A Marshall Plan for Third-World Infrastructure?

At the G-20 meeting, an Ivorian journalist asked President Macron about the Marshall Plan and if Europe would do the same for Africa. Macron gave a long-winded response, including some deservedly-mocked zingers about Africa’s “civilizational” problems and how women have 7-8 children (see my own response here). But buried in that there was an interesting point I’d like to expound on, about the difference between the Marshall Plan and current aid:

I don’t believe in this reasoning, forgive me for my directness. We among the West have been discussing such Marshall plans for Africa for many years and have in fact given many such plans already. So if it was so simple it would be fixed already. The Marshall plan was a reconstruction plan, a material plan in a region that already had its equilibriums, its borders and its stability.

Jane Jacobs said something similar, in either The Economy of Cities or Cities and the Wealth of Nations, I forget which. Her argument was as follows: postwar Europe lay in ruin, but the business culture, social networks, and so on were still there, so rebuilding infrastructure could restore prewar prosperity and seed future growth. Even with the disruption caused by the mass carnage, there were enough skilled workers who knew the local business culture for the economy to recover. Thus, per Jacobs, and per Macron, Marshall Plan-type programs for developing countries, which are poor rather than in ruins, have no chance of succeeding.

And yet. There are some complexities in the above description. The first is that postwar reconstruction in South Korea, which had never been a developed or even middle-income country at that point, was useful. Literacy rates rose rapidly, after WW2 and again after the Korean War, going from 22% in 1945 to about 71% in 1960. The schools were often built not by the Korean government but by the US or by Christian missionaries (Korea was the cause celebre at the time, and the origin of the trend of Americans adopting children from poor countries).

The second complication is that in post-conflict situations, there is a role for reconstruction aid. Libya was never a developed country, but it was richer before the civil war than it is today, and could have used reconstruction before the war resumed in 2014. Niger and Mali (two of the few countries that are so poor Macron’s epithet about 7-8 children per woman might apply) in particular have had recent conflicts, dragging down growth, especially in Niger.

The third is the subject of this post: infrastructure. In theory, this is a one-time investment, which can be done with an outside infusion of cash plus some tech transfer. This means, first-world consultants helping design rail networks, water infrastructure, roads, subways, and power plants, and on the way training local workers in how to do maintenance and how to design and engineer future expansion. Europe and the US practically never do that anymore, but Japan still does and China has started doing so as well; Kenya is building intercity rail with Chinese money, buying Chinese equipment. In theory, this is worthwhile investment, since the recipient countries have very weak currencies and high expected growth rates, which depresses current-dollar construction costs while maintaining decent future current-dollar profits.

And yet. There’s a number of subway projects in developing countries built with foreign financing and technical expertise, chiefly Japanese. I singled out two for their high construction costs, in Dhaka and to a lesser extent Jakarta. Dhaka is setting world records for elevated construction costs – higher in absolute terms than in the US, and unimaginably higher relative to local incomes. Jakarta’s costs have risen further since I last wrote the post, and currently stand at $1.7 billion, or $5.4 billion after PPP adjustment, a total of $350 million per km for a line that’s only 60% underground.

There is a dearth of indigenous expertise in how to build rail infrastructure in developing countries. Unfortunately, the first world cannot supply this expertise, because the first world’s expertise is in how to build rail infrastructure in rich countries. As I noted a month ago, rapid transit construction in the third world needs to take into account the difference in relative costs of labor and capital between rich and poor countries; in comments, Ian Mitchell suggested resuscitating the methods of the 1910s, when American incomes were about the same as in the more functional third-world countries today, like India and Nigeria. There is no real expertise in how to do that, and it is unlikely that international consultants, who expect to do most of their work in rich countries, will bother to learn.

After the initial construction phase of the Delhi Metro, the system worked on indigenizing itself – that is, on using more local capital rather than relying on foreign consultants. The cost reduction, as far as I can tell from links that are now dead, was 15% – substantial, but not a game changer. India remains one of the highest-cost countries in the world. It’s possible that it learned all the wrong lessons – as it developed local expertise, it figured out how to build rapid transit using the construction methods of the first world.

This is unlikely to have been an accident. Poor countries, and even middle-income ones, are full of cultural cringe, in which acting like the rich world is a positive status marker; ex-colonies frequently act this way toward their former colonizers. The political system within the countries in question encourages elites to show that they can be just like the Europeans or Americans or high-income Asians. Those elites are fervently nationalistic, but this often means showing the world that India can have what Britain and the US have. Thus there is an internal political bias toward solutions that do not work. Ironically, first-world consultants are the best-placed people to recommend using different construction techniques, suitable for low labor costs, but they are unlikely to suggest them, again since their expertise is in high-labor cost environments.

