The Time-Travelling Economist: Why Education, Electricity and Fertility Are Key to Escaping Poverty

303 Pages·2022·5.355 MB·English

by  Charlie Robertson

-
THE TIME
TR AV ELLI NG
ECONOMIST
WHY EDUCATION,
ELECTRICITY AND
FERTILITY ARE KEY TO
ESCAPING POVERTY
CHARLIE ROBERTSON
The Time-Travelling Economist
“interesting new approach to low income development, highlighting why India
can boom for decades”
—Suresh Prabhu, India’s minister of Civil Aviation (2018–19),
Commerce and Industry (2017–19), Railways (2014–17),
Power (2000–2002)
“I have listened to and read several presentations by Charles Robertson. It is
always amazing how much he captures his audiences’ attention and leaves them
in deep thought, thereafter.
I am sure he will do exactly the same with this book.”
—Dr Shamsuddeen Usman, Nigeria’s Minister of planning (2009–11),
Minister of Finance (2007–09), deputy governor
of the Central Bank of Nigeria (1999–2007)
Charlie Robertson
The Time-Travelling
Economist
Why Education, Electricity
and Fertility Are Key to Escaping
Poverty
Charlie Robertson
London, UK
ISBN 978-3-030-97596-8 ISBN 978-3-030-97597-5 (eBook)
https://doi.org/10.1007/978-3-030-97597-5
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Acknowledgements
This book owes a great deal to many people. Firstly, my past and present
macro-strategy colleagues, most obviously Yvonne Mhango, Vikram
Lopez, Daniel Salter and Artem Chubarov. Most of the tables and charts
only exist because of Vikram and Artem.
Also the broader research team, past colleagues and current, including
Nothando Ndebele, Adesoji Solanke, Ahmed Hafez, Ryan Ayache, Seki
Mutukwa, Roy Mutoni, Greg Smith, Johann Pretorius and Oni
Oluwatoyosi.
In offices across Africa over the last decade, I need to thank Temi
Popoola, Stanley Kariuki, Dan Ugwuoke, Yvonne Ike, David Dalhuisen,
Dela Wosornu, Abi Ajisafe and Sam Sule, and in London also Mark
Reed, head of sales trading, who actually reads and has provided thought-
provoking feedback on my research for many years.
Much appreciation is owed to Anna Vyshlova and Ruslan Babaev for
granting me the time to put this book together and helping provide such
excellent colleagues to work with. Also to Stephen Jennings who inspired
me to join Renaissance Capital and ensured we published the Fastest
Billion, and Ben Samuels who broadened my view to Asia too.
I owe profound gratitude to Michiko Fox, who helped so much in the
early stages of the book. And I have a debt to Sarah Wangare Kinyanjui,
who was good enough to read and argue with me about many of the
chapters.
v
vi Acknowledgements
It is a mistake to single out specific investors in Africa, Pakistan and
other Frontier markets, but the following have continually provoked,
challenged and often inspired the work in this book: Michael Power,
James Johnstone, Satyen Mehta, Joseph Rohm, Mishnah Seth, Deirdre
Maher, Andy Brudenell, Terence Gray, Suleyman Ba, Andrew Alli, Marc
Stoneham, Larry Speidell, Kevin Daly, John Niepold, Godfrey Mwanza,
Hans-Henrik Skov and James Bannan, Pete Leger, Suhail Suleman, Faisal
Ghori, Ayo Salami, Sebastian Kahlfeld, Lars Bane, David Haglund,
Jennifer Passmore, Nazmeera Moola, Paul Robinson, Randolph
Oosthuizen, Darren Smith, Tarek Karam and Johan De Bruijn, Bob
Mccarthy, Anwaar Wagner, Johannes Loefstrand, Mark Lawrence, Oliver
Bell, Brett Rowley, Nick Padgett, Peter Townshend, Erik Renander,
Matthias Althoff, Susan Wisialko, Karim Sawabini and hundreds more
who I will kick myself for not having mentioned here.
There are a great many civil servants, central bankers and ministers
who have graciously granted their time and knowledge. Many IMF resi-
dent representatives, World Bank staff and embassy officials have pro-
vided their expertise and insights. They have been invaluable. Those who
must be mentioned include Sanusi Lamido Sanusi, Arunma Oteh,
Shamsuddeen Usman, Yemi Kale, Yewande Sadiku, Patrick Njoroge,
Terry Ryan, Gyude Moore, Amine Mati and Tolu Ogunlesi.
Then there is a long list of people who don’t quite fit in any of these lists:
Feyi Fawehinmi (@DoubleEph), David Pilling, Adelaide Changole,
Godfrey Mutizwa, Wole Famurewa, Andrew Skipper, Hannah
Ryder, Christopher Cramer, Michelle Essome, Nonso Obikili, Jonathan
Rosenthal, Ceasar Siwale, Stefan Dercon, Aly-Khan Saatchu, Karen
Taylor and again so many others including every one of those who engage
with me on Twitter. Together they educate me daily.
At a more personal level, I need to thank my loving parents and of
course, the family that I am so lucky to have, my partner Emma, and
bright and engaging “children”, Jacca, Sasha and Katya. They all have
remarkable tolerance. There’s only so often anyone should have to hear
sentences that begin “I’ve just found out this amazing fact …”.
Contents
Education: No Take Off Without Adult Literacy 1
Electricity: Power to the People 43
Sex and Money: How Many Babies Are Too Many? 93
Debt: A Debt Crisis Is Probably Unavoidable in a Bid to Create
Jobs 161
Demographics and Growth: Who Booms, When? 193
What the Future Holds: Democracy, Corruption, ESG and
Emigration 219
Conclusion 243
Glossary 251
Bibliography 257
Index 261
vii
List of Figures
Education: No Take Off Without Adult Literacy
