Dambisa Moyo at the Druckerforum in Vienna

Dambisa Moyo2

Dambisa Moyo, bestselling author and a big voice when it comes to abandon development aid for Africa, comes to the Global Peter Drucker Forum to Vienna on November 5 and 6, 2015.

In her blogpost at the Drucker Blog, Dambisa rises concern that digitalization and its accompanying annihilation of jobs will specifically hurt African countries with their growing and much younger population.

A very good question:

Are African countries more vulnerable to technological unemployment than Western countries?

The answer is not clear. I tend to see it the other way round.

Yes, the growing work force of African countries needs a fast-growing number of jobs. As digitalization progresses, first unskilled labor and routine tasks of skilled labor get substituted by machines. Naturally, that hurts African countries specifically hard. Not generating enough jobs has huge negative implications on societies.

But on the other hand, a fast growing “lean” country (Dayo Olopade distinguishes between “lean” and “fat” economies)  has a lot of flexibility to adapt to new circumstances. And to benefit from new opportunities. Just look at the success stories of the mobile telecom industry in Africa as a totally new industry emerged with a lot of new jobs.

Further advancing communication technologies or new production technologies will again generate big opportunities. Think for example of all this new food growing technologies and at the same time the huge and growing demand of the new middle class in emerging countries.

While it seems clear that future economic growth will trigger less job-growth because of disruptive digitalization, new technologies will also contribute to additional economic growth. This could compensate or even over-compensate the negative effects on the number of jobs.

No, “fat” economies will struggle much more

Different the situation in “fat” economies of the Western world. First, low growth rates mean in themselves much less flexibility to adapt to new circumstances as there is no additional value creation where adaption is much easier to achieve. Saturated demand further diminishes possibilities for companies to adapt and create new fields of value creation.

Second, in fat countries a sophisticated system of social-welfare and pension schemes has been built up and is relying heavily on traditional jobs. A significant lower amount of this type of jobs will require a profound system change. But with all their tremendous difficulties to get even minor reforms done, it will be very, very difficult for European countries to get a system change happen.

Institutionalized vested interests in “fat” countries are much higher than in “lean” countries and therewith a much bigger hindrance to change.

Young and informal

On individual level, is a 20y old African harder hit by technological unemployment than an 50y old European? Mostly not: The younger, the higher the capacity to adapt to new technologies.

Additionally, a much bigger informal sector in lean countries helps. It allows “test-and-lern” experiences with new technologies on lower income levels. As it happened with the mobile phone technology leading to mobile banking services.

Ironically, due to empty public tax funds, European countries need additional tax revenues and are trying very hard to “formalize” and squeeze the still existing informal sector. Autonomy of small economic units is therefor cut down, and as a side-effect informal “test-and-learn” experiences are made almost impossible.

To conclude, technological disruption is one more point in favor of “lean” African countries. The day, Africa’s economic performance in absolute terms will be bigger than Europe’s performance comes closer every day.

 

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