So having a Marshall Plan-style program in which rich countries build infrastructure in poor countries is a recipe for high construction costs. Can it at least result in good projects? The answer is, again, mixed, for two reasons.

The first reason is that it isn’t easy to realize profits from infrastructure investment in foreign countries. The poorest ones have a high risk of relapse into civil war. The next tier of countries – the Kenyas, the Bangladeshes, the Vietnams – are more stable, and in theory offer a good investment, with reduced risk of economic collapse. The problem is that as they get richer, they will necessarily be more nationalistic and more capable of asserting themselves. The same xenophobia that leads people in expensive British, American, and Canadian cities to scapegoat foreign investors, often Chinese, for high housing costs, applies just as well to poor countries. A richer Kenya is a Kenya that is more likely to find it offensive that it depends on China for its railroad network. If there is significant profit extraction from Kenya to China, then it’s because Kenya’s economy has grown, allowing it to threaten to impose capital controls or nationalize the railroad. This means that a strategy of spending money in a poor country now to make profits later as it gets richer has too much political risk, regardless of how much the country signals commitment to letting foreigners make a profit in it today.

The second reason is that the projects themselves may not be optimal. This is the same problem as the construction cost problem. International consultants are used to principles that are true in the cases they have the most experience in, which are usually in rich countries and occasionally in middle-income ones. I’ve had trouble drawing good fantasy maps in Israel, a borderline rich country, purely because its ethnic divisions are so different from those of any other rich country: in comments here and at Sandy Johnston’s place, Shlomo reminds us that the ultra-Orthodox use transit profoundly differently from everyone else. With my knowledge of European mores, I can confidently say that even in European countries I don’t know well, like Spain, this is at most an edge case. Can I say this of Nigeria? Maybe not. Can I say this of Niger? Lol.

This lack of local knowledge is compounded by the fact that, as with the construction cost problem, local elites want the appearance of a Western- or high-income-Asian-looking system. This does not mean they want to build subways, rail networks, modern sewage systems, household electrification, etc. just for show. On the contrary, in the better-functioning third-world countries even very corrupt leaders genuinely want their respective countries to be more successful. The problem is that they are unlikely to be experts on what a good subway, sewage, etc. system should look like, and base their ideas of what works on what they have seen work in the first world. Third-world adaptations are often creatively different, for example an NGO is installing elevated water pipes in Kibera, to avoid expensive underground engineering required to eliminate seepage, and to deter metal and water theft (Kibera is notorious for both).

There is no way around painstakingly developing local expertise in infrastructure construction and operations. It’s something that engineers in poor countries can learn from rich countries, but they would need a good understanding of first principles in order to adapt to local situations. It’s not something that a consultancy could trivially do.

So, is there room for a Marshall Plan? The poor countries in question could certainly use the money. The problem is that the sum total of what they need to invest in – physical infrastructure, schools, public health, legal institutions – stretches not just their tax capacity but also the generosity (some would say guilt) of any first-world country. What I think Lagos needs to spend on building a metro system is on the order of $200 billion in PPP terms; in exchange rate terms that’s $60 billion, compared with $90 billion in annual aid given by EU members, in total. Lagos needs more investment than just the subway, Nigeria is more than just Lagos, and the total population of countries poorer than Nigeria is more than a billion. Even counting foreign investments that the donor country intends to recoup but probably will not, this is not nearly enough. So what we’re discussing is not really a Marshall Plan equivalent in which the donors help rebuild infrastructure in the recipient countries, but usual foreign aid politics, in which (from the perspective of the recipients) foreign aid is one additional revenue stream with its own strings attached.


  1. orulz

    What examples are there of poorer or middle-income countries doing it the right way: planning and constructing transport systems in a way that leverages local expertise to the greatest extent possible, and acutally makes sense given their economies? I’m sure there are plenty.

    Of the top of my head, Mexico City comes to mind. Their Metro system is immense and has built some recent expansions with reasonable costs. It also looks and interacts with its environment somewhat differently from any first-world metro system I’m aware of. Perhaps some sort of consortium that used American (or European?) capital and Mexican construction methods or expertise could help.

    • Alon Levy

      South Korea did it well in the 1980s and 90s. Mexico City is also very good about it. Curitiba and Bogota’s use of BRT also counts – they came up with a transportation system that didn’t exist in the first world and worked for their specific use case. But China is also pretty good, modulo problems like “the construction costs are rising fast” and “there is no express rail or commuter rail to speak of.” Iran seems to be doing well now – its construction costs seem low. Russia has pretty good subway planning, and in particular Moscow manages very high frequency without advanced signaling.

