The Global Economy’s Future Depends on Africa154 views
As Others Slow, a Youthful Continent Can Drive Growth – By Jack A. Goldstone and John F. May
In recent decades, the engine of the world economy has been the spectacular growth of China. From 1980 to 2020, fully one-quarter of the increase in global GDP was due to China’s growth, outstripping the contributions of the United States (22 percent), the European Union (12 percent), and Japan (4 percent). From 2010 to 2020, when the United States and Europe were still recovering from the Great Recession, the world was even more dependent on China; in that decade, China’s growth accounted for over 40 percent of the rise in global GDP.
China’s success story had much to do with the demographic profile of its enormous population. The country’s glut of young workers, eager to explore new opportunities in cities and special economic zones, powered the global economy. But that demographic advantage has now all but evaporated. China’s population is aging, and soon the country will see a shortfall in the workers it once had in abundance. As China wrestles with this challenge in the coming years, its economy is expected to slow down. The world will no longer be able to depend on China to power its growth.
What new engine of growth will fill the role that China has played in the last 40 years? India is often touted as the “next China,” but that remains an unlikely prospect because India will soon face many of the same demographic constraints now hobbling its fellow Asian giant. Instead, the world will have to look to the continent of Africa.
The most recent UN estimates project that Africa’s population, driven by both falling mortality and high fertility, will grow from 1.4 billion today to 2.5 billion by 2050. With China, Japan, Korea, and European countries all likely to experience a sharp decline in young workers, the world economy is set to slow sharply unless it receives a productivity boost from the billion young people being added to Africa’s population in the next quarter century. The dynamism of Africa’s youth is central to the future of the global economy.
THE BABY BUST
In the next 30 years, China will have to deal with harsh demographic trends. Thanks to its one-child policy, which has driven down births since 1980, the Chinese prime-age workforce will fall by 40 percent from its 2010 peak by 2050, declining by 300 million workers. The existing workforce will grow older, and the population of seniors aged 65 and older will double. There is virtually nothing that China can do about this: even a sudden increase in births next year would do little to reshape the labor force for at least 15 to 20 years.
All eyes have, therefore, turned to India, whose population has just overtaken that of China. Yet this optimism is misplaced, as it overlooks the reasons for India’s continued population growth: not high fertility, but longer life expectancy. India has an extraordinary number of young workers, but its population, like that of China, is growing older. Just as in China, India’s birth rate has plummeted, with fertility falling from four children per woman in 1990 to just two today. In fact, India’s population of 15- to 24-year-olds—the more educated youth cohort that will drive rapid productivity growth—has already peaked in 2021 at 255 million and is projected to decline by 15 percent, or 40 million, by 2050.
The United Nations estimates that India’s population of 1.43 billion will increase to 1.61 billion by 2040, a gain of 180 million people. But prime-age workers between the ages of 15 and 49 will make up less than one-quarter of that increase, accounting for just 43 million people. Meanwhile, the number of Indians who are aged 60 or older will increase by over 100 million between today and 2040, more than twice the size of the prime-age workforce. That is hardly a recipe for rapid economic growth. After 2040, India’s prime-age workforce will start to decline, joining China in this downward trend.
Many other countries are grappling with this problem. Over the next 20 years, most of the world will face declining youth cohorts and shrinking labor forces, while having to care for an exploding number of seniors. With total fertility rates ranging from 0.8 to 1.3 in East Asia, from 1.5 to 1.7 in Europe and the United States, averaging 1.9 in Latin America, and now dropping to 2.0 in India, there is virtually no region of the world in which a rapidly aging population and a dwindling number of young people will not be dominant features of the next several decades.
Except for Africa, that is. Fertility in Africa, at 4.3 children per woman, is roughly twice that of the rest of the world. That high fertility rate reflects, at least in part, a lack of access to education. Many demographers expect that if quality secondary education became universal for African women, fertility would dramatically decline. But at present, African countries have some of the lowest secondary school enrollment figures in the world, especially for women. According to the World Bank, only four in ten women of high school age in sub-Saharan Africa are enrolled in secondary education. In half of Africa’s 54 countries, including major states such as Angola, Ethiopia, and Uganda, less than one in five women have completed secondary education; in 11 states, including Ghana, Mozambique, and Niger, it is less than one in ten.
But those high fertility rates are turning African countries into the world’s last great harbor of young people. This year, one out of every three children born in the entire world will be born in Africa. In 2040, as a result, one of every three people in the world between the ages of 15 and 24 will be an African. By 2050, the prime-age working population of Africa will be five times as large as that of Europe, and larger than that of India and China combined. Another way to view the coming decades is to note that the entire world’s prime-age working population will increase by 428 million between 2020 and 2040. Of that increase, 420 million will be in Africa; 8 million will be the net increase in that age group in the entire rest of the world. In the coming era, African youth will account for 98 percent of all the net labor-force growth in the world.
In the West, these data and projections are often used to arouse fear of uncontrolled immigration and of Europe being overwhelmed or transformed by non-Europeans. That is a rather unfortunate way of seeing the continent. Africa’s youth are not a threat, but a remarkable opportunity upon which the prosperity of the entire world depends.
