life skills and knowledge to lead their families, communities, and maybe even countries out of poverty. Education can be the start; it can affect other factors. Take demographics: studies show that educated women tend to have fewer children, which means that resources can be concentrated on a smaller number of people and each person can get more of the pie, so to speak. This means that families (and in time, nations) can save, which could lead to more and better investments in infrastructure, which could lead to better use of resources and greater trade, which could…
Okay, it won’t be as clean as easy as this chain of events, but it’s something. I’m hopeful that a little start here just might lead to something greater. All we can do is try.
Overseas Intern – Zambia