Thursday, July 16, 2015

Is there a middle class in the Sub-Sahara?



I was recently watching the news on one of our local television. There was a comment about middle class in African nations. The commentator said that there is a rising middle class in the sub-region because of the increase of incomes. As junior economist my attention was drawn on the issue of middle class in the sub region.

What is a middle class in economics?  Do we have a middle class in the sub-region?

The middle class is the broad group of people in contemporary society who fall socio-economically between the working class and upper class

In the western countries the middle class represent a significant part of the population constitute a driving force for economic growth. Credit Suisse's Global Wealth Report 2014, estimated that people who belong to the middle class, have wealth between the range of $10,000-$100,000.

There is a very low rate of people who belong to the middle class in the sub-region. What we have is should be called a center, a concentration of wealth in the hands of few in most of the sub-Sahara countries. And there is the peripheral which represent more than 80% of the people who hold less than 5% of national wealth.
 
The policymakers should endeavor to make the middle class a reality in the sub-region. A middle class can be a drive to sustainable development economy. With an increased purchasing power it leads the consumption to its highest level. Then enterprises would strive to meet the demand. Production will increase and it means jobs and wealth for nationals.

At this point, it is obvious that wealth allocation remains and it is a real issue in the sub-Sahara. In the coming articles we shall talk about wealth issues in the sub-region.
 


Monday, February 23, 2015

How to reach economic development in the sub-Sahara?

Economic development is the goal that all African nations should strive to reach in this 21st century. It is obvious that without economic development there cannot be poverty alleviation. It is only through the application of sound economic policies that African nations especially in the sub-Sahara will overcome the threatening issue of poverty. Economic development specialists agree on four priorities that should be highlighted. What are they?


1-      Develop agriculture

The industrialization success depends on the standard of living of the rural areas population. Agriculture development is vital not only because it is the sole mean to provide food to the population, but it is also the way to reduce significantly unemployment and curb the drift from the land. It also helps diminish significantly the dependence on the western and Asian countries. For instance if rice is to be grown extensively (there is enough land and a favorable condition), it will help diminish significantly the import of rice from Asia.


2-      Slow down demographic growth.

It is estimated that African population will reach over 1 billion in 2050. It means more people to feed. If governments are unable to feed the few population they have now, how will they deal with the inescapable reality of the population growth. It more awareness campaign and real policies to improve women’s standard of living are prerequisites to population growth control.

3-      Invest in the human capital.

Western countries have the monopoly of technology and fundamental research. They offer then more opportunities for researchers and intellectuals.  It is the major reason why African intellectuals flee the continent. In order to stop that from happening India has invested in research facilities around the country. It is obvious that it keeps the brains in the country. It has set India on the path of technology creativity. India is now among the most creative nations on earth and is now among the G20 group. It is an example for African nations. Technology can be a mean to reach economic development.

4-      Create a Welfare State.

Political stability and social welfare are prerequisite to economic development. Therefore governments should strive to maintain a peaceful political atmosphere in their countries. It is a signal for foreign investors who will not hesitate to invest in the country, obviously opportunities for job creation and poverty alleviation.


In conclusion, economic development can only be reached through the application of sound economic policies. It will not come from a miracle or from the western countries or from a Marshall plan.



Tuesday, December 30, 2014

CHINA: THE RISE OF A SUPERPOWER.

The global dominance will shift from West to East.

In this year 2014, China is ranked by the IMF (International Monetary Fund) the first economic power in the world. The USA was the world leader in economy for over decades until the recent economic turmoil which deeply impacted the USA clout over the world. As result it is declining. According to a CIA report, USA will remain the strongest military force in the world. Are we on the edge of a new economic order? Will Chinese dominance last as long as USA?   What is the outcome for the world?
Since the era of Mao, China has set the path to its economic development through its social and economic revolution. The regime has made choices that paid:
- The extensive use of the human capital (China has the largest human capital in the world with a population of over 1 billion people)
- A heavy industrialization of the economy (China opened its market to foreign industries)
- The extensive use of new technologies (Huge investments are made in research and development)
- A huge investment in modern infrastructures
- A massive export of manufactured products especially electronics (computers, mobile phones etc…)

Over two decades Chinese economic growth rate was two figures till the recent economic downturns. Will Chinese economic performance last?
It is likely that China will not sustain its dominance as the Americans did for two major reasons:
-First, the one child policy is an obstacle to the renewal of the human capital. The ageing of the population will lead to an exponential decrease of the active population.
- Second, China is a colossus with feet of clay. The regime which is communist is facing a latent revolution which seems to be a time bomb and may explode any time.

What is the outcome for the world?
It is likely that china’s dominance over the world will lead the path for new superpowers to rise. Countries like Brazil, India and Russia will become powerful nations. A new economic order will of course take place. The western countries will lose their dominance over the world as result of the economic turmoil and political crises they will encounter.

Over all China will become a powerful nation, but for just a short period of time. The Americans will remain the strongest military and will lose their economic leadership, but is likely to make a comeback for this reason: America is the most creative nation on earth.