      The problem is that none of these countries is poor. Depending on what your favorite dataset is, Mexico is between 3 and 4 times richer than Nigeria and between 4 and 6 times richer than Tanzania. On the usual metrics that even the higher-functioning low-income countries (India, Nigeria, etc.) use to distinguish themselves from the rich world – literacy, access to running water and electricity, life expectancy – Mexico is basically a developed country and so are China, Russia, Brazil, and Iran. Mexico was a lot poorer when it started building the Metro, and might be able to give some advice based on that experience, but how many of the people who designed the system in the 1960s are even alive?

      China, which was poor and building subways 15 years ago, might be more useful. So far I haven’t seen Chinese-designed subways in poor countries. But I’m skeptical that such subways would be cheaper than the current ones.

    • Eric

      Mexico City has built just one metro line since 2000, despite the pressing need. That line had to be closed for 18 months after opening once structural deficiencies were discovered. So I can’t see it as a model any more.

      ” It also looks and interacts with its environment somewhat differently from any first-world metro system I’m aware of.” – what do you mean by this?

      • orulz

        From what I have seen and read about the system, outside of the core of the city, there is a proliferation of ground-level, median-running transit in freeways, or elevated lines over very large arterials, which doesn’t seem to suppress ridership as much as it might in a first-world country. This may be partly due to the fact that the system integrates pretty well with the ubiquitous microbus, to the point that, at many stations, the semi-formal microbuses seem to be the main way that people get to and from many of the stations.

    • Diego Beghin

      The one middle-income city I’m familiar with, Rio de Janeiro, is doing its transportation investments quite badly. People do understand the importance of having functional rapid transit, politicians like to bring up all the metro stations and BRT lines they built, but their approach to transit is flawed in a lot of ways :

      1) They insist on building BRT in high-traffic, radial, corridors. Unsurprisingly, buses can’t handle the passenger volumes, and overcrowding is a major issue. None, or very few, of the advantages of BRT apply to Rio : construction isn’t cheap (the busways are mostly grade-separated and poured with concrete and the stations are high-platform, laying rails can’t be that much more expensive), the BRT buses have to be custom-designed because of the high platforms, and labor isn’t that cheap.

      2) The rail transit isn’t seen as a network. First the “metro” and “suburban rail” systems are pointlessly separated : there’s no fare integration and it’s hard to even find a map where both appear. Second, the metro is facing severe overcrowding in the city center where there is only a single two-track tunnel, but instead of addressing it politicians keep expanding the network outwards, which only makes the capacity crunch worse. Most of the problem could be addressed by building a 3 km tunnel from Estácio to Carioca (the CBD’s core), which would allow the two metro lines to be disentangled.

      3) A pointless downtown circulator streetcar was build. With no overhead wires of course, the streetcar needs to be flashy and modern.

      4) Last but not least, the city hates pedestrians. Half-meter sidewalks next to high-speed arterials are common. Pedestrian crossings are just not done where it would inconvenience cars. Amazingly enough, lots of people walk anyway, but I can’t help but think that this extremely pedestrian-hostile environment is making Rio more car-dependent than it should be.

      • Eric

        My pet plan for Rio is to extend the suburban rail through an under-bay tunnel to Niteroi, then to branch into the suburbs from there. Thoughts?

        • Diego Beghin

          I don’t think there’s any reason to build a tunnel when a bridge will do. But even a bridge would be very expensive, since it needs to be 10+ km long to cross the bay. There are lower hanging fruits in dense neighborhoods closer to the core. All the Avenida Brasil neighborhoods which are maybe getting BRT in the next few years? They need rail.

          But sure, Niteroi should eventually get a rail connection. But the alignment might be tricky. You want to go to the CBD otherwise the line is pointless, but you can’t get the bridge too close to the Santos Dumont airport or to the Navy areas… I’d need to think about it.

          • Michael James

            Is the Rio-Niterói bridge sufficiently sturdy to allow a second deck to carry two rail tracks? (I assume this has already been considered and rejected years ago.)
            Otherwise one might have thought that since Guanabara Bay is shallow, an immersed-tube tunnel would be the way to go. At ≈13km it is long but only about half the Seikan tunnel laid on the floor of the Tsugaru Strait. Though if going this method I suppose you’d choose a narrower crossing?

          • Diego Beghin

            I just looked at the map again, and I take back my opposition to a tunnel.

            Here’s my reasoning. You can’t make a new bridge south of the existing car bridge, because it would be too close to the airport. So the only way for trains to cross the bay through a bridge would be to make another line which dead-ends at Central do Brasil, through-running would be out of the question. You’d need to add platforms to Central do Brasil, but that’s certainly doable if you take some of all that enormous open space in front of the Presidente Vargas avenue (seriously, that avenue is horrible and it only gets worse and worse the more you go west).

