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

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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?" by Ragnar Øygard (Professor, Economy, UMB)

  1. 1. Why is Africa (still) poor?Ragnar ØygardUMB School of Economics andBusinessApril 30, 2013
  2. 2. Why is Africa (still) poor?• Many causes – manyspeakersMy explanation:• History, institutionsand policy
  3. 3. Why is Africa (still) poor?• The right question?• Alternative question: Why is so much of theworld so rich?• Turning point ca. 1800
  4. 4. Why is Africa (still) poor?• Less growth in Africa than other parts of theworld since 1800 – and esp. last 50 years– In total income– In per capita income (high rates of populationgrowth)But: very high growth rates last decadeAnd: There have been big improvements in healthand education
  5. 5. Why less growth in Africa?Growth regressions - Robust findings:Higher growth is correlated with:-Higher saving and investment level-Not being in Sub-Saharan AfricaSo what is it with Africa?
  6. 6. Why less growth in Africa?GeographyorInstitutions?
  7. 7. Geography• Tropics• Temperature• Soils• Disease• Low populationdensity• High infrastucture cost• LandlockedBut: Botswana!
  8. 8. Institutions and PolicyJared Diamond: «Guns, Germs andSteel»:-Few or no plants and animalssuited for domestication-Little or no settled agriculture-Not hierarchical settled farmersocieties-Hunter-gatherers: «The originalAffluent Society» (Marshall Sahlins)-Easy victim for Europeancolonizers
  9. 9. The Scramble for Africa• Slave trade• Division of Africa bycolonial powers• Extractive institutions– e.g. little investment ineducation – as opposed toin temperate colonies
  10. 10. The colonial legacy: Institutions• Young, weak andfractionalized stateswith little basis in pre-colonial divisions• Weak notion of«nationhood» – of«being in the sameboat»• The language of thestate is the colonizer’slanguage
  11. 11. The colonial legacy: Institutions &policy• Young, weak andfractionalized states:Redistributive policies• Extractive institutions– autocratic regimes:Weak «checks andbalances» and «rule oflaw»• Contested power –civil war
  12. 12. The colonial legacy: PolicyAt independence: Divisonbetween political power andcontrol over the economyand businesses.Adoption of policies of:-nationalization and-Import-Substituting-Industrialization- Trade barriers- Overvalued exchange rates- Parastatals and monopolies
  13. 13. Current trends: Reason for some optimism!• Natural resource boom• Growing sense of nationhood• More democracy – e.g. constitutional transfer ofpower.• Better policies for broad based growth – e.g. byinvestment in education, agricultue and ruralsectors• Foreign direct investment• Falling population growth ratesAfrica can catch up – but it will take some time!

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