Economics 3510 African Economic Development Spring 2010

Economics 3510African Economic Development

Spring 2010

Introduction

Instructor: A. R. M. RitterMay 11, 2010

Agenda:I. Introductory and Administrative MattersII. Africa’s Development ChallengeIII. Brief Geographical and Historical Overview

Presentation based on maps;Geography;Political evolutionPopulation Economy

Literary presentationPre-Colonial EpochColonialism and Independence

IV. Recent Development Experience: A Quick Overview

II. Africa’s Development ChallengeRegion GDPpc

(PPP)$US 2007

Life Expectancy 2007

M F

Child Mortality. Per

1000

Sub-Saharan Africa 1,869 50 52 125

East Asia & Pacific 4,969 70 74 56

Europe and Central Asia

11,262 65 74 49

Latin America & Caribbean

9,678 70 76 65

Middle East & N. Africa

5,402 68 72 77

Canada 35,500 78 83 06

II. Africa’s Development Challenge

Dimensions of the Challenge

• Economic– Poverty– Income Distribution– Policy problems– Economic disintegration– Infrastructure shortcomings

• Demographic• Health: AIDS/HIV; Malaria etc. • Political: • Civil Strife • Corruption• Environmental

III. Brief Geographical and Historical Overview

Presentation based on maps;Geography;Political evolutionPopulation Economy

Perspectives of Africa: Pre-Independence

Brief Geographical and Historical Overview

The World. Viewed from Space

Major Rivers

Ethnic Groups

The Scramble for Africa: Berlin Conference of 1884-1885 to Divide Africa

Islam in Africa

African Petroleum Reserves and Production

Population

Recent African Economic Experience: A Quick Overview

Bad News: Economic Contraction, 1970s to 1990s– minus 0.9 % per capita per year, 1975-2000– 27 countries with declining GDP pc, 1975-2000

Good News: Recent Growth Recovery late 1990s to 20101999-2007 + 4.7% per year or about 2.4% % per capita per year,

Bad News:2009:caught in global recession- but not too deep or prolonged

Explanation of earlier contraction: A Conjuncture of Negative Circumstances 1. Problems of Governance

• Political instability• Civil war, • Weak Governance and Corruption;

2. Burgeoning population growth rates, with3. Health Problems

• HIV/AIDS epidemic in many countries (see chart)• Malaria etc.

4. “Poverty Traps” or Interacting Vicious Circles5. Inappropriate economic policies:

• Modern sector Industrial &Urban Bias• Trade protectionism; • Ineffective integrative schemes• Exchange rate dysfunction• Price Controls

5. External Factors;• Weak export commodities (see charts)• Protectionism vs. some products, esp. Cotton• New LDC competition (coffee)• Competition from China for all manufactures• “Resource (or Oil) Economy Syndrome”• Growing debt burdens• Falling aid volumes plus high aid dependence (see

chart)

6. Environmental problems• Desertification;• Soil depletion• Climate change

Renewed Economic Expansion, 1999-2008:

Explanation 1. Buoyant world economy promotes recovery

– primary commodity prices rise– new drivers of growth such as increased economic

relations with China and India.2. Some debt reductions and relief from servicing the debt3. Increases in development assistance4. Direct foreign investment has started up.5. Reduced conflict in the region? (ambiguous)6. Improved public policy7. Improved governance

Result:• Poverty levels decline;• Personal & family incomes rise;• Tax revenues and social expenditures (health

& education) rise• General improvement

But: problems mentioned earlier remain; - some countries are in trouble; - peace and stability are tenuous in a few cases.

2009: Renewed Contraction

Central Causal Factors–Not banking & finance;–World Recession: affecting commodity

prices and therefore »foreign exchange earnings, »tax revenues, »social expenditures, »family incomes

–DFI slowdown