            But if you allow yourself to build a tunnel, you can prolong the current mainline from Central do Brasil to Carioca (the CBD’s core) and then under the airport, under the bay and on to Niterói! And you can actually cross the bay in just 2.5-3 km there.

            The bridge option might still be cheaper since you can build everything above ground, but it would be a lot less useful.

            Final caveat : through-running would be problematic since there a lot more people living on Rio’s side of the bay than on Niterói’s side. You can’t possibly make all trains coming the north and the west go east. Most trains would still terminate at Central, which would be a shame.

          • Eric

            “You can’t possibly make all trains coming the north and the west go east.”

            Not an issue – Paris has RER trains that run in tunnels through the city center, but it also has suburban trains that terminate at city-edge stations. Because so much ridership is on the RER trains, the stations can be a lot smaller than they would otherwise need to be. Same here.

          • Alon Levy

            The traditional Parisian stations are huge, though. And even though Saint-Lazare is in the CBD and Gare de Lyon is in a secondary CBD, there’s no plan to shrink the stations’ footprint.

          • Eric

            Well, land is a lot less valuable when you can only build up to 7 floors on it, as opposed to most other CBDs where you can build 50 floors should you choose.

          • Alon Levy

            There are higher-rise buildings near Gare de Lyon (though not 50 floors). The area around Saint-Lazare is mid-rise, but it’s so wealthy that it has the highest commercial rents in the city.

  2. electricangel

    It was Cities and the Wealth of Nations;. Jacobs pointed out that regions of Italy that were poor before the war were poor afterward, and that the economically thriving areas like the Ruhr and Southern Germany just rebounded as expected. In some sense, Germany was made better off by losing the non-import-replacing cities and hinterland of the East, including territories lost to the USSR and Poland. Berlin, from what I can tell, had a thriving city economy not just dependent on being the capital, but that was killed by the iron curtain.

    • Alon Levy

      That’s not really true of Germany, though. Saxony was a thriving industrial region until the war – the first railroad in Germany connected Leipzig and Dresden, and Saxony had higher population growth than any non-Hanseatic German state until the war, even more than Prussia, which controlled the Ruhr. Southern Germany was less industrial – Bavaria was quite rural outside Munich, and wasn’t anything like the economic powerhouse it is today. Even Munich was a much smaller city then than it is today.

      • electricangel

        Of course, I ignored the Leipzig Messe, too, as a great international export-earning aspect of Leipzig. Perhaps too much post hoc, ergo propter hoc in my thinking. I’ve not been to the former East Prussia, but it strikes me as a largely agricultural region. Silesia was industrialized, especially near Katowice, but these were not locally-generated industries. Breslau was the only major city and it might have been self-generated growth.

        I recall a display at the German Railroad museum claiming the first railroad between Nürnberg and Fürth; a check of Wikipedia shows Dresden-Leipzig as the first all-steam railroad, since N-F used some literal horsepower.

    • Diego Beghin

      Well, in Belgium what used to be, in the 19th century, the industrial and economically thriving region (Wallonia) is now post-industrial and poor (GDP per capita is around 80% of the EU-28 average) while what used to be the backwaters region (Flanders) is now rich.

      But maybe there’s a larger story here, where Flanders used to be rich since the Middle Ages and only temporarily fell behind when the Industrial Revolution came around? They do have inherent advantages like being closer to the sea and having a higher population density, while Wallonia only had the temporary advantage of sitting on top of obscenely large amounts of coal. Also, the political domination of Francophones in the 19th century probably hindered Flanders’ development.

      • Alon Levy

        I think the main problem in Wallonia is that it doesn’t have any post-industrial growth industries, because the cultural and economic center of Francophone Belgium is Brussels. So instead of a situation in which there’s one thriving center that people move to from the poorer provinces, the thriving center isn’t even in the region. In contrast, the Rhine-Ruhr region contains both the post-industrial poverty (the Ruhr) and more successful new economy cities (Cologne) in the same state.

        • Diego Beghin

          My only quibble is that Brussels is not an economic center just for Francophones. The city proper is majority French-speaking, but the suburbs are majority Dutch-speaking. My guess is that about 1/4 to 1/3 of the people working in Brussels are Flemish (I know that half of the jobs are taken by commuters from outside the city, and the proportion of Flemish commuters is definitely in the 1/2-2/3 range).

          But yes, this doesn’t change the fact that Brussels is the economic and cultural heart of Francophone Belgium. Walloon cities are kind of depressing to be honest.

      • electricangel

        Jane Jacobs’ theories, especially highlighted in the new Book Vital Little Plans, are attempts to explain continual city growth. Bruges was a great trading city until war and silt kept it from continuing to develop a city economy. Contrast Amsterdam, which continually built on an economic base of herring to turn out new industry and new work, from shipbuilding to inventing the stock market to running the first multinational.

