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You are right about the problems with being dependent on commodity exports and how countries get rich by doing complex things, but you are wrong about this problem being caused by colonialism. The problem is caused by low human capital.

In order to have a complex economy capable of producing and exporting products with high added value, you need a lot of human capital*, if you don't have enough of that, then you end up depending on simple and dumb activities like agriculture and mining. Of course, there is a lot of technology evolved in agriculture and mining, but you can always import the machines and other technologies to dig the ground in your country.

This is clearly the pattern when one looks at the world. What do Poland, Finland, Hungary, Sweden, Slovenia, Switzerland, Slovakia, Ireland, Israel, the US, South Korea, Japan, Taiwan, Hong Kong, Singapore and China have in common? It's not that they were colonies, or weren't colonies, or had colonies, it's that they have high human capital, enough to have complex economies.

The only countries that achieve a high GDP per capita without a complex economy are countries with huge amounts of natural resources per capita, and it is almost always oil, although countries like Botswana benefit from high density of other resources, and small countries that receive a lot of tourism and finance.

As someone mentioned, it's important to understand that the whole world was poor before the Industrial Revolution, albeit with some variation, and Europe started to get relatively rich in the 1300s, but that's relative to that time. Before the Industrial Revolution, people in sedentary societies mostly did subsistence agriculture everywhere. It is the explosion in technical and scientific innovation that created the possibility of prosperity as we know it, and it is differences in the ability to recreate and create those advances in technical and scientific fields that distinguish countries in their incomes today.

Much of Africa's mineral wealth and that of other commodity exporters only have value because they are bought by industrialized countries. If industrialized countries were to stop buying primary products from poor countries, those countries would just get poorer, and exporting primary products to the international market doesn't stop anyone from getting rich, see Canada and Australia for examples. Income from primary products is fine, what poor countries need is to add to their economies complex manufacturing and services, and in enough quantity to make a difference.

* Human capital can be measured by international tests like PISA. The World Bank has an article on this where they converge the scores of all kinds of international tests.

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Maybe there's something I am not getting across here but I agree with most of this. I agree that the whole world was poor and that European developed which allowed them to colonize. But I don't know how you can say "low human capital" is the fault without bring up colonialism.

My point is at independence, African countries need to export to gain foreign currency. To get loans to grow industry you need to export goods. What did Africa have to export? Mainly commodities, so they nationalized or (few of them) allowed entrepreneurs to run their former colonial commodity exporting enterprises to fuel their industrialization strategy until the West entered a recession which lead to a commodity price slump, which lead to two decade long 1980-2000 African debt crisis. East Asia approached it differently, instead of having an urban bias like most of Africa did, they did land reform to allow household farming to get foreign currency which fueled their industrialization strategy. Japan re-industrialized and basically invested in Taiwan, Hong Kong, South Korea, and Singapore. which helped them grow, then the they invested in other East Asian countries. Of course having a market economy and being strategic about an industrial policy of investing in electronics, ship building and cars helped as well.

I completely agree with you that the problem is caused by low human capital. But that is impart due to colonialism. France burned Ubangi-Shari people alive for not meeting their rubber export quotas (modern day Central African Republicans) and Belgium was relatively late to educate Congolese. In Congo only 20 university graduates, 136 secondary school graduates existed, and the country lacked indigenous doctors, high school teachers, and senior army officers. Libya had a 7.5% literacy rate when at independence same with other nations like Mozambique and Guinea. Colonialist regimes vary in care they have for their colonial states, but for almost every country you can think of - literacy and life expectancy got better after colonialism. (There's a different story for GDP per capita though)

What I am saying is Taiwan, Malaysia, Hong Kong, South Korea, Singapore, have overcame their colonial legacy, while African countries like Benin, Burkina Faso, Niger, and etc. haven't.

Being former a colonial country doesn't doom you to being poverty forever, but the issue with colonialism in Africa is that they all continued the colonial strategy of resource exporting except for the new independent countries, they exported resources to fuel industrialization, and the strategy failed once the commodity buyers went in recession in the 1980s. It's up to the government to create an environment so the economy can become more complex. African governments are either failing to do that or are slowly increasing their capacity to do that.

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I just disagree that low human capital was caused by colonialism. You cite the poor educational outcomes of countries once they became independent, but it's not like before colonization they were better educated, and it's not at all obvious that if they had remained independent they would have had better outcomes. Haiti, Liberia and Ethiopia certainly don't seem to have fared any better. As I said, the pattern we see is not that colonized countries were unable to develop the high human capital needed for a complex economy, because East Asia and East Europe were able to.

