Is Africa the future of New England?

The Asian miracle had an extraordinary impact on the U.S. West Coast. The African miracle, quietly underway now for a decade, could have a similarly profound effect on the U.S. East coast-especially for those states that anticipate and embrace it.

America failed to recognize the beginnings of the Asian miracle because in the 1960s, our mindset equated Asia with struggling, developing countries. We also held uncomplimentary preconceptions about Asians: we weren't convinced they were capable of economic leadership. Now history is repeating itself and, even though free-enterprise democracies have taken hold all across the African continent and despite the fact that many of them are achieving rapid annual growth rates reminiscent of the early years of Asia's emergence, our mindset stands in the way: a color-laden mindset, reinforced by our own tormented American racial preconceptions, of a "dark continent" and a "Black Africa" paralyzed by disease, drought and dictatorship.

Most Americans, including most New Englandersbe they bankers, investors or educators; secretaries, carpenters or construction workers-imagine Africa as a monolithic land of despair. They don't think about a continent of 53 countries, 48 of them the so-called subSaharan African nations, each with its own distinct culture, economic base and aspirations. We must change our mindset because the 700 million citizens of those African nations, joined by millions of highly educated, successful overseas Africans-and backed by the descendants of slaves throughout the African Diaspora (more than 1 billion people in all)are beginning to achieve an African miracle which over the next 30 years will rival the Asian miracle.

As this happens, simply because of our geographic proximity to the African continent-especially West Africa-the economy and the universities of New England stand to gain hugely and disproportionately just like the West Coast economy and universities did as the Asian miracle unfolded. Consider this:

Kwesi Botchwey, Ghana's former minister of finance and now director of Africa research and programs at Harvard's Center for International Development, recently told me: "If you look at the economic performance of the past three or four years, the numbers are encouraging. There are countries (Uganda, Botswana, Mauritius, Ghana, La Cote D'Ivoire, Mozambique for example) with a good policy environment, which are stable from a macroeconomic point of view and are also politically stable."

The chief economist of the International Finance Corp. observed in a speech last fall: "A dozen economies whose markets add up to $170 billion or 60 percent of Africa's total, are showing definite signs of progress. Their combined GDP has been growing at nearly 5 percent a year during the past five years [and] their exports have been expanding at 7 percent annually."

In March 1998, "to help the American people see the new Africa" President Clinton visited six countries: five economic high-flyers-Senegal, Ghana, Uganda, South Africa and Botswana-and Rwanda, where he apologized for American inaction during that country's dreadful ethnic cleansing. During that trip, the Boston Sunday Globe reported that "burgeoning stock markets ... a rise in exports and a 5 percent annual increase in the continent's gross domestic product for the past several years are shattering Africa's stereotype as a financial basket case." The New York Times said about President Clinton's visit to Uganda that he "will be entering a country that is a far cry from the dirtpoor and oppressed nation ruled by Milton Obote and Idi Amin in the 1970s and 1980s. Uganda has seen an average growth of 6.7 percent for the 12 years of President Yoweri K. Museveni's tenure."

The fastest growing world economy in the three decades leading up to 1997 was not in East Asia. It was Botswana, whose per-capita income grew at an average rate of 9 percent annually during that period, according to the World Bank.

Ghana's stock exchange is "one of the world's best performing stock markets," according to The Economist magazine. "Building, tourism, technology and financial services provide more than 46 percent of national income and are usually cited for the country's average annual growth of nearly 5 percent for more than 12 years."

South Africa is the Japan of Africa. The Harvard Business School Bulletin recently quoted Harvard Business School Professor Richard H.K. Vietor as saying, "The driving force behind the region's growth is South Africa. South Africa produces 20 percent of Africa's GNP." The Bulletin quotes his B-School colleague, Associate Professor Robert J. Robinson, as saying: "South Africa is a regional superpower. For those who can access it, the country has a First World infrastructure-financial institutions, health care and transportation, for instance-- and it is rich in natural resources."

The countries that America and New England should be watching carefully are: South Africa, Botswana, Namibia, Mauritius, Mozambique, Uganda, Lesotho, Mauritania, Ethiopia and, in West Africa-- closest to New England's shores Ghana, Senegal, La Cote D'Ivoire, Benin, The Gambia and Nigeria (with its brand new democratic government). But so far, America is not taking much notice and neither is New England.

When members and guests of the New England Economic Project gathered in May to hear Zurich Financial Group Chief Global Economist David Hale meticulously describe the state of world markets, they heard valuable inside information on Europe, Asia and South America, and they heard exactly what they expected to hear about Africa: nothing.

Among the 33 Yale seniors "pursuing research projects in far-flung corners of the globe" through Yale Summer Traveling Fellowships, only one is headed for Africa, based on an eyeballing of itineraries published recently in the Yale Bulletin and Calendar.

