Unlocking Africa’s development potential: insights from the perspective of global hierarchy and competition

Abstract

AbstractScience and technology have had great leaps since World War II. However, many African countries have remained very poor. To understand this issue, we employ a new metric, the revealed comparative wealth (RCW), to critically assess economic development in all African countries. The yearly ranking of RCW for all the countries in the world reveals a global hierarchy with many African countries moving to the lower end of the hierarchy, indicating worsened relative underdevelopment in Africa. Analysis of the temporal variations of RCW reveals a salient mechanism for the underdevelopment in Africa — over 30 African countries have their RCW strongly negatively correlated with advanced economies. One main factor contributing to this phenomenon, inferred from international trade data analysis, is the partition of labor and differences in industrial structure — most African countries are at the very bottom of the various value chains, including only providing raw materials to the better-developed countries. The inferior positions in the global hierarchy for the African nations are found to be partly instigated by colonialism and enhanced by neo-colonialism. To unlock Africa’s development potential, African nations must diversify their economic activity, unleash people’s creativity about economic development, and make the best efforts to accumulate capital to make further development possible. A prerequisite for achieving the last is to use foreign capital and cooperate with multinational corporations more wisely, including securing better deals with profit allocation resulting from foreign investment.