Increases in life expectancy have been fantastic across the third world, but this is due to timing related to vaccinations and other methods that underdeveloped countries were able to apply in the second half of the 20th century and early 21th century.

Another thing is the increase of years in school, which does not necessarily translate into gains in learning. This is a problem not just for Africa, but also Latin America and parts of Asia. How countries significantly improve their educational outcomes is a key question. I do agree that it is the job of national governments to create the necessary environment for a complex economy to emerge, which includes the daunting task of raising educational outcomes.

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Ultimately, your argument is that low human capital existed prior to colonialism, and that every society had low human capital until the 18th century industrial revolution. Therefore, it's not colonalism's fault for failing to develop human capital since everyone was poor before and there are states that were never colonized that still have low human capital a la - Nepal, Ethiopia, Afghansitan, and etc.. I think the difference between you and I are the weights. I am inferring from your comments that you give nearly a 0% weight to colonialism for underdevelopment.

If I had a weight of “blame” I would be 80% on failed industrial strategies after colonialism and 20% on colonialism itself.

I said “in part by colonialism” not “low capital was caused by colonialism”. All I mean is the counterfactual would be years of empire building and/or border defining, centralization, and adoption of foreign technology. There were many African empires that were already doing this prior to colonization – the Ashanti Empire (my people) which were conquering other African people before being colonized,

Would the countries be better off if they formed states on their own vs. making a state after colonialization? Hard to say, there could be more countries or less countries. Some states would probably still be as poor, some even poorer, and some might be richer. But saying that "colonialism isn't the fault because Ethiopia is still poor" excludes the fact that stations that were never colonized have wide variety of outcomes: AKA Japan vs Thailand vs. Nepal vs. Afghanistan.

One of the big issues of colonialism is that these states (with the exception of the Kingdom of Burundi and Rwanda) never existed with their current borders before colonialism. (Even Ethiopia, which was never colonized had rapidly expanded its borders to avoid Egyptian encroachment) The British Gold Coast which became Ghana used to be the Ashanti subjugating the Fante, Akuapem, and then there was the Gonja in the north.

Nigeria was the Kanem-Bornu, Igbo, Edo, Oyo empire, and Sokoto Caliphate. If Igbo's were their own nation controlling their own oil near the niger delta, that would 5x oil reserves per capita. Prior to British colonialism, Igbos were the Aro Confederacy who were trading with different African and European merchants until the Niger Delta Company crushed the confederacy.

To me that 20% caused by colonialism has to do the part of building a nation of separate people's who historically hate each other or have no relation to one another and continuing many of the colonial enterprises as government run corporations.

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I changed the sentence to more accurately convey what I believe

" After colonialism, African countries tried to fuel industrialization through continuing the colonial legacy of exporting commodities, but commodity prices have been too volatile to raise the incomes swiftly for most African countries. When commodity prices are high, African currencies appreciate, making manufacturing exports too expensive to buy. When prices decline, it happens so abruptly that government revenues decline, currencies depreciate, you get sovereign debt defaults, IMF bailouts, and restructuring. Balancing the between these two extremes has been an issue for African nations. In the 1980s, when the commodity buyers, the West & Japan, entered a recessions due to central banks hiking interest rates to slow demand, commodity demand plummeted so did commodity prices, kickstarting the 1980s-2000 African Debt Crisis."

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Overall I like the article, but I disagree with your TLDR summary "Colonialism made economies dependent on export commodities." This seems to be a restatement of Dependency theory, and your article really does not give evidence of it.

Sub-Saharan Africa (like most of the rest of the world) was poor long before the Europeans arrived. The disparity in wealth was in fact the main reason why Europe could conquer Africa in the first place.

I believe that the reason for the discrepancy in development was mainly geography, not colonialism. The geography came long before the colonialism.

Europe clearly founded commodity export industries for their own good, and then after independent the Africans learned how to run those industries themselves. This clearly created the problems for their economy that you outline so well, but having those industries is better than pre-colonial times.

I do not agree that exporting commodities makes it impossible to create higher value-added export industries.You mention that commodity prices drive up currency, which is true, but it is not as if this drove up the price of African manufacturing exports. In general, those industries just did not exist.

I think that it is possible for Africa to follow the path of East Asia in developing high value-added export industries. During times of increasing commodity prices, those commodity exports may in fact give the capital to build new industries.

Unfortunately, commodity exports often lead to kleptocratic governments that do not want their country to become rich. The leaders would rather be rich in a poor country than middle-income in a middle-income nation.

Anyway, you know far more about the economics of African countries than I do. That is my take.

