Africa’s four different kinds of economies

August 25, 2010

     By Duncan Green     

I’m a sucker for typologies. I guess they’re a wonk’s equivalent of those ‘what were the ten best punk/ska/heavy metal albums of all time?’ discussions in the pub. Here’s a nice one from ‘Lions on the Move’, a breathlessly upbeat new McKinsey report on Africa. It finds four clusters of African economies + a few outliers. Click on theĀ scatterplot for a clearer picture.

African typology

The clusters are
1. Undiversified oil exporters (Angola, Libya)

2. Diversified, successful exporters (South Africa, Tunisia)

3. Transition countries (Ghana, Kenya, Senegal) en route to joining group 2

4. What are somewhat euphemistically called ‘pre-transition’ countries like DRC and Ethiopia

McKinsey uses a measure of economic diversification and exports per capita as the two axes. The colour of the blobs shows GDP per capita, the size of the blob shows total GDP. As you go up the y axis to higher levels of exports per capita, GDP per cap also grows, but countries split into two groups – the oil exporters and the diversified economies.

It’s noticeable that the two classic ‘African success stories’, Botswana and Mauritius, don’t sit neatly in any of the clusters. Botswana has high exports per capita from diamonds, but has managed to diversify somewhat, while Mauritius is more diversified and a bigger exporter than even the ‘diversified countries’.

Of course, compared to yesterday’s post, this is all terribly static. Would be great to see how these clusters have evolved over time. Anyone want to have a go?

August 25, 2010
Duncan Green