Madagascar: World's Worst Economy?

Good news / Bad news time:
Good News: An article making the internet rounds today is about Madagascar!
Bad News: The article is from Forbes and ranks the ten worst economies, with Madagascar ranked as the worst.  Here's a link to the article: Madagascar World's Worst Economy

First, I should point out that the author admits that there are far worse countries, such as Somalia, but these countries are not included in the ranking because the IMF does not have complete economic data for them. So Madagascar is the worst out of 177 economies.(As a comparison, last year Forbes had ranked Madagascar number 10 on this list). While this ranking may be welcome news to the critics of self-declared Malagasy President Andry Rajoelina (and I am, at times, a critic myself), I find it hard to support this ranking with my experiences in Madagascar. Despite all of the dire warning of the international community that Madagascar was headed for economic disaster in 2009-2010, it somehow survived. Those doom-and-gloom predictions continue today, as most observers think the economy should have collapsed by now. I am sure that these predictions, and the Forbes article, are strongly supported by economic data and other quantitative indicators. Yet the reality in Madagascar is far from dire, as my anecdotal experiences from 2008-2011 taught me. Here are a few of the non-qualitative economic indicators I noticed:

-Many people expected the 2009 coup d'etat to scare off foreign investors in Madagascar. But I noticed a drastic increase in foreign businessmen, projects and investments. This should not be surprising to anyone, as businesses rarely care about the human rights issues or political legitimacy associated with a particular government.
-I saw major road improvements throughout the country. The central government spent some money in this area (as part of their populist appeals), but because their coffers were nearly empty and foreign aid limited, I expect most of this construction was financed by foreign companies.
-There are many major construction projects that began in the past two years. This is especially true in the capital of Antananarivo where office buildings and hotels have shot up in very little time.
-In my region of Alaotra Mangoro, I saw far more French workers in Ambatondrazaka in 2010 than I had in 2008. Meanwhile the city of Moramanga had expanded drastically to accommodate the mining interests in the area, and foreign workers from South Africa, India and China were everywhere.
-A huge influx of Chinese business interests. Chinese traders were rare in remote regions of Madagascar until a few years ago. By 2011, my villages had seen many traders come through searching for minerals and other natural resources.
-Investments in tourism, mining operations, and business creation. These investments from foreigners come despite the continuing international isolation of the current Madagascar government.

The final "indicator" I will mention is the plight of the common people, and it has not really changed very much. People in small villages have lost access to some excellent NGO-funded programs, but they are continuing to survive and sometimes prosper. To these people, the events in the capital do not really effect daily life. One assertion in the Forbes article particularly surprised me: "Much of the country has descended to a barter economy, according to the U.S. State Dept." While I do not know the basis of the State Department's study, I had not seen any such descent. Many people do barter for goods, paying for work with rice or exchanging vegetables, but they have always done this. The statement makes it seem as though Madagascar no longer has a monetary economy, and that is simply not true.

While I think the plight of Madagascar is difficult, I do not think it earns the country the title of World's Worst Economy. The government has been near-bankrupt for almost two years, and continually has had to delay payments to public sector workers(*). Yet I was very surprised to see that in many areas, the change of government did not affect day-to-day economic life too drastically. Even more surprising, some business interests seemed to flourish in the past few years. So, as someone who saw the country in 2008 (pre-coup, when Madagascar was considered one of Africa's rising stars) and in 2009-2011 (post-coup, when it was an international pariah), I have seen little change in the lives of the average people and really the economy as a whole. I guess this is just a case of the numbers and the images painting differing pictures...



On a happier Madagascar note, there is a nice travel article in the New York Times. Scientist John Sparks captures the thrills of travels by ox-cart, and also touches upon the dangers of assuming the western traveller knows better than the local villager:

When the team finally trudges into the village of Tsaratanana, on the north bank of Lake Tseny, at 11:30 p.m., dusty and exhausted, having walked for more than seven hours, its members have gained a number of important insights. First is that a villager’s estimate of 40 kilometers for the journey, which they had thought to be a gross overstatement, may well have been accurate. Second, although zebus pulling a cart appear lethargic in the hottest part of the day, they are capable of surprising liveliness after dark. Thus, reminded of the old line about “mad dogs and Englishmen,” the team members now fully comprehend the reluctance of oxcart drivers to begin this journey at high noon.

 Sparks is writing regularly as he studies the freshwater fish of Madagascar. Here is a link to his full article history (thanks to Ryan Marsh for originally tipping me off to him!)



(*) = The government likely earned revenue from illegal rosewood logging and other activities shunned by the international community. This revenue was probably used to fund the military (which has seen numerous officer promotions and salaries raises), provide some public goods (such as cheaper commodities at specific markets), and eventually pay some of their public-sector salaries. It is also likely that any such "black market" revenues obtained by the government would not be included in the IMF's economic indicators, and would explain how the government has continued to operate despite the lack of traceable funds...