Whither African Manufacturing?

This blog has often criticized columns by Neil Reynolds. But he had quite an interesting one in yesterday’s Globe and Mail.

In a nutshell, the column argues that used clothing donated from western countries has limited the emergence of garment manufacturing in Africa, thereby stunting that continent’s industrial development.

Reynolds emphasizes this research as an example of the unintended consequences of ostensibly benevolent interventions. However, there are other possible implications.

If one accepts the facts as presented, then African countries would be better off if they had levied a countervailing tariff on imports of used clothing. This conclusion runs contrary to the free-market philosophy that Reynolds normally champions.

I wonder whether garment manufacturing is a viable economic strategy for Africa. Several small Asian countries used it as a path to more sophisticated industrial development. They succeeded partly because the Multi Fibre Arrangement restricted clothing exports from China to the western world until 2005. Today, prospective garment manufacturers in Africa would have to contend with unrestrained Chinese competition in western markets.

More generally, a strategy of export-led growth depends on other countries running trade deficits. An increasing US trade deficit over the past three decades enabled many smaller economies to expand by running trade surpluses. With the US trade deficit likely to shrink, the rest of the world will have to rely less on exports and more on domestic sources of economic growth.

3 comments

  • Neil Reynolds columns are not meant to be taken seriously or engaged with. Rather, their sole purpose is to indicate that he is still employed by the Globe and Mail and that, given the continued employment of someone with his track record at one our most prestigious media outlets, we remain doomed as a society.

    I may, but probably won’t reconsider this opinion if Reynolds ever writes a column updating us on his mid-2007 recommendation that what Canada needs to do to succeed economically is to emulate Iceland.

    I might also accept a column updating his recommendation that we need to emulate the Baltic Republics.

    Or even one where he acknowledges that just because the Canadian and U.S. currencies have the same name (Dollar) does not mean there is any logical reason they should have the same value.

    Until then, we can continue rearranging deck chairs.

  • That’s true about the dollar, though, even though he may still be an idiot. Purchasing Power Parity for the Canadian dollar is around $0.80 US.

  • No, what he wrote was that $1CAD should equal $1USD, not that they should have purchasing power parity.

    See here for details.

    You persist in misoverestimating the man…

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