        I don’t know how Wallonia became wealthy in industry, but I wonder if the capital wasn’t supplied by outsiders, rather than being internally generated? My guess would be French or Dutch capitalists coming in from outside. If you have a source, I’d love to read it.

        • BDawe

          Joel Molkyr’s The Lever of Riches notes that Flanders was an area that specialized in linen production (as did parts of Ireland) Linen production was among the last major textiles to be mechanized due to technical difficulties, and thus the industry was hit badly when cotton and wool became much cheaper relatively than they had been previously

        • Diego Beghin

          Most of what I know about 19th century Belgium comes from this book (I found it lying around my parents’ home one day).

          First things first, 19th century Belgium was very different from what it is today. All the rich people were native French speakers*, that includes the Flemish bourgeoisie that lived in Ghent, Antwerp, etc. So Flemish investors in Wallonia weren’t really seen as “outsiders”.

          Second, Belgium (really, Wallonia) was the second country to industrialize**, after the UK. There was already an old native expertise in coal extraction, and when coal became super important in the industrial revolution, it was Wallonia’s time to shine. Early investors came from the UK, but soon the Walloons and the Francophone Flemish bourgeoisie picked up the slack. Wallonia wasn’t really a late adopter dependent on foreign investments, it was a first mover.

          * Of course, later on, at the beginning of the 20th century, the Flemish upper classes started to identify themselves more and more as Flemish rather than Francophones. But still, one of my grandfathers, born in the 1930s, came from a well-off French-speaking doctor family from Ghent. He didn’t speak Dutch very well.

          ** Wikipedia has a few short paragraphs on that.

          • electricangel

            Ah, an interesting perspective. Im afraid between French and Flemish I’ll have to go with the French edition of Reynebeau’s book; better yet to get it in French and run it through Google translate.

            Where did the Walloons have the wealth to invest in industrial production? Flemish weavers are famous in European economic history, and the Van Eycks did some nice work there in Gand. But I really know little of Walloon culture, except Marguerite Yourcenar.

  3. Ben Kurtz

    You forebodingly note that “the total population of countries poorer than Nigeria is more than a billion,” yet on Twitter you tut-tut and mock Macron at length when he raises the issue if sky-high African fertility rates. Lol. Try to keep your story straight!

    • Alon Levy

      Yes, because countries that are poorer than Nigeria include Bangladesh (whose TFR is barely above replacement), Pakistan (well above replacement but nowhere near 7), all of East Africa (Uganda approaches 6 but the rest are way lower), Ghana, and Ivory Coast. It’s not all Niger and Mali. Even Ethiopia, which is extremely poor, is posting good growth numbers, has rapidly falling TFRs, and managed to build rapid transit at non-terrible cost (about comparable to light rail in Europe, but the system is mainly at-grade so light rail is the right comparison).

      • Ben Kurtz

        A misleading response at best…

        Bangladesh and Pakistan each had TFRs of 6+ for many years running, well into the 1980s/1990s, which is why they went from post-WWII populations of ~40m each, to current populations of 170m (Bangladesh) and 195m (Pakistan). For that matter, the Ivory Coast had a 6+ TFR until the 1990s as well, and the latest estimate of 4.65 is hardly low-growth.

        Macron said that in “some countries today seven or eight children [are] born to each woman.” It is, quite frankly, asinine to respond to that by saying “Gotcha! You’re wrong! Hah hah! Racist! Technically, the TFRs in most of these poor countries was closer to 6, not 7, plus some of those countries got fertility under control in the past generation.” First, a TFR of 5 or 6 is still monumentally high. Second, if a country’s TFR was in the 5-7 range for a long time, and only recently fell to more developed-country levels, it will coast along on demographic momentum for quite some time with a still-increasing total population. Third, there are still plenty of countries with persistently very high TFRs, and those tend to be in Africa! Read an introductory text on demographics when you have a spare moment; the math is actually quite simple, but the insights can be profound.

        No; sky-high TFRs in poor countries — historically and sometimes presently — are at the heart of the matter. In some non-African countries (and a few African ones), the societies have (somewhat belatedly) got their demographics under control, and then it makes perfect sense to move on to more mundane topics, like what mix of heavy machinery vs. unskilled labor should be used in road projects. But in a large number of countries — mainly in Africa — the demographic question is still the key one, and you don’t come across as very coherent when you jump on the shame-Macron bandwagon through the splitting of irrelevant hairs. Based on recent trends, Africa is projected to go from 1 billion population today to 4 billion population in 2100, while every other continent is expected to level off or decline slightly. If you can’t see the significance of that — and thereby understand Macron’s fundamental point — I can’t imagine what sort of facts or logic would get through.

