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Africa

How Africa can prosper by following Deng’s economic model

Teodoro Poulson says the continent has the resources and the young population needed to thrive, and China’s model of direct state investment in technology and entrepreneurship offers a way forward

PUBLISHED : Thursday, 16 November, 2017, 11:02am
UPDATED : Thursday, 16 November, 2017, 7:18pm

Perhaps no one in the 20th century had a greater impact than Deng Xiaoping, who reformed China’s economy. Deng’s approach included four “modernisations”: agriculture, industry, national defence, and science and technology.

These are key growth industries that account for most jobs in Africa. The sectors must flourish for Africa to create jobs for its booming youth population. Science, technology and innovation are especially important. Deng’s belief in state investment in technology had a dramatic long-term impact. Today, China accounts for 20 per cent of global research and development expenditure. The world’s third-, fourth- and fifth-largest smartphone manufacturers are Chinese.

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China prioritises development of talent to drive growth in science and technology via government-sponsored schemes. Many old, traditional cities have become modern centres of technology R&D. The old industrial city Wuxi now welcomes foreign technology entrepreneurs and skilled foreigners to set up enterprises.

African entrepreneurs need state support to accelerate, and the pursuit of capitalism in the developing world should be measured. They should know the importance of innovation-led job creation, localised manufacturing and a strong export economy.

Deng legitimised the pursuit of wealth and material happiness, and his reforms let farmers profit.

Africa’s largest employer is agriculture. In China, agriculture was modernised by granting more autonomy to farmers, alongside state investment in food-processing facilities. These helped farmers experiment with crops, improve output and process their own produce for local markets. Deng allowed farmers to rent state-owned plots, while land could be contracted for decades, meaning farmers could invest for a sustainable future.

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African policymakers can learn from mistakes and successes. Deng helped create special economic zones to encourage foreign investment and helped facilitate transfer of technology, skills and knowledge from developed economies. Special economic zones are increasingly widespread in Africa. So are initiatives for entrepreneurs, including direct financial support.

State investment in private enterprises may go against free-market thinking in established economies. However, Deng was more interested in outcomes than ideology. African governments seeking sustainable, diverse economic growth should adopt a similar attitude.

Teodoro de Jesus Xavier Poulson is an economist and board member of the Investment Committee of the Fundo Activo de Capital de Risco Angolano (Facra), an Angolan venture capital fund that fosters the development of SMEs