"Sorry, No Vacancies" Why African Firms Create So Few Jobs.
An article from the Economist discusses the fact and potential reasons why African firms, on average, are 24% smaller than equivalent firms in other countries. One possible explanation that the article explores is the corrupt government and the societies resistance to change. Larger firms in Africa are contacted by the government more and spend 14% more time talking to government officials. This is due to the opinion that large firms are more profitable, and attract the attention from the government for bribes and taxes. By remaining small, the firm avoids the corrupt officials. The article also discusses higher labor costs and the much more practiced form of informal employment, where people are heavily involved in agriculture and the commodity trade.
While traditions and views of a developing country can be diffucult to change, I believe some succes can be found in the article's final opinion, the development of the agricultural sector. 65% of Africa's labor force is in agriculture, greatly diminishing the supply of labor. This is typical of less developed countries due to the lack of technologocal advancements the would benifit this industry. Instead of efficiently producing food, more laborers are required to make the same amount of food. Agricultural advancements in Africa would increase the efficiency of farms, increase the labor force, and in turn the overall size of most firms.
Source:
http://www.economist.com/news/finance-and-economics/21599837-why-african-firms-create-so-few-jobs-sorry-no-vacancies
I could not agree more, unless there is a radical structural reform and a fully functioning and independent judicial system to enforce laws and regulations, no one can or should expect a significant growth in the level of employment on the African continent in general
ReplyDelete...But where would this solution come from? Most outside assistance is dubbed "colonialism," and these corrupt governments likely control the flow of information in their countries just as much as they control the economics. One can make the argument that China's concessional loans in the region are assisting in infrastructure development, but at the same time, this is at great profit to China, also an inefficient system. Internally, why would the corrupt officials WANT to change their ways, when they are so profitable to the individual? It's quite the conundrum.
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