        • Alon Levy

          I’m notably not saying “ha ha, Macron is racist.” I don’t think Macron’s response was especially racist, and even before I saw the full transcript I was suspicious because a) the video was obviously cut and b) people were attacking Macron for blaming African women for having many children whereas he clearly did no such thing. What I am saying is that Macron seems to judge Africa by the problems of a handful of least developed countries, which happen to be the ones that matter the most to French geopolitics.

          You’re of course right that all of the countries in question had very high TFRs recently. But, well, they’ve managed to get their TFRs down, and now have other problems. Most of Africa is in stage 3 of the demographic transition and not in stage 2. Heading into the future, those countries all expect high population growth, but this is demographic momentum and not just high present-day TFRs. This is why the comment that Africa’s problems are deep grates so much: it misses the recent changes in social outcomes, and in some countries also recent economic growth. Bangladesh has had especially steep drop in TFR, and this is related to the work that NGOs have done; it’s relevant to the “can foreign aid help?” question, since Macron was arguing about continued underdevelopment as an argument that foreign aid doesn’t work.

          • Ben Kurtz

            Yes, I grant you that in those certain countries that have got their TFRs down we can move on to next-order questions, like how they should build up their infrastructure given their present level of development.

            But the UN, as of this year’s population update, still has Africa — on a continent wide basis — growing from 1.256bn to 4.468bn people between now and 2100 (a gain of 3.212bn, or a 3.5-fold increase), based on their mid-case scenario. Every other world region, by contrast, grows or shrinks by less than 0.2bn in the same period. https://esa.un.org/unpd/wpp/Publications/Files/WPP2017_KeyFindings.pdf

            This is more than just the demographic momentum you see on the back end of a demographic transition. This is evidence that on the whole, on average, Africa does not have its TFRs under control and has not convinced the UN that it will happen any time soon.

            So while there is still plenty of room to ask and answer the questions you pose on this blog (heck, there’s a reason I read it regularly, and comment from time to time), I’m still with Macron when someone asks about Africa on a continent-wide overall basis: The first order issue is still the social / civilizational one of very high fertility in an impoverished environment, which isn’t going to be solved by a Marshall Plan for infrastructure.

          • Alon Levy

            Demographic momentum is more powerful than you give it credit for. Tellingly, the UN projections have every country going to roughly replacement level by the end of the 21st century. Niger is down to a TFR of 2.5, Mali to 2.07, below replacement unless its child mortality shrinks to present-day first-world levels. We see this with other countries that are at or barely above replacement – Brazil (with a TFR of 1.7) and Iran (1.6) still have population growth today, and their population levels are large multiples of what they were two generations ago. Thailand, with a TFR of about 1.5, is projected to have flat population through 2030.

            Population growth is not bad. Population growth isn’t even bad in Nigeria, which for all of its problems is not like Saudi Arabia, where GDP is fixed by oil production and GDP per capita is literally a fixed GDP divided by population. There’s a real problem with high child dependency ratios, but current demographic projections suggest that in the coming decades most of sub-Saharan Africa will enjoy a stage-3 demographic dividend, with low combined child and old-age dependency ratios.

    • Michael James

      Yes, oil wealth is just another version of the Miner’s Curse. It creates high inequality and a loose attitude to money because it is unearned.

      Alon, you are being too harsh on Macron. And at least France doesn’t condition its aid on feudal contraception and anti-abortion doctrine like the US does (and is about to get worse with Trump). I admit that I too tend to turn off the endless misery stories out of Africa. Most aid seems to just entrench the old problems. Most of the worst troubles are caused by population competition for land and water (that’s what the Rwanda massacres were all about, and it’s what the current Sudan trouble is all about, made worse by drought). I can’t imagine how Nigeria will cope with what its demography predicts especially if/when the oil wealth starts declining. (I know it is agriculturally rich but ….population the size of the US by 2050; of course it may never make it but the reasons why won’t be good … for a TFR of 5+ there has to be plenty of women having 7-8 births).
      As to birth rates, Timor Leste has average 6 births per woman, with up to 12 not uncommon. It is one of the poorest countries in the world. (For Americans: it is half an island in the Indonesian archipelago. OK, many Australian would have trouble picking it on a map even though they fly over it on their way to Bali.) Perhaps like those African countries cursed by a Catholic colonial power, it is due to their Portuguese colonial status for 4 centuries. (Portugal does have a particularly poor track record; even with itself, it was the poorest European country, with shockingly low literacy, until the EU picked it up out of the gutter.) It also has oil wealth though nothing much seems to be changing in the country–we keep hearing that it is being used to build hospitals and schools yet none of the stories I see regularly on our public broadcaster show it (though literacy has gone up from 37% to 58% in a decade so maybe).
      I don’t think we have anything to be proud of. Australia was the lead nation in the UN mandate there, at the same time as exploiting their weakness by negotiating unfair contracts in the “shared” oil fields in the Timor Sea between the two countries. To our utter shame this dispute is in The Hague court after Australia had been caught in dirty tricks over the oil contracts. Huge oil wealth corrupts everyone. Guess who is helping them in healthcare and in training doctors? Cuba. (Which is good and better than the pharma-dependent shit we’d try to force on them …). Incidentally during the UN mandate, while stability was achieved after the Indonesian withdrawal, the billions of dollars spent seem to have mostly gone to the 8000 UN staff (a majority being Australians and Australian Armed Forces) keeping them in the comfort to which they are accustomed, including local domestics and nannies/amahs. When the UN left this created an economic depression because it had become a significant income for Timorese families! When they left most roads were still unpaved, few schools and even fewer hospitals. I’m not one to habitually criticize the UN (for getting lumbered with problems no one else has been able to solve or wants to even try) but this was not their finest moment, nor Australia’s who could have better helped our neighbour.

