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Why Africa Needs Economic Freedom – Competitive Enterprise Institute (blog)

That is the topic I presented earlier this week as part of the panel discussion, Perspectives on African Development, at the Department of State’s Foreign Service Institute. The full contents of my presentation can be found here.

I wanted to challenge the prevailing mindset of those who work in the development “industry,” in particular the idea that we need ever more foreign aid or expert-designed intervention to solve poverty once and for all. Yet the key to African development is just the opposite. I argued for an embrace of the same values that drove the West to unprecedented prosperity, and more recently, drove Asia to the greatest reduction in absolute poverty ever recorded.

What Africa needs is to embrace economic freedom—enshrining personal choice, voluntary exchange, and protection of private property at its core.  Rather than top-down economic planning by governments, African nations should pursue bottom-up development by individuals. Historically, the results of economic freedom are unparalleled.

The Fraser Institute has found that countries with institutions and policies more consistent with economic freedom have higher levels of income, more rapid economic growth, and a greater reduction in poverty rates. The difference between the two is stark. In 2015, nations in the top quartile of Fraser’s economic freedom rankings had an average adjusted per capita GDP of over $40,000, while those in bottom quartile nations were around $5,000 per capita.

Unfortunately, most African nations fall into this bottom quartile. While they certainly have improved since the start of the new millennium, the continent ranks as the least economically free region in the world. For African nations to develop, they will need to institute a strong rule of law and secure property rights, small government, low levels of regulation, sound money, and free trade.

Development experts may disagree with me, claiming that they know best how to solve poverty. But development is not about getting the right people or the right plan to solve poverty from the top down. What development is really about is creating the right institutions that empower individuals to solve their own problems. These institutions cannot be designed by experts or bribed into existence by foreign aid. They can only be brought about through the economic rights and freedoms of people. This is why Africa needs economic freedom, and why it is paramount to the development of the continent.

Why Africa Needs Economic Freedom – Competitive Enterprise Institute (blog)

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