"Why is Africa (still) Poor?" by Ragnar Øygard (Professor, Economy, UMB)
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Transcript of "Why is Africa (still) Poor?" by Ragnar Øygard (Professor, Economy, UMB)
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!