      • Alon Levy

        Yeah, I talked a lot about Africa, but as Paul Collier noted years ago, the poorest countries in the world that are not in Africa (Cambodia, Afghanistan, Yemen, East Timor, Haiti) aren’t collectively different from the poorest countries that are in Africa. The few least developed states, like the Sahelian colonies, are all African, though. I don’t bring up East Timor and such because I don’t really understand the infrastructure situation there. In Cambodia I know some (but it really shouldn’t be thinking about transportation infrastructure at this point), but in the rest, I don’t. Yemen might be big enough to warrant looking into infrastructure… but it’s in civil war.

        At least as far as TFRs go, the worst are mainly in former French colonies. Hard to say exactly since Angola is weird (it has oil), and Mozambique seems pretty middle-of-the-pack for where it is. But judging by how different Rwanda and Burundi are, it can’t be just an artifact of colonialism.

        • Michael James

          But judging by how different Rwanda and Burundi are, it can’t be just an artifact of colonialism.

          Well, might be French-speaking Catholicism: the Belgian Congo surely rates as one of history’s worst examples?
          The weaker colonial powers only got the parts of Africa that the Brits didn’t want! Incidentally, remember when–in the early 2000s IIRC–Nigeria was being blacklisted by the Commonwealth and its leader declared that henceforth French, not English, would be the official language. Lasted about one year.

          In fact the Magreb is not so totally awful with Morocco, Algeria and Tunisia having opportunity to escape being basket-cases. Libya was Italian; say no more …

          I may have mentioned this before: for an excoriating look at the French, search for Mort Rosenblum’s Mission to Civilize (1986). He was editor of Int Herald Tribune and lived on a peniche on the Seine for many years. When I think of doing the same–ie. the peniche, not being editor which of course you were thinking–I remember his words: the best day of your life is when you take possession of that boat; the second-best day is when you sell it. That was probably in his “The Secret Life of the Seine”.

          • Alon Levy

            The whole point is that despite having identical colonial history (Germany -> Belgium, complete with an artificial Hutu/Tutsi distinction), Rwanda and Burundi have very different recent trajectories. The DRC went from genocide in the Congo Free State to reasonable management as a regular Belgian colony (its GDP per capita in today’s money was $2,000 in the 1960s) to absolute disaster after the CIA helped install Mobutu.

          • Alon Levy

            They’re not perfect, but they’re close enough for government work. Nowadays there are reliable income statistics in a lot of them, and that’s harder than demographics.

  4. Eric

    “the total population of countries poorer than Nigeria is more than a billion.”

    Nigeria has oil revenue which, like oil revenue in most places, does not contribute much to improving the functioning of society. Because of this, I think its GDP numbers are inflated relative to the actual level of development, and the total population of countries less developed than Nigeria is much smaller…

  5. Ian Mitchell

    I’ll agree that there’s not a living base for expertise in building high-labor low-cash capital transit projects.

    There’s a situation, fairly prolific in Africa, of road (including street) construction. The IMF/World bank grants a loan (or a foreign power gives aid) to a country to pave its streets (almost always in the capital, because generally every other population center is left to languish). The country then ends up sending most of that money right back out of the country by either hiring foreign contractors or leasing foreign equipment. Labor-saving equipment designed around first-world construction union wages, absolutely inappropriate to countries with double-digit unemployment and monthly pay lower than first-world daily rates.

    Dakar did something different.

    Could the same kind of highly-disruptive, labor-intensive, value-engineered practices as built the New York City subway be practiced? I like to think so. I think it would be better for their present and future if they were.

