MIT Study Reveals Why Africa Is Still Poor

This video is sponsored by Better Help Africa is the

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est continent in the world and as the economic centers of Asia come into their own, they are unfortunately only being left behind today. The majority of people in the world who live on less than $1 a day live in Africa and the income gap between a large portion of African nations and developed nations has grown to a factor of 40 or 50 and is now being addressed. an entire continent as a single economic case

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which is usually a foolish endeavor. There are 54 countries in Africa, each with their own economic systems.

Government challenges. and Opportunities Asking general questions about the economy of all of them at the same time would be like assuming that the United States and Ecuador had the same economic dynamics, but when it comes to poverty, this is a relatively universal problem throughout Africa. Yes, there are outliers. like the St Shells Marius and even Botswana, but most of their economic output is unstable at best and based on dubious tax systems, even then the nation with the highest GDP per capita on the continent would be low middle incomes in Europe or North America, making The question of why Africa is

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even more important to answer the fact that most countries on the continent are underdeveloped, led a team of MIT economists to look for underlying reasons that go beyond individual national issues to see if there are common barriers to economic development. in Africa that are not present in other regions of the world, finding and understanding these problems, if they exist, has the potential to guide economic policy and aid efforts to address the root of the problem rather than mask the symptoms, so What would be the fundamental problems if Anything that the MIT researchers found when trying to answer this question: how can the problems be solved?

And finally, is there any reason to be optimistic about what would otherwise be a fairly daunting problem, while the economy of an entire country requires thousands of people to manage it? a little overwhelmed just trying to manage your own life on your own. For my part, I got a little lost last year and decided that this year I will address my problems head on and I don't know if I would have had the confidence to do it without Talking to my excellent therapist, I found through the sponsor of this video better help after of a match with one of Better Help's 30,000 licensed therapists.

We talked about setting more manageable goals using the smart framework. Work that is specific, manageable, achievable, relevant and time-bound. This has helped make seemingly big problems smaller and even just having someone to talk to regularly just to stay in touch with myself has made all the difference in the world. Just answer a few simple questions and, in most cases, a therapist will be assigned to you within 48 hours. and you will be able to schedule your therapy sessions at a time convenient for you and from the comfort of your home and if you feel a little lost like me or just want to be more confident in the face of adversity with better therapists to help.

You can work on what matters to you, so give yourself the gift of mental clarity and reduce your feelings of being overwhelmed by visiting Betterhelp.com for 10% off your first month. It is also linked in the description and you will support this as well. Channeling economic success at no extra cost to you tends to lead to more economic success and, unfortunately, economic challenges do the same. Today, countries across Africa face a combination of problems that the world is perhaps all too familiar with: political instability, corruption and the destruction of capital. It is riskier for industries to establish themselves on the continent, which means that people do not have access to economically valuable opportunities, which causes an impoverishment of the population, which causes even more political instability, on top of this, there are modern problems and the world has opened up.

For international trade and workers, it has become harder for African industries to compete and easier for talented African workers to leave to find better opportunities in richer countries. These issues are well documented and well understood, but they are symptoms of other underlying problems. So why does Africa have such a universal situation? He continued to struggle with this vicious cycle where countries on every other continent in the world have not had the same problems or been able to address them. A good start would be geography, almost like a real-time strategy game where countries exist on a map. has an impact on the initial development of the game, land is one of the factors of production along with labor and capital, but in some ways it is almost the fundamental factor of production because even in the oldest civilizations that go back Thousands of years ago, good land could support more people.

The more people were kept on the land, the more they could specialize in technical areas of a society besides simple hunting. Gathering or growing food to survive Now, obviously, Africa is huge, but land in the economic sense also extends to other aspects of geography. such as how fertile that land is, access to drinking water and, at the last moment, access to raw materials and trade routes. Whenever economists discuss the poverty experienced in Africa, they almost without fail mention the abundance of natural resources that exist across the continent, from precious fossil metals. fuels diamonds and even rare earths that have become vital to the electrification of the global economy, the trillions of dollars buried in the continent's soil make poverty even more heartbreaking because, while land is so abundant in this sense, That same land has worked against the people who inhabit it for thousands of years and has put them in a position where today, when those resources are most valuable, they are not well equipped to take advantage of them, the most obvious place to start is just how isolated most of the continent has been.

