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Why has Africa Grown So Slowly?

Why has Africa Grown So Slowly?. Xavier Sala-i-Martin Columbia University. Distortions and the Cost of Investment. Investment is low in Africa Investment is Expensive Risk may be overstated. Survey of Business Leaders. Human Capital (1): Education. School Enrollments are low

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Why has Africa Grown So Slowly?

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  1. Why has Africa Grown So Slowly? Xavier Sala-i-Martin Columbia University

  2. Distortions and the Cost of Investment • Investment is low in Africa • Investment is Expensive • Risk may be overstated

  3. Survey of Business Leaders

  4. Human Capital (1): Education • School Enrollments are low • Investment in Education does not lead to more enrollment: incentives • Education of GIRLS has added benefits in terms of Health and Fertility

  5. Survey of Business Leaders

  6. Human Capital (II): Health • Life expectancy has increased in African over the last 40 years but: • AIDS • Malaria • We now face a public health crisis, a pandemic of biblical proportions

  7. Survey of Business Leaders

  8. Geography, Tropics and Institutions • Most Sub-Saharan Africa has adverse Geography: • Landlocked • Tropical • Direct impact on productivity (soil, specific agricultural productivity,…) (Sachs and Warner 1995) • Direct impact on health and, thus, productivity (Sachs and Warner 1995) • Indirect impact on institutions (Acemoglu et al. 2000) • INSTITUTIONS AND NATURAL RESOURCES (Nigeria, Sala-I-Martin and Subramanian 2003)

  9. Survey of Business Leaders

  10. Survey of Business Leaders. Corruption and the Natural Resource Curse

  11. Survey of Business Leaders

  12. Survey of Business Leaders

  13. Openness (Globalization?) • Africa is essentially CLOSED (1% of world trade) • And whatever Trade depends too much on a single natural resource (oil, diamonds,…)

  14. Is Globalization to Blame? • What is it? Free Movement of • Capital • Labor • Goods • Technology • Information • Have any of these arrived in Africa?

  15. Excessive Public Spending and “bad government”

  16. Survey of Business Leaders

  17. Survey of Business Leaders • See all the slides on Institutional Environment

  18. Ethnic Fractionalization and Conflict • Countries at war between 1960-2002: Algeria, Angola, Burundi, Chad, Cote d’Ivoire, Democratic Republic of Congo, Djibouti, Eritrea, Ethiopia, Guinea-Bissau, Liberia, Libya, Mauritania, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sierra Leone, Somalia, South Africa, Sudan, Togo, Uganda or Zimbabwe.

  19. Survey of Business Leaders

  20. USING BACE COEFFICIENTS

  21. What to do? • African Countries • Peace • Institutions/Markets • Openness • Rich Countries/Institutions: • Change AID Programs: • Focus on R&D • RADICAL CHANGE: ask, penalize if do wrong, local answers… • Maybe NOT HUGE AID (Sachs, Blair, Bono, …) • Open Markets (especially EU, USA and Japan ‘s agricultural protectionism) • NGOs: • Education (progresa-type programs) • Health (doctors without borders)

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