Wednesday, April 16, 2008

Africa’s Economic Growth

I attended one more discussion forum yesterday. Actually, it was a book launch ceremony organized by the Center for Global Development (CGD). The huge, expensive two volume book “The Political Economy of Economic Growth in Africa, 1960-2000” is written by nine authors, whose profession range from academicians to central bank governors.

book Frankly, the program was boring, not in terms of content but in style of presentation (monotonous style). Also, the book is too expensive (costs more than $250; it is a little less than GDP per capita of a Nepali!).

Anyway, I tried to follow what is unique about this book, apart from the historical background and blame on crisis, political strife, famine….the list goes on and on. Benno J. Ndulu, Governor of Central Bank of Tanzania argued that 1980-2000 was “two decades of lost opportunity” for Africa. Why? I did not get his reasoning for this! I think he was implying that the large countries like Nigeria, DRC, and Sudan are not growing as China and India have done. The growth rate of Sub-Saharan Africa (SSA) was just 0.5% between 1960 and 2004. The developing countries had a growth rate of 2.5%.

He argued that the endowment argument does not explain the variation in growth in Africa. For instance, Zambia and Botswana are both resource-rich and landlocked, and Cote d’Ivoire and Mauritius both have coast and are resource-poor. They have different development paths. Four stuff worth noting from the book:

  • Growth experience varied and was episodic

  • Slow productivity growth (investment return is just 1/3 that of Asia)

  • Policy and governance matters a great deal for growth

  • Disadvantage from geography and resource-curse (account for 1/3 of the gap of growth with other LDCs)

The other speakers were a bit unclear about the stuff they were presenting. It might be that they were skipping and speeding parts of their presentation in the interest of time. So what does Africa need? One of the speakers said, it needs “four big I”: Investment, Infrastructure, Innovation, and Institutional Capacity. More here