The Sahara Desert divides the continent from east to west and for most of human history has effectively acted as a large ocean, turning most of the land to the south into an island physically separated from many social developments. that took place along the trade routes between Europe. Middle East and Asia, even today, the North African countries along the Mediterranean are more integrated into global affairs and are generally more developed in the southern and central countries of the continent. The Sahara Desert is an economically important geographic feature that economists often look at North Africa and sub-Saharan Africa as two completely separate entities, both have their problems, but sub-Saharan Africa tends to be long isolated from even trade.

Initial globalization and diffusion of ideas and technology put the southern continent behind its northern neighbors and would later also open it up to exploitation from technologically superior regions that would establish connections with the continent in ways that were not mutually beneficial, to put it mildly. , while the land itself is not particularly fertile, so the transition to productive agriculture is one of the most important things humanity has ever done, but it was obviously easier to take that step where the land was more naturally fertile. The Sahara Desert is clearly not ideal for agriculture, but even the seemingly most fertile lands in the center of the continent have poor soil quality. which is prone to rapid erosion unless carefully managed with even the most advanced modern agricultural techniques, an ancient civilization would have found it very difficult to develop agriculture given these factors and there was also no real incentive to do so in lush areas where the agriculture would have been possible.

It was simply easier to forage for food than to invest the effort in developing farms. Sub-Saharan Africa is also a very inhospitable environment with structured development. The most fertile areas are plagued by tropical diseases, insects and wildlife that generally favor the human groups that remain. Dispersed and mobile anthropologists compare this to theories they have about other early developments that revolve around something they call the Sedentary Trap. This is where human groups would find an area so lush with life and abundant in resources that were important to early humans such as freshness. water, wood and lack of predators, they would simply become sentinels in that area for generations until they exhausted everything they could hunt or gather, at which point agriculture becomes the only option if the group has lost its nomatic ways, these Gardens of Eden, as anthropologists call them.

It didn't really exist in Africa, so people had to stay in smaller groups and they had to keep moving today. This has resulted in a continent that has many different ethnic groups that speak hundreds of languages ​​and have very different cultural norms. Even though the continent is divided between many different countries, those countries are often divided individually between many different groups, the great The number of randomly drawn borders also causes other economic problems. Yes, this is largely due to the shadow left by colonialism, but we

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need to get there when it comes to simply using land as a factor of production for economic development.

This dense web of borders also means that many countries are isolated from the outside world because they do not have access to the oceans for the transportation infrastructure of international trade. because trade is minimal and what exists is either far from fully developed or are remnants of railways from colonial empires that are falling into disrepair and were only created in the first place with the intention of exploiting resources rather than building an economy independent. Connections between countries are usually dirt roads at best and even those lucky enough to be directly on the ocean for the opportunity to engage in global trade

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have other significant geographic barriers.

Most of the African coast, especially in the west, is elevated and completely impractical to develop major shipping ports, so even before humans existed, Africa was far from an ideal spawning ground for developments. economical mid to late game. These challenges also influenced the other factors of production, including one that we rarely mention on this channel, which macroeconomists talk about frequently. the way land, labor and capital interact influence the economy; In the case of Africa, it had land that was not ideal for agricultural trade and industry, which meant it had a smaller and more divided population, which meant it was less concentrated in the centers of Trade, which meant that in Instead of developing and sharing technologies and infrastructure, capital, they were more focused on simply surviving, but there was also another element and that was entrepreneurship.

Now, when economists talk about entrepreneurship as a factor of production, they don't just mean people who go. undertake and start a business, refer more to people or even institutions that can coordinate the other factors of production, land, labor and capital, to make something useful. It should be noted that many economists often simply conflate this with work because work also considers not only how many people work in an economy, but also what their skills are. A more skilled workforce should be able to produce more economic output, since entrepreneurship is arguably just another skill. It explains why these two are often merged, but the African Economic Case Study may be one of the clearest examples of why this is important enough to be considered as a separate item now that most of it is based in the work of Darren Asam Moglu and James a Robinson of MIT in their publication simply titled Why is Africa Poor?

