Economic Recovery in Africa and its Determinants John Ulimwengu, Senior Research Fellow, West and Central Africa Office, IFPRI, DRC 2015 ReSAKSS Annual Conference, Addis Ababa, Ethiopia, Sept. 1-3

1. Economic Recovery in Africa
and its Determinants
O. Badiane, J. Collins, X. Diao, and J. Ulimwengu

2. Motivation
• After decades of stagnation and decline, Africa has
experienced a remarkable growth recovery in the past
two decades
• But has this recent growth made up for the lost
decades? Is Africa catching up with other regions?
• We find that efforts are needed to sustain and
accelerate recent growth
• This calls for an understanding of the growth strategies
pursued by African countries over time as well as the
drivers of the recent growth recovery

3. Trends in Africa’s Past and Current Growth
• Current growth is rapid, after decades of slow or
negative growth
-8
-6
-4
-2
0
2
4
6
8
10
Angola
Chad
Ethiopia
Ghana
Mozambique
Nigeria
Rwanda
Tanzania
Uganda
9countries
SSA-ZAF
Average annual GDP per capita growth rates (%)
1980-1989 1990-1999 2000-2012
Source: Authors’ calculations using data from World Bank, 2014a.
Note: SSA-ZAF = Africa south of the Sahara, not including South Africa.

4. Trends in Africa’s Past and Current Growth
• Has Africa’s recent growth made up for lost
decades?
400
600
800
1000
1200
1400
1600
1800
2000
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Per capita GDP
(2005 constant $US, 27 SSA countries average)
Actual and 2000s trend for the future
1960-1977 growth path
Catching-up scenario
1960-1977, 1.97% annual
3.2% annual
growth rate
7.0% annual
growth rate
$694
$1,147
$1,841
Source: Authors’ calculations using data from World Bank (2014a).

5. Trends in Africa’s Past and Current Growth
• Agricultural labor productivity has also not
recovered from lost decades
400
500
600
700
800
900
1,000
1,100
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
2018
2021
2024
AgriculturalOutputPerWorker(2004-06
constant$)
Year
Level of Africa's agricultural labor productivity
Ag output per worker actual,
SSA-ZAF
1960s growth path
$612
$790
$1,135
1.1% annual
growth rate
1.2% annual
growth rate
3.8% annual
growth rate
Source: Authors’ calculations using data from Nin-Pratt (2015) (the original data are from the Food and Agriculture Organization of the United Nations).

6. Drivers of Growth in Africa
Variables Africa Variables Africa
Dependent variable: Log GDP per capita/GDP pc 1990
(1990-2013)
Log GDP per
capita, 1990
-0.00516***
RL
0.00296**
(0.00168) (0.00138)
Inflation
-0.00011***
CC
0.00373***
(0.00004) (0.00111)
Savings
0.00005* Life
expectancy
0.00022**
(0.00003) (0.00009)
ODA 100
(Social)
0.00501***
Schooling
0.00269***
(0.00152) (0.00040)
ODA 200
(Economic)
0.01285***
Rain
-1.41E-06
(0.00205) (1.37E-06)
ODA 300
(Production)
0.00514** Resource
export share
3.74E-06
(0.00247) (0.00002)
FDI
0.00009** Inflation*
resource share
3.68E-06**
(0.00004) (1.46E-06)
VA
-0.00084 Manufacturin
g export share
7.39E-07
(0.00098) (0.00002)
GE
0.00024
Constant
0.01538
(0.00151) (0.01156)
RQ
0.00051 Observations 331
(0.00123) 𝛘 𝟐
(18) 443.1
Log likelihood 1420.9
• Evidence of conditional convergence in
Africa: poorer countries grew faster
• Drivers of growth included
• Macroeconomic stability: lower
inflation
• Availability of funds for investment:
savings, ODA, FDI
• Better governance: rule of law,
control of corruption
• Inflation was less harmful in
countries with higher shares of
natural resource exports
Note: *** significant at 0.01 level; ** significant at 0.05 level; * significant at 0.10 level. Standard errors given in parentheses.
CC = Control of Corruption; GE = Government Effectiveness; RL = Rule of Law; RQ = Regulatory Quality; VA = Voice and
Accountability.

7. Decreased inflation
0
5
10
15
20
25
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 19961998 2000 2002 2004 2006 2008 2010 2012
Average consumer price inflation rate, weighted by GDP, 1970-2013
Source: Authors’ calculations using data from World Bank (2015).
Note: Includes 24 countries with data for most years in the period. Two outliers with very high inflation in the mid-1990s, the Democratic Republic of the Congo and Angola, are
excluded.

8. Increases in savings and FDI
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
0
5
10
15
20
25
30
199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013
Savings and FDI, percent of GDP
Savings FDI
Source: Authors’ calculations using data from World Bank (2015).
Note: Savings as a percentage of GDP is shown on the left axis; FDI as a percentage of GDP is shown on the right axis.

9. Increases in ODA
0
5000
10000
15000
20000
25000
30000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
ODA disbursements to Africa, 2013 USD (millions)
ODA 100 ODA 200 ODA 300
Source: Authors’ calculations using data from OECD (2015).
Note: ODA 100 refers to ODA for social infrastructure and services, ODA 200 is for economic infrastructure and services, and ODA 300 is for productions sectors.

10. Rising natural resource export share
0
5
10
15
20
25
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Natural resource exports as share of GDP
Source: Authors’ calculations based on data from World Bank (2014a).

11. Changes in governance indicators
-0.95
-0.9
-0.85
-0.8
-0.75
-0.7
-0.65
-0.6
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Worldwide Governance Indicators, Africa
VA GE RQ RL CC
Source: World Bank (2014b).
Note: Values represent average for African countries, weighted by population. CC = Control of Corruption; GE = Government Effectiveness; RL = Rule of Law; RQ = Regulatory Quality; VA =
Voice and Accountability.

12. Conclusions
• Africa’s recent growth is promising, but the continent
has not yet recovered from previous decades of
stagnation and decline
• For decades after independence, economic growth
strategies lacked coherence and consistency and did
not produce intended outcomes
• More recently, drivers of growth include
macroeconomic stability, increases in savings, FDI and
ODA, and improvements in governance and in human
capital
• In the future, African countries must further improve
governance and institutional quality, and work to
manage natural resource revenues effectively

13. Thank you!