Hundreds of New Englanders (almost all of African descent) did gather at Boston's John E Kennedy Library in July 1999 for a regional conference organized by the Boston Pan-African Forum to explore issues around education, economic development, quality of life, democracy and peace on the African continent. The event was organized as the New England Regional Forum of the multiyear National Summit on Africa project, whose goal is to heighten the interest of Americans in a continent with which most have no personal or financial connection. That this event was even held in New England is a testament to the leadership and determination of MIT Professor Emeritus Willard Johnson. Notably, however, New England's African Summit was held on a Friday night and Saturday, probably because most participants couldn't justify attendance as part of their real jobs.

ASIAN PARALLEL

Asian matters weren't seen so differently through American eyes 30 years ago. Since then, the Asian miracle-led by postwar Japan and joined by Hong Kong, Taiwan, China and a handful of "Asian tigers" (Singapore, Thailand, Indonesia, South Korea, Malaysia)has transformed a continent. The formula was simple. These nations provided low-cost manufacturing to an increasingly global economy, fueling the creation of an indigenous middle class whose consumer demand opened huge new markets for a wide assortment of products: CDs, telephones, life insurance policies, roads, sewer systems, Stephen King novels, home loans and mutual funds, razor blades, computers and fast food restaurants.

As that happened, New England certainly benefited. In 1998, every single New England state featured at least five Asian nations on its top 20 list of export buyers. Maine had nine; Massachusetts and Connecticut, eight; Rhode Island and Vermont, six; and New Hampshire, five. But the real American beneficiaries of the Asian miracle were the West Coast states, in particular, California.

A geographically large, economically diverse state-not unlike New England's six states taken together-California has positioned itself carefully vis-a-vis Asia, invested heavily and benefited greatly from the Asian miracle.

How much did Asian growth over the past 40 years contribute to the growth of the U.S. West Coast states? Did this West Coast growth come perhaps at the expense of the Northeast's longstanding leadership in research and development, high technology and manufacturing?

In its December 1988 issue, The Economist gushed about Asia and its impact on California, blaring:

"America's shores are washed by the Pacific as well as by the Atlantic, and some people think that American interests lie more with the countries of East Asia than with those of Western Europe."

"The rise of Asia is one of the biggest stories of this half-century. ... In the quarter century that began in 1960 the East Asian economies grew at an average real rate of 6 percent a year.... East Asia's share of gross world product more than doubled during 1967-87, from 8 percent to 20 percent. Its share of manufactured exports went from 8 percent to 18 percent, of imports of all kinds from 12 percent to 17 percent."

"Californians of Asian descent already make a bigger splash in the state's university system. They account for 25 percent of this year's entering class at the University of California at Los Angeles. ... Asian money is contributing along with Asian people. Japan has, after Canada, the biggest single stake of foreign capital in California; its companies are, bar none, the biggest foreign source of employment in the state."

"Californians do know more about Asia and pay more attention to it than New Yorkers-as well they might, considering where so much of their money is coming from."

If California's head was already turning West in 1988, consider these more recent statistics from the California Trade and Commerce Agency.

In 1996, California was the national leader in foreign direct investment with 3,500 foreign affiliates (accounting for more than $100 billion in assets). Not one New England state ranked in the top 10 in terms of foreign direct investment. In 1996, 48 percent of California's foreign investment came from Asia versus 26 percent nationally.

In 1996, Asian and Pacific Rim countries accounted for a majority of all foreign-owned commercial property in California: $18 billion, of which Japan accounted for $14 billion.

Meanwhile, the Organization for International Investment reports that the 549,000 California workers employed by U.S. subsidiaries of foreign companies in 1995 constituted 5 percent of California's total workforce, up from 3.2 percent in 1987. And between 1980 and 1995, California employment at U.S. subsidiaries of foreign-owned companies increased more than four times faster than all jobs in California.

It isn't just California. The Tacoma News Tribune, under the headline "NUMBER OF WORKERS EMPLOYED BY NON-U.S. COMPANIES GREW NEARLY 300 PERCENT OVER 15 YEARS" reported as follows: "With Japanese and Taiwanese investment in Washington plants and factories booming ... the number of workers employed in Washington state by foreign companies and their subsidiaries grew from 21,100 to 81,500 during the 15-year period from 1980-1995." Oregon's foreign subsidiary employment was up by 365 percent between 1980-1995!

The Asian miracle seems also to have left its mark on higher education on the U.S. West Coast, particularly California.

In 1996, according to the U.S. Department of Education, Asian-- Americans and Pacific Islanders accounted for 328,000 of California's college and university students, or 17 percent of the state's higher education enrollment.

In the same year, all New England enrolled 36,114 Asian-Americans and Pacific Islanders, or just 5 percent of its higher education enrollment.

Even with these low numbers, four of six New England states enrolled more Asian-Americans and Pacific Islanders than they did African-American students in 1996.