We were lucky enough to speak directly to Professor Assam Mogu who apart from publishing this article also wrote the legendary book Why Nations Fail being one of the most academic researchers and needless to say the history of economics was good. to get his ideas on such a complex topic, can you understand Ukraine today without its geography? No, its entire history, especially recently, is due to where it is located, next to Russia, so that is geography and you cannot understand Saudi Arabia without its geographical significance. are its oil endowments, if Saudi Arabia did not have oil, today it would be a placevery different, so there are geographical factors that matter, but the question to which James Robinson and I gave a categorical and categorical answer is that geography is the main factor explaining the large gaps in per capita competition and in prosperity around the world and the answer is that no institution is overwhelmingly more important.

You know you're absolutely right. Sub-Saharan Africa is really a jarring case of poverty, inability to develop economically, inability to build industry and prosperity again even though these challenges exist, it is important to address the underlying cause of things like the slow adoption of technology as mlu and Robinson in their research analyze various groups across the continent and the individual motivations for why they adopted or did not adopt certain technologies. Even when they were made available, even really simple technologies like a wheel were not widely adopted. The cheap transportation that something so simple allows means that it becomes increasingly easier for societies to develop outside of small village groups because resources can be exchanged between them. different areas that allow people to specialize, if something like food tools or building materials needs to be transported using a head port where people simply place heavy things directly above their heads, then that is much less efficient than even a card of basic hand, at that point it simply becomes It is easier for social groups to be self-sufficient because it is now very difficult to trade.

This was not unique to Africa. Indigenous Australians were also largely separated from the initial exchange of technologies and the two remain largely self-sufficient hunter-gatherer groups. until western colonies were established there, if that's all there was to this story, then that would explain why Africa was historically behind the northern empires, but it wouldn't explain why they lagged behind. What ASA MGO and Robinson found interesting was that even after Wheels became common knowledge on the continent,

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groups still preferred to do things by hand and there was no clear reason why, until they looked at the institutions who ruled these areas when Western technology came to Africa, regions like the Congo were loosely governed by kings who would rule for the Cree with little or no oversight, collect revenue. through arbitrary taxes and taking things by force when they saw fit, this pushed the groups who wanted to avoid the rule of these uncontrolled leaders and further away from the basic paths that existed in the region, so in Instead of developing a culture of commerce and independence, tyrannical ruling institutions encouraged the exact opposite that fractured self-sufficient groups have led to the present day, where even within Africa's many borders there are often dozens of different cultural groups within a country. who compete for political representation and power.

In this type of environment, it is easy for EAS bad leaders to establish themselves in positions of power by appeasing their group and running the country in such a way that it is at the expense of everyone else, meaning that even a few hundred years later it is It is risky for people to depend on the economy to provide them with what they need, it may be much less efficient, but it is much safer for them to take care of themselves. It also wasn't worth putting too much effort into doing even simple things like a hand chop when it could be taken by some absolute monarch at his whim.

Now, of course, this didn't happen in a vacuum and it's impossible to look at Africa's modern economic struggles unexplored. conquest and colonialism, all the challenges that the African continent had with divided populations, inhospitable environments and poor economic management. significantly worsened by the Atlantic slave trade and subsequent colonial empires, the basic economics of the slave trade were unfortunately almost brutally simple and relied on many of the fundamental weaknesses we have been exploring so far, colonial empires had established plantations in the newly discovered territories. America, but unfortunately for them, unlike many other colonies in the East Indies, the native population was disappearing too quickly to work on the cultivation of exotic spices, so the Europeans needed to import new labor and well, no They were going to do it. many of the uncontrolled African rulers at the time were already using slave labor and were happy to participate in this horrible industry in exchange for European technologies, particularly firearms.

Weapons were technically advanced tools, but unlike many others. technology, they didn't have the same problem with simply being claimed because they were property and a tool for enforcing property rights all in one, so that powerful groups could gain tools to become even more powerful and benefit from the capture of their rivals To send them abroad, the Europeans took this slave labor and used it in their new colonies to produce exotic goods to sell in Europe and used the profits to buy even more weapons to sell to Africa in exchange for more slave labor, The reason they did not simply establish the colonies in Africa itself was because at that time the African groups, after a long history of fighting among themselves, were quite powerful adversaries, especially in their own territory, which was full of diseases.