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I change the wording to more accurately convey my TLDR summary. You can agree or disagree but I think this is more objective:

"After colonialism, African countries tried to fuel industrialization through continuing the colonial legacy of exporting commodities, but commodity prices have been too volatile to raise the incomes swiftly for most African countries. When commodity prices are high, African currencies appreciate, making manufacturing exports too expensive to buy. When prices decline, it happens so abruptly that government revenues decline, currencies depreciate, you get sovereign debt defaults, IMF bailouts, and restructuring. Balancing the between these two extremes has been an issue for African nations. In the 1980s, when the commodity buyers, the West & Japan, entered a recessions due to central banks hiking interest rates to slow demand, commodity demand plummeted so did commodity prices, kickstarting the 1980s-2000 African Debt Crisis."

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I like your reply! Iron sharpens Iron. Happy to reply to your comment:

1) I don't think I am restating Dependency theory since I don't prescribe to that sort of thinking.

When I say "Colonialism made economies dependent on exporting commodities":

a. I think I am just stating a fact that Ghana exported cocoa and Malaysia exported palm oil during the colonial era. I am just saying that's what colonialism did, I am not saying Ghana is doomed to poverty forever. Malaysia has managed to improve from being a natural resource exporter of palm oil & crude oil to semiconductor, integrated circuits, and oil refinery.

b. Every newly independent African country basically depended on exporting commodities to fuel their government budgets and obtain foreign currency. Most African governments post independence had an "urban bias" and tried (and failed) to leapfrog and produce manufacturing while underinvesting in agriculture. East Asia (specifically Taiwan, Japan, South Korea, 1980 Deng Xiaopeng era-China, and mid 1980s ,Doi Moi market reform Vietnam) was able to increase their agricultural productivity thru land reform and giving land to household farms. Those countries increased food yield so much that it helped provide them export currency and food independence, which allowed the nations to financially repress their systems (lower their foreign exchange rate to the dollar) in order to develop cheap export oriented economies.

2) The geography vs. colonialism argument. I think geography and colonialism play a role in underdevelopment of Africa. But I think the biggest weight would be institutions. I agree that everywhere was basically poor with terrible sanitation, high child mortality, widespread disease, and stagnate population until the British industrial revolution. I agree that Western Europe, by the 1800s, was far richer than Africa before colonialism which allowed to to colonize it in the first place. But, I think it's clear that making institutions that allow people to make their full potential are what makes or breaks a country. That explains why South Korea > North Korea, West Germany > East Germany or Poland's economic reforms to join the EU made it better than Ukraine, which up until 2014 was basically an oligarch state.

3) In the 1960s, some African countries (like Zambia, Democratic Republic of Congo, Ghana, Nigeria, and etc.) had manufacturing sectors like food processing, steel production, and even car manufacturing. A good example is the Democratic Republic of Congo, back when the country was known as "Zaire" in the 1970s there was Zaire-Fiat Chrysler, Zaire Gulf, Zaire Pan Am, Zaire Renault, Zaire Peugeot, Zaire Volkswagen, and Zaire Unilever. Unfortunately the commodity slump of the 1980s to 2000s which lead to the 2 decade African debt crisis, corruption, too much protectionism which made African manufacturing lackluster in quality on global markets, and economic mismanagement killed industry in Africa and Africa underwent "pre-mature de-industrialization" - aka deindustrializing before Africa could grow rich. Then Africa deindustrialized more from 2000-2014 due to Dutch disease, stronger currencies thru stronger commodity prices which helped fueled investment to go to China and East Asia over Africa. Democratic Republic of Congo isn't a big car manufacturer anymore. It's not true that African manufacturing "didn't exist", it's just even weaker than it was before. Peak African manufacturing was 1960s-1981.

4) Africa can only develop high value-added export industries, when Africa is willing to repress its financial system instead of artificially increasing its standard of living. Because many African countries have very unproductive agricultural yield, their central bank will artificially strengthen their currency to the USD at an artificial rate in order to buy medicine, food, and fuel cheaply. Japan, South Korea, and etc. did the opposite, because they were able to achieve food independence in the 1960s and 1970s, they were able to focus on artificially making their currencies weaker to outcompete the West for selling cheap toys, refrigerators, and etc. Japan was basically "dumping" cheap cars and products on US soil until Reagan forced Japan to revalue its currency during the plaza accords.

Look at how unproductive African agricultural yield is here:

https://ourworldindata.org/grapher/cereal-yield?tab=chart&country=NGA~ZAF~MAR~Net+Food+Importing+Developing+Countries+%28FAO%29~COD~ETH~PRK~FRA

5) There is some truth to this, but this was more true in the 80s and 90s than today. But this post is already long enough.

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Thanks for your follow up comments, and your openness to discussion.

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