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IS AFRICA GROWING OUT OF POVERTY?

IS AFRICA GROWING OUT OF POVERTY?. Ewout Frankema Wageningen University, Utrecht University Public Lecture at Fundación Ramón Areces , Madrid, 22 January 2015. A decade ago. The African ‘Lions’. Source: IMF 2012.

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IS AFRICA GROWING OUT OF POVERTY?

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  1. IS AFRICA GROWING OUT OF POVERTY? Ewout Frankema Wageningen University, Utrecht University Public Lecture at Fundación Ramón Areces, Madrid, 22 January 2015

  2. A decade ago...

  3. The African ‘Lions’ Source: IMF 2012

  4. Yet another short-lived commodity boom,orthe first stage of a transition towards sustained economic growth and poverty alleviation?

  5. Sub-Saharan Africa, 1950-2013 Average annual GDP per capita growth Source: Maddison 2010; IMF 2012

  6. Real wages of unskilled workers, 1870-2010 Source: Frankema and van Waijenburg 2014

  7. Poverty trends, 1981-2010 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2010

  8. Scenario’s of poverty trends to 2100

  9. Five main socio-economic trends of the past 20 years

  10. (I) Improved macro-economic stability Source: Africa Development Indicators 2014

  11. (II) Export growth, 2000-2012 Source: UNCTAD 2014

  12. Export-GDP relationship, 1995-2012 Source: UNCTAD 2014; African Development Indicators 2014

  13. (III) Infrastructural investment Construction of Highway Nairobi-Thika (Kenya)

  14. (IV) Glimpses of an African ‘Green Revolution’ Rwanda, rice (paddy), t/ha Benin, cassava, t/ha Source: FAOSTAT 2014

  15. (V) Declining intensity and changing nature of violent conflict Source: Centre for Systemic Peace, http://www.systemicpeace.org/CTfig04.htm

  16. What drove the post-1995 growth recovery? • “Lost Decades” of 1973-1995 (growth cycle) • End of the Cold War • Shifting global economic gravity (China, Brazil) • Structural adjustment programs?

  17. What’s new?

  18. Exports per capita, 1850-2010 (in constant US$ 1980)

  19. Per capita exports of ‘non-oil’ countries, 1850-2010

  20. Chinese FDI offers in Africa, since 2010

  21. A slow revolution...

  22. Population density (pp/km2), ca. 1500

  23. Population density (pp/km2), 1900-2100 Source: Frankema and Jerven 2014; UN Population Prospects 2012

  24. Concentration of economic power

  25. Drivers of urban growth • Ca. 50% of post-2000 GDP growth in SSA caused by domestic structural change (McMillan & Harttgen 2014) • Consumer demand concentration (market size) • Agglomeration effects in product and factor markets • Concentration of investment capital (partly export revenue driven) and human capital • Higher potential for labour division and economic specialization

  26. The temporal ‘order’ of development

  27. Urban economic growth comes ahead of agricultural intensification; well-functioning land market institutions (e.g. registration); rural infrastructure • Urban growth financedby extra-continental trade relations and foreign investment(FDI) flows. • Urban growth goes ahead of human capital investment (educational quality in particular). • Urban growth goes ahead of well-functioning financial & fiscal institutions (credit markets, tax systems etc.). • Urban growth goes ahead of historically grounded institutions of ‘citizenship’.

  28. Can urban growth induce institutional reforms and agricultural intensification?

  29. Conclusion • Yet another commodity boom? No, there is much more going on. • However, the specific ‘order’ of development implies a lack of useful historical analogies to understand current African growth, and its sustainability in particular. • Policy implications: • Strengthen rural-urban market connections, also if this implies ‘de-liberalization’ and fiscal re-distribution. • Governing institutional reform (land registration, fiscal capacity, financial institutions and evolution of ‘citizenship’).

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