NOW RUSSIA

I recently went to the Russian Far East on an assignment in support of five Russian small business associations. I traveled aboard Aeroflot #855/856, a twice-weekly flight connecting Seattle and Anchorage with the Russian Far East cities of Vladivostok, Khabarovsk (just north of Vladivostok) and Yuzhno Sakhalinsk (on the Island of Sakhalin, just North of Japan). Though huge, the Russian Far East is not well-known and its economy has been declining for years. Nevertheless, Alaska has a sister state relationship with Sakhalin Island. The president of the Anchorage Chamber of Commerce recently completed a business association technical assistance mission to the cities of Yuzhno Sakhalinsk and Khabarovsk. And an executive of the Greater Seattle Chamber of Commerce (40 percent of all U.S. trade to and from Russia enters the country through Seattle) did the same three months ago. Portland, Ore., has a sister city relationship with Khabarovsk. And the list of connections goes on.

There are two reasons for all this exchange activity. First, our fellow West Coast American citizens have learned how (and where) their bread is buttered. Second, a few years ago-with prodding from U.S. Sen. Ted Stevens (R-Alaska)-- Vice President Al Gore and the then Russian Prime Minister Victor Chernomyrdin signed a long-term agreement establishing a number of U.S. government programs to foster a new relationship between the U.S. West Coast and the emerging Russian Far East. This has made it possible for legislators, mayors, businesspeople, professors, venture capitalists and various Russian Far East project directors to travel back and forth and to implement an assortment of special initiatives. All this because U.S. policymakers take Russia and Asia seriously, and U.S. West Coast leaders have learned from the Asian miracle growth years how important it is to leverage their political clout in Washington into special programs to grow new global connections.

Enough of the parallels between Asia and Africa. So how will New England catch the African wave?

FIVE STEPS

First, we need to significantly raise our awareness of sub-Saharan Africa and understand more about the emerging African economies, what they need to continue their advance and how New England resources-especially the region's private sector and education resources-can best respond.

Second, we need to learn a lot more about the impact of the Asian miracle on the West Coast, particularly how states such as California leveraged the Asian miracle into opportunities for their states.

Third, we need to talk to our Congressional representatives, inform them of this strategic new New England global perspective and ask that they start paying attention to African issues and opportunities, learning new tricks from their West Coast colleagues and fighting for resources to support a New England (or U.S. East Coast) Africa initiative.

Fourth, we need to concern ourselves anew with preconceptions about race and geography, lest the Africans conclude they would rather do business with Southern states whose African heritage and more aggressive relationship-- building programs make them more attractive partners.

Fifth, the six New England states need to resolve not to go it alone on this one. Each New England state is too small, its resources too limited to make the necessary impact on those 15 or so emerging African economies that are leading the way. Connecticut is off to a great start with its "Demystifying Africa" initiative. But the region needs to open relationships together.

In the words of Kwesi Botchwey: "New England is a hub of liberal democratic thinking and practice, has a unique concentration of schools and universities, a long tradition of student connections [with Africa], a substantial group of African professionals, respected African studies programs and thriving African communities. New England can harness these resources, provide a political forum for debate and mobilize civil society. The seeds are here. They just need to be watered."

Where to focus?

Education. America's Western governors have joined forces to create a virtual university to respond to the lifelong learning needs of their widely dispersed populations. New England's distance education resources, though less developed, could be harnessed to meet the African continent's huge demand for education.

Investment The 1998 World Bank annual report states: "Long-term private capital flows to Africa have increased from $4 billion in 1996 to $8 billion in 1997 but remain a fraction of the $256 billion total flows to developing countries. Africa must attract more investment [and] not only from foreigners ... Some 37 percent of African assets are held abroad ... higher than for any other region." Equator Bank of Hartford, Conn., is focused entirely on subSaharan Africa. But it is virtually alone. Yet New England is the mutual fund capital of the world, a venture capital center and probably the repository for much of these African assets. Special investment packages-possibly with the support of the federal government-could be mobilized to underwrite infrastructure and private sector initiatives in the most rapidly emerging African nations.

Infrastructure. Roads, water, sewer systems, airports, electricity and telecommunications are the backbone of economic growth and development. Raytheon has longstanding relationships with African countries, building methanol plants, airports and radar systems. Prodigy operates an Africa Online Internet Service. Are other New England companies getting their fair share of infrastructure projects targeted to the most rapidly emerging African nations? And shouldn't at least one airline offer at least one scheduled flight from New England to at least one African destination?

AIDS. Despite all the good news coming out of Africa, AIDS is a tremendous problem and a serious challenge to development. New England is the health care capital of the United States and a major biotechnology center. Couldn't a New England-West Africa AIDS coalition be created as a partnership between that expertise and the region's philanthropic leaders?

Are we ready for it? Are we up to it? If so, Africa may indeed be the future of New England.

Nathaniel Bowditch is a senior fellow at the New England Board of Higher Education and author of "The Last Emerging Market. From Asian Tigers to African Lions? The Ghana File," from Praeger. Kate Pomper is an economics major at the University of Virginia.

Copyright New England Board of Higher Education Summer 1999
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