    I also absolutely agree with you that international consultants are unlikely to be able to lend any useful expertise toward such a solution.

    • Michael James

      I’ll agree that there’s not a living base for expertise in building high-labor low-cash capital transit projects. There’s a situation, fairly prolific in Africa, of road (including street) construction.

      I’ve thought exactly the same thing with East Timor where the large majority of the population is rural and dirt poor (living by subsistence farming) and almost every road remains dirt to this day–and thus I presume becomes a quagmire in the wet season, and damaging vehicles all-year round. The country needs large-scale job creation and it needs a basic sealed road system (to support farm-to-market, basic services and its developing tourist industry) so a low-tech road building scheme seems tailor-made. Doubtless all the UN, IMF, World Bank and usual consultancies recommend the exact opposite: give a giant contract to Halliburton or AECOM that will very efficiently drain those billions overseas (and probably load them up with debt too, SOP). It could probably do the same for a rail system.

  6. johndmuller

    Worrying about quality transportation is a first world problem. In the third world, people will do whatever it takes to get to work; having a job or not is the issue for them. Building a subway or whatever first world artifact is the local elite showing off to fellow local elites somewhere else or else just trying to produce any apparent progress in an otherwise gloomy state of affairs.

    It is really difficult to make satisfactory improvements in a poor country no matter how much good faith and money one applies. There are just so many ways for things to go wrong; I don’t need to list them for you, do I? It makes me wonder if it would not be more effective to just fly over Dakka, or Port-au-Prince or wherever and airdrop a billion $1 bills – at least to try it out to see if there might be some positive result.

    As to utilizing whatever local comparative advantages there might be (i.e. homegrown labor), I’m all for that – assuming there is someone who knows what to tell them to do. As some of you might have noticed, I sometimes recommend using shovels and wheelbarrows in the first world too, as in places where globalization has disinvested in the local factory and gone overseas to manufacture. The question is whether anyone has the patience to do things this way.

    The Marshall plan came with strings, like buying American and paying back the money, so it was hardly a selflessly Saintly gesture, much like Chinese RR construction in other countries is largely about creating a supply system for moving natural resources to Chinese factories (and while we’re at it, perhaps we’ll lock you into using Chinese rolling stock, etc.).

    Maybe what some of these countries need is something like this:
    — a few thousand shovels and wheelbarrows;
    — a continuous supply of food for a few thousand workers (this would be ongooing foreign aid);
    — a few civil engineers
    and what you get is a reservoir of two and some aqueducts to deliver the fresh water.

    • Alon Levy

      What you’re saying about jobs isn’t really true of the bulk of the third world (i.e. not Port-au-Prince). On the contrary. India’s unemployment rate is ~3%. A less skilled population should have lower natural unemployment rate rather than a higher one, because there is less likely to be a skills mismatch. As a sanity check, the first world and China both started building subways when their GDPs per capita were within the functional third world range today (Kenya and Tanzania at the bottom, India at the top).

      Aqueducts for fresh water aren’t always the biggest concern. In Kibera, getting water from the neighborhood to homes is a bigger problem than getting it from the rest of the country to the neighborhood.

      • adirondacker12800

        A water system is useless unless it can be filled.
        It’s a really bad idea to build a water system without sewers to carry away the extraordinary amounts of water people will start to use.

      • johndmuller

        The situations are different from country to country; what is similar in the third world is that they have -very little- and they need -a great deal-. Only so much can be done at once, so it is difficult to make upgrades in any kind of balanced fashion; various distortions such as good water supply but bad sewage, new roads, but no cars (or vice versa) are bound to occur.

        Aid projects as often as not create problems at the same time as they are trying to alleviate others. As many projects focus on already developed areas, such as the capital cities, a common side effect is a rapid upsurge in domestic migration to those areas exposing a lack of housing, etc. Even with the best of intentions, this kind of thing is hard to avoid.

        It might be interesting to attempt improvements in a ‘bottom-up’ direction, focusing on rural improvements such as agriculture, water and sanitation, education; it might be possible to mitigate some of the mass migrations

  7. Kasper Jensen

    Paying for infrastructure in poorer countries is one of the things the EU has some experience in. There’s been plenty of highways, railroads and metro systems built in the new Central and Eastern European member states, and historically in Spain and Ireland and so on too.

    I don’t know every detail of how the EU bureaucracy works, but some of the principles are cost sharing (the EU only contributes up to 85%), local project management with Brussels oversight, and no money upfront so expenses are only covered after they’ve been documented. There’s also a fairly rigorous application process.

    It’s not been without struggles, and it requires a level governance quality that doesn’t exist everywhere, but it seems to work fairly well and support some good and reasonably cheap (cheaper than in the West) projects.

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