It is important to recall that in 1980, China was desperately poor and even less developed than Africa is today. China’s 1980 GDP of $423 billion was barely larger than that of the Netherlands, and its GDP per capita was $431 per year, just half of Ethiopia’s today. Over the next 40 years, China expanded its prime-age working population by over 200 million people, equipped them with the tools to be more productive, drew in global investment, and expanded its economy 30-fold. In the next 20 years, African countries will increase their prime-age working population by 400 million workers. If over the next 40 years even half of them achieve the same productivity gains as China (or all of them achieve on average half of China’s productivity gains), Africa would increase its GDP 15-fold, a gain of $52 trillion, which would produce a 60 percent increase over the world’s total GDP in 2021.
Of course, it may seem unlikely that the 54 diverse countries on the continent could together produce a productivity miracle like that of China. But in 1980, the idea that communist China would soon have an economy rivaling that of all of Europe or the United States would have seemed ridiculous. At the same time, Bangladesh was dismissed as a hopelessly overcrowded and impoverished “basket case”; yet Bangladesh, despite lacking any of the natural and energy resources that Africa has in abundance, has grown its GDP fivefold in the last 30 years; its GDP per capita is now greater than India’s. If Africa can achieve even Bangladesh-level growth over the next 30 years, it would add $15 trillion to the global economy—about the same contribution as China made from 1980 to 2020.
Such rates of growth are not fantastical. From 1980 to 2020, sub-Saharan Africa tripled its GDP from $600 billion to $1.9 trillion. From 2000 to 2020, Nigeria nearly tripled its GDP; Ethiopia’s has grown fivefold in that period. If these countries can build on this performance and carry other African economies with them through greater regional integration, a generation of young Africans can create a global boom. No other region of the world can produce anything like the potential growth of Africa.
GREENER ON THE OTHER SIDE
The world economy needs Africa’s economic growth; but it also needs Africa to take a different path than did China. The Asian giant followed the West’s pattern of early industrialization: grow quick and dirty and worry about the consequences later. Driven for years by coal, China’s economic success has also been an environmental disaster. Since 2005, China has been the world’s largest emitter of greenhouse gases. Although Africa’s carbon emissions today are tiny, its development could rapidly add dangerous levels of greenhouse gases to the atmosphere, undoing the benefits that come with reductions made by other countries.
Growth in Africa must be clean, both in terms of generating energy and not despoiling the continent’s landscape and natural resources. Fortunately for Africa, the continent not only has plentiful sources of hydro, solar, wind, tidal, and geothermal power, it can also reap the benefits of technological advances that have lowered the price of clean energy by an order of magnitude from just a decade ago. Indeed, in most places, renewable power is now cheaper than burning coal. New methods of large-scale energy storage, from stored hydropower and pressurized gas to improved batteries and capacitors, will soon make it possible to overcome the intermittency problems that plague solar and wind power.
African leaders already recognize the need for clean development. The Kigali Communiqué, “Ensuring a Just and Equitable Energy Transition in Africa,” signed by ten African countries in May 2022, and the African Common Position on Energy Access and Just Transition, led by the African Union Commission, both present a vision for Africa’s energy future of development and job creation based on clean energy, powered by sustainable electricity production. With sufficient support from multilateral and external sources, including private investment, African leaders will be able and willing to pursue this vision.
The energy and environment expert Kelly Sims Gallagher has suggested establishing a Green Bank, an institution similar to the World Bank that would specialize in financing green energy projects in developing countries with grants and low-interest loans. Today, most efforts to tackle climate change focus on reducing the emissions of the largest greenhouse gas producers. Although those reductions are essential, they will also be futile unless the world’s fastest growing populations and most rapidly growing economies find a cleaner path.
A VITAL AFRICA
Outsiders looking at Africa today must look past (but not overlook) the obstacles to growth. It is true that much development aid to Africa has to a large extent been wasted, but that is because aid has so often been directed to projects designed to promote the interests of leaders, rather than to bottom-up market-driven investments that meet local demands. China’s experience has shown that certain measures work: carving out special economic zones; focusing on education, infrastructure, education, and international competitiveness; and building a government that holds local officials accountable for disorder but also rewards them for presiding over economic growth. African countries need to work with each other to create a more integrated institutional climate that attracts private investment from abroad. Charitable foundations, such as the Bill & Melinda Gates Foundation, have shown, for instance, that relatively small amounts of money, carefully spent, can produce great results in improving public health. Funds to support secondary education and improve its quality—whether from charitable foundations or governments—can pay similar dividends. But the investments that create jobs in tourism, services, light manufacturing, heavy industry, design, entertainment, retail, shipping, publishing, communications, and finance will have to come from the global private sector.
Of course, the greatest obstacle to Africa’s growth has been internal conflicts, from civil and regional wars to genocides. Ethiopia’s recent war in Tigray may have killed three-quarters of a million people, far more than have died in the war in Ukraine. More vigorous diplomacy is needed to prevent, or more quickly end, the conflicts that are slowing growth. Leaders of African countries must also forsake pecuniary self-interest for that of the greater good. Japan, South Korea, and Taiwan did not succeed economically without first having to overcome corruption and dictatorship; but in all these countries, leaders came to recognize that there were greater gains to be had in prioritizing the growth of the country as a whole rather than simply appropriating a slice of the existing economy for their family, clan, or region. National unity and compromise among leaders are vital for growth; leaders who recognize this will see their economies pull away from their neighbours and attract talent from across the continent—and capital from around the world.
For too long, Africa has been seen through the lens of its recent past, rather than that of its potential future. Demographic trends are now placing Africa front and center as the one region that can sustain global growth. Africa demands everybody’s attention, not just to give it support, but because it is vital for the world.