Monday, January 21, 2008

NGOs and African manufacturing

One thing that has always struck me in the African countries I have worked is that the real wages (i.e. wages adjusted for the cost of living) of African formal sector workers seem to be incredibly high, at least compared to that of workers in China or India. Given that firms in China and India seem to be more productive than their African counterparts, it creates a double disadvantage for African workers, and raises the question of why the situation continues. Why don't manufacturing wages fall in Africa, stimulating more jobs for more people at wages still higher than those available in agriculture or informal business? ...

Another possibility, however, is that the largest employers of skilled workers in most African countries are international NGOs and the local government. They are competing, in many cases, for the same pool of skilled and semi-skilled workers as the manufacturers and service sector firms. Neither the government or NGOs, moreover, seem to set wages according to the local market or local conditions, and it requires little imagination to wonder whether they set their wages higher than the market would normally do. ...

I also can't help but notice that the best and the brightest pursue degrees in social work, not business. This is not necessarily a bad thing, but it does not feel terribly sustainable. You can't build a national economy on NGOs.
--Chris Blattman, Asst. Prof. of Political Science & Economics at Yale, on the possible growth-stifling effects of NGOs

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