I had a conversation with someone who claimed offhandedly that AI will dramatically raise agricultural productivity (via agritech advancements) in low-income countries and trigger growth as a result. My instinct was to respond that we've already had substantial advancements in agricultural technology, and yet it hasn't resulted in the magnitude of yield growth, let alone economic growth, you'd expect in many countries. We'd need to explain that before knowing how AI-driven innovation will be different.
I work through this question via Malawi. It's a useful case because all the usual scapegoats don't apply (no war, no resource curse, peaceful democracy), but the economy is still dominated by subsistence farming.
The argument is that the binding constraint on growth in cases like Malawi is not technological, and that AI-driven productivity gains may hit the same arrangement that absorbed the previous ones unless the forecast specifies how that changes.
Curious what people working on AI-and-growth scenarios or on Malawi specifically make of this.
You discuss institutions, but I don't think you discuss the right kind of institutions. If I am comparing Malawi to some of the other nearby landlocked African countries you mention, the first thing that jumps out to me is their dramatically worse economic freedom. Malawi has one of the worst scores in the entire world, ranked 147/165, a level more typical of central or saharan african countries.
https://www.efotw.org/?geozone=world&page=map&year=2023&countries=MWI,ZMB,RWA,BWA,LSO#country-info
(You didn't mention Eswatini or Burundi, but they also score very badly - unfortunately the map tool above will only let me display 5 countries so I focused on those named in the text plus Zambia as it is neighbouring).
This doesn't resolve the infinite-regress style question of what causes some countries to have more capitalist institutions than others, but when it comes to which institutions to investigate, I think it is their economic institutions we should focus on.
tbf it looks like the categories that drag Malawi's economy down are the trade restrictions which were discussed and lack of "sound money": inflation is often a symptom of being poor[1] rather than anything particularly unusual about its institutions.
Even more so if we compare institutions with Botswana and its relative wealth from being able to export diamonds rather than basic food.
productivity growth locally not keeping up with the cost of necessary imports, basically. Looks like Malawi de-pegged their economy from the dollar a while back because of balance of payment problems rather than because of some weird governmental quirk.
The article is good, but the title's claim is too strong.
Merely knowing that Malawi is a landlocked sub-Saharran African country has huge explanatory power. The question of 'We don't know why Malawi is poorer than Rwanda' seems like a better question (which the article explores).
The pushback against AI led productivity growth also seems comparatively weak. AI is not referenced until the last paragraph, and I don't think you really engage with what AI makes possible.
This is just annoying because the article is really good, but now I want to argue about the title XD
Malawi is really, really poor - worse than almost all Sub-saharan landlocked countries even those with previous conflicts and worse institutions. I get what you mean that Malawi could be doing twice as well and still be really poor, but despite that I think the title is just fine!
I think the bigger impact of AI than agricultural productivity is increased demand for manual labor as knowledge work is automated, so low income countries should get ready to export a lot.
I think you make a good point well (although I think the answer to why Malawi is poor is "all of the above and more", and the question "why is Rwanda growing fast" is a more interesting one[1])
When it comes to the inability of A[G]I to magically transform Malawi's economy I actually think it's even broader than just specific things like the existing political settlement restricting exports: AI telling people how to increase crop yields simply isn't going to make maize smallholding anything other than a poverty living. Demand for maize is finite so making it marginally more efficiently even if one assumes every Malawian smallholder perfectly optimizes their production using the latest frontier yield optimization models (which one definitely shouldn't assume) makes little difference. AI isn't going to make the world any more likely to manufacture in a poorly educated, poorly connected backwater; if anything the opposite. Malawians aren't exactly inundated with funds to buy compute time to start exciting new international businesses either.
Bangladesh and Vietnam I don't see as really comparable. They have some classic historic problems but they have factors pulling them into a global economy Malawi doesn't and couldn't have.
Nice piece, thanks for sharing it on here!
The full post ended up being much better than the stub above :) <https://newsletter.deenamousa.com/p/we-dont-know-why-malawi-is-poor/comment/257812223>