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Presentation for the seminar "Why is Africa (still) poor?", April 30, 2013, UMB, Norway. http://africapoor.wordpress.com/
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Why is Africa (still) poor?
Ragnar Øygard
UMB School of Economics and Business
April 30, 2013
Why is Africa (still) poor?
• Many causes – many speakers
My explanation: • History, institutions
and policy
Why is Africa (still) poor?
• The right question?
• Alternative question: Why is so much of the world so rich?
• Turning point ca. 1800
Why is Africa (still) poor?
• Less growth in Africa than other parts of the world since 1800 – and esp. last 50 years– In total income– In per capita income (high rates of population
growth)
But: very high growth rates last decade
And: There have been big improvements in health and education
Why less growth in Africa?
Growth regressions - Robust findings:
Higher growth is correlated with:
-Higher saving and investment level
-Not being in Sub-Saharan Africa
So what is it with Africa?
Why less growth in Africa?
Geography
or
Institutions?
Geography
• Tropics• Temperature• Soils• Disease• Low population density• High infrastucture cost• Landlocked
But: Botswana!
Institutions and Policy
Jared Diamond: «Guns, Germs and Steel»:
-Few or no plants and animals suited for domestication
-Little or no settled agriculture
-Not hierarchical settled farmer societies-Hunter-gatherers: «The original Affluent Society» (Marshall Sahlins)
-Easy victim for European colonizers
The Scramble for Africa
• Slave trade• Division of Africa by
colonial powers• Extractive institutions
– e.g. little investment in education – as opposed to in temperate colonies
The colonial legacy: Institutions• Young, weak and
fractionalized states with little basis in pre-colonial divisions
• Weak notion of «nationhood» – of «being in the same boat»
• The language of the state is the colonizer’s language
The colonial legacy: Institutions & policy
• Young, weak and fractionalized states: Redistributive policies
• Extractive institutions – autocratic regimes: Weak «checks and balances» and «rule of law»
• Contested power – civil war
The colonial legacy: Policy
At independence: Divison between political power and control over the economy and businesses.
Adoption of policies of:
-nationalization and
-Import-Substituting-Industrialization
- Trade barriers
- Overvalued exchange rates
- Parastatals and monopolies
Current trends: Reason for some optimism!
• Natural resource boom• Growing sense of nationhood• More democracy – e.g. constitutional transfer of
power. • Better policies for broad based growth – e.g. by
investment in education, agricultue and rural sectors• Foreign direct investment• Falling population growth rates
Africa can catch up – but it will take some time!