Tropical rainforests, dangerous animals, and below-average soils made it easier to navigate across the Atlantic anyway. Ocean, which highlights how difficult it was to colonize Africa, of course this system didn't last forever. The American colonies began to claim independence and the Industrial Revolution meant that Western armies became much more powerful very quickly in the 17th century with wooden ships and the first firearms. It would not have been economically viable to colonize Africa as European powers were doing with other regions of the world, but with modern armies, steamships, and basic treatments for tropical diseases, the large continent of Africa began to look very attractive as colony, especially because it was full of resources that suddenly became very useful in the industrial era, this period on the continent was really horrible to the point where we can't go into too much detail or this video will simply be removed from YouTube, but from a purely macroeconomic perspective, this laid the foundation for many of the government problems that the continent still struggles with to this day, as colonial powers moved out of Africa, taking their tools, government structures, and relationship education.

Industrial industry on the continent was almost non-existent and now many groups could not even return to their traditional way of life. Violent power grabs occurred across the continent and even if the main LRA who seized power were completely benevolent, they had no training in what it entails to run an effective government. Now, of course, many leaders across the continent have not been benevolent and it is known that there were cases of corruption at Independence. You know, part of Africa had the beginnings of a bureaucratic system, a judicial system, etc., that the Europeans themselves had established, but they were mostly in the main population centers in the main urban centers they had not penetrated into society had not been fully legitimized, in fact Europeans often destroyed more legitimate indigenous institutions when they tried to build their own for reasons of control, for example the British colonized Nigeria and tried to introduce them. their own ruling families also in places like Sierra León and when they left the shell, the skeleton of the institutions was not very useful for building new economic activities, but they were very kind to a strong man to take charge of them and use them for the extraction.

Natural resources that should be the golden ticket to Africa's economic prosperity have in many cases been used by despotic leaders as their own personal piggy bank to secure their own power. The constant political onslaught and continued rule by unchecked authorities mean that the continent as a whole has Its reputation has taken a severe hit to the point that any industry in Africa is considered inherently riskier than a similar industry on another continent. This means that Africa has had difficulty getting funding for even basic projects with huge potential benefits because it is now considered too risky. sometimes this reputation is earned a few months ago we looked at the conflict that was developing in Ner and how it was stopping the development of an oil pipeline, one of the easiest infrastructure projects to ever see a return on investment in a geopolitically uncertain country, but still in it.

Fortunately, now it was not worth the risk, although this situation almost seems hopeless, there is room for optimism. Many of the underlying problems related to the failure to develop strong institutions to manage economic development are beginning to show positive signs of progress. Paper by Robinson and Asam mogo was written over 13 years ago and a lot has changed since then Botswana is one of the fastest growing countries in the last 60 years since independence and if you look at bwana it has all the problems that others attribute To Africa. A landlocked country, it is not an easy country to navigate due to its wealth of all kinds of natural barriers to movement and other problems.

It has diamonds that have been called a curse to other African countries. Its independence also began. very poor period and without many roads or any kind of educated elite, but it built better institutions for a variety of reasons, we can look at them if you're interested, but it built better institutions, it created stable property rights, it created a democracy that has worked reasonably. Over time, it never led to a system where the justice system was biased toward one group versus another. He invested in people in education in public infrastructure. It managed the diamond wealth well and achieved this relatively high level of income, but it will be a world-wide interest rates are high right now, which means international investors are even less attracted to places like Africa, as who can earn good returns simply by purchasing extremely safe investments when cash generates less than one percent of what they earn. might be a little more motivated to consider Africa as an option again, the continent is also once again embroiled in a number of very high-profile conflicts, which is causing even countries like China to step back and see how it all plays out This, no one can predict. the future less than all economists, but we must also remember that just 50 years ago most of Asia was in the same economic situation as most of Africa was today 300 years ago, a blink of an eye in the grand scheme of human history, even the richest Western nations had economic output similar to that of the continent today.

One of the most poignant conclusions from Asam Mogu and Robinson's research is that economic success tends to lead to greater economic success. Most economies throughout history have been stagnant until they are no longer stagnant if Africa's time comes. could be an economic success story, just like any other region that was plagued with problems until they made the first breakthrough, our full interview professor as glue is available for ad-free listening on Spotify and all other popular platforms music streaming service that we briefly mentioned. The problem of modern corruption in this video, but it is something we covered extensively in our video on Erria, one of the clearest examples of an African nation in trouble.

You should be able to click on that video on your screen now, thanks for watching buddy, bye.