Powering Africa: “Off-grid” is not the answer

This is from the Economist:

Generating power at home may transform life in rural areas for the better, but factories, mines and mills need a reliable, large-scale power supply. If Africa is to industrialise, it needs power plants.

More here.

Also, a little known fact is that in the next five years nearly all of eastern Africa will have an energy surplus (everyone is increasing their installed capacity). But the power lines need to be upgraded, extended, and integrated (see here); and governments need to come up with policies (mostly related to financing) to get more people living under the grid (close to power lines) on the grid.

Does female empowerment promote economic development?

The conventional interpretation of the observed gender expenditure patterns re- lies on women and men having different preferences.4 And indeed, if all women highly valued children’s human capital whereas all men just wanted to consume, putting women in charge of allocating resources would probably be a good idea. However, we show that the facts can also be explained without assuming that women and men have different preferences. We develop a model in which women and men value private and public goods (such as children’s human capital) in the same way, but that nevertheless is consistent with the empirical observation that an increase in female resources leads to more spending on children.

Our theory does not lead to clear-cut implications for economic development. In particular, we find that empowering women is likely to accelerate growth in advanced economies that rely mostly on human capital, but may actually hurt growth in economies where physical capital accumulation is the main engine of growth.

…… Given that the human capital share tends to in- crease in the course of development, our results imply that mandated transfers to women may be beneficial in advanced, human capital-intensive countries, but are unlikely to promote growth in less developed economies.

That is Doepke and Tertilt in an NBER working paper (HT Marc F. B.)

This paper reminded me of of the BIG vs Small Development dichotomy, and why we should not take cash transfers (despite recent glowing reviews) to be a panacea to poverty and underdevelopment. Cash transfers (whether targeting poor men or women) should be seen as short-term relief whose development impact are, at the very best, highly contingent and long-term (especially if the transfers are used to increase the quality of human capital through schooling for kids). I could be totally wrong, but I think that the promise for real and lasting rapid development lies in creation of mass employment. And on this front the shoots are beginning to show on the Continent.

I wish more development economists were thinking of ways of growing African SMEs into mass employers, even if it meant flirting with the idea of Industrial Policy.