Sir W. Arthur Lewis and the Africans: Overlooked Economic Growth Lessons

This comment is not a typical outcome of a typical research activity, and it not written like one. For example, although I have a list of references, I do not provide a formal literature review. The list is simply an acknowledge of the work that might have influenced my thoughts on the topic at hand. It is also not a review or any other evaluation of Lewis’s work, of which there are many by more eminent and famous friends, colleagues, and students of his. Lewis’s impact on Development Economics is well-known and appreciated. Less known and openly appreciated is his economic theory of growth and technological change, but I am not going to stress that either. My maintained claim is that the Newly-Industrialized Asian economies (NIAEs) have read carefully and followed closely and well Lewis’s theory in devising their growth and change strategies and policies, with local adjustments, of course. Many African countries on the other hand appear to have followed Lewis halfheartedly and in a helter-skelter way. Consequently, the difference in the performance of the two regions is no longer a matter of contention. The objective of this comment is to restate what I believe are Lewis’s key lessons to developing countries, and to show that although Lewis led all developing countries to water, proverbially speaking, some African countries have so far chosen not to drink. I find that there is a deliberateness in the order of the development process as conceptualized in Lewis’s theory of economic growth and technological change. First, for a country to grow it has to acknowledge that scarcity is real and to learn to be efficient, to economize. Second, efficiency requires good economic institutions to sustain it. Third, institutions need to not only have knowledge, defined as technological knowledge plus social knowledge, but more importantly such knowledge must grow, spread, and be used. The fourth “proximate cause” of growth in this order of preference is physical capital. Following capital, in the fifth and sixth places, respectively, are population (labor) and other natural resources (land), and government. Lewis is new classical (not to be confused with neo-classical) in that his theory of growth and change takes population and natural resources as given for any developing country, and counts government as a throwback to classical economics to suggest that economies perform best when government’s role is well defined and constrained. By implication good government is a function of good institutions, learning and knowledge growth. I conclude from this evidence that some African countries have refused to acknowledge scarcity, paid lip-service to knowledge accumulation, growth, and diffusion, over-stressed their need for physical capital and the abundance of their natural resources, neglected their populations, and failed to assign government its proper role. The result, until recently, has been slow growth.