Fig. 1 How do countries rank on literacy in 2015? Who can’t grow
sustainably and who can’t industrialise yet? Note: There are no
data for Somalia since 2001; as a failed state, it would not
surprise us if literacy had fallen since then. (Source: UNESCO) 6
Fig. 2 Literacy rate, 2015 versus manufacturing as % of value-added,
2015 or 2016. (Source: UN, Guinea-Bissau 1999, Madagascar
2008, Mali 1979, Papua New Guinea 2004, Rwanda 2014,
Somalia was 4.6% in 1990, Sudan 2011) 6
Fig. 3 Map of literacy rates in Imperial Russia in 1897—also a good
guide to per capita levels today (darker is better). (Source: “The
first general census of the population of the Russian Empire in
1897” (1897–1905), Central Statistical Committee of the
Ministry of Internal Affairs (St. Petersburg), Nikolai
Aleksandrovich Troinitsky) 8
Fig. 4 Literacy rates over the last 120 years: green is over 70%, red is
below 40%. Note: SA 7% refers to non-white population
(white was 96%) and same for the 28% figure. 28% for
Szechuan province (China) is the only data we could find and
refers to 1942–43. For UAE we use Trucial Oman for historic
data. In 1945, only the Jews and Armenians in Turkey had a
literacy rate above 50%. (Source: UNESCO, League of
Nations, various other papers) (Color figure online) 9
ix
x List of Figures
Fig. 5 Literacy rates for the past 125 years for a range of European,
Asian and African frontier economies. (Source: League of
Nations, UNESCO, various other sources) (Color figure online) 13
Fig. 6 Nigeria exports similar amounts of oil per capita as Mexico;
Angola is more like Venezuela. (Source: BP, IMF, Polity V) 14
Fig. 7 Adult literacy data in Africa, since 1943. Note: DR Congo
figure for 1960 from the Belgian embassy at the time. (Source:
UNESCO, various other sources) (Color figure online) 16
Fig. 8 Map of Africa by population size (2020 IMF) and literacy rate
(latest, up to 2018 UNESCO) plus other frontier markets
(top-right). (Source: IMF, Central Bank of West Africa, NBS,
UNESCO) 18
Fig. 9 The number of literate adult Nigerians has risen from 2 mn in
1952 to 54 mn in 2015, and might double to 101 mn by
2030. Note: We’ve aligned literacy survey data for 1952, 2003
and 2008 with population estimates in 1950, 2000 and 2005.
2020–30 figures are our forecasts. (Source: UNESCO,
Nigerian Bureau of Statistics, UN, Renaissance Capital) 20
Fig. 10 The lag between secondary school enrolment in 1971 and per
capita GDP ($) in 1991. (Source: UN, IMF, BP) 24
Fig. 11 The lag between secondary school enrolment in 1991 and per
capita GDP ($) in 2011. (Source: UN, IMF, BP) 25
Fig. 12 Only a few countries still have secondary school enrolment
rates below 25–28.5%. (Source: UN, IMF, BP) 26
Fig. 13 For nearly half of the countries where literacy rates are under
80%, improving female literacy would make a huge difference.
(Source: UNESCO, Renaissance Capital) 36
Fig. 14 What role did literacy rates in the 1980s play in determining
per capita GDP 30–35 years later? (high energy exporters per
capita in red). Note: Renaissance Capital estimates for literacy
rates in Russia, Korea, Taiwan, Colombia, Jordan, Egypt.
(Source: World Bank, IMF) 37
Fig. 15 The first decades of industrialisation are low-wage decades—
per capita GDP in nominal $. (Source: IMF) 38
List of Figures xi
Electricity: Power to the People
Fig. 1 Per capita GDP, in 1960 and 2019—all in constant purchasing
power parity dollars (2017 prices). (Source: Penn tables,
Renaissance Capital) 45
Fig. 2 Electricity consumption is correlated with per capita
GDP. (Source: World Bank Enterprise surveys) 50
Fig. 3 OECD countries have an average electricity price of USc10 per
kWh for industry. (Source: OECD) 51
Fig. 4 MENA and South Asia electricity prices for households in
2014. Note: Egypt’s prices have since been raised significantly.
(Source: World Bank via the Arab Union of Electricity (2014)
for MENA countries, World Bank for South Asia but also
Bangladesh and Sri Lanka power company data) 52
Fig. 5 Electricity prices in Africa. Note: Egypt’s figure is from an
unreliable source. (Source: World Bank except for Egypt) 52
Fig. 6 Electricity is a bigger constraint on business than transport
infrastructure, except when there is plenty of electricity.
(Source: World Bank enterprise surveys, Renaissance Capital) 53
Fig. 7 We’ve come a long way baby—hours of light (equivalent to a
1994 light bulb) provided by 60 hours of labour (log scale).
(Source: Washington Post, Renaissance Capital (2018 estimate)) 55
Fig. 8 Number of annual cases (lhs) since 1960 when electricity is
consistent with manufacturing being 20% of GDP. (Source:
World Bank, EIA) 57
Fig. 9 Kenya needs to double electricity to industrialise, kWh per
capita. (Source: EIA, IEA, World Bank, Renaissance Capital) 67
Fig. 10 Zimbabwe is the only example of premature de-industrialisa-
tion in Africa, manufacturing as % of GDP (rhs), electricity
consumption kWh per capita (lhs). (Source: IEA, EIA, World
Bank, Renaissance Capital) 72
Fig. 11 Mauritius, kWh per capita and manufacturing—Ghana now
similar to Mauritius in the late 1980s. (Source: IEA, EIA,
World Bank) 74
Fig. 12 Tunisia could see manufacturing pick up again, on the back of
good literacy and electricity data, kWh per capita. (Source:
IEA, EIA, World Bank) 76