Africa's growth tragedy: a retrospective, 1960-89

William Easterly and Ross Levine ()

No 1503, Policy Research Working Paper Series from The World Bank

Abstract: Africa's economic history since 1960 fits the classical definition of tragedy: potential unfulfilled with disastrous consequences. The authors use one mehthodology - cross-country regressions - to account for sub-Saharan Africa's growth performance over the past 30 years and to suggest policies to promote growth over the next 30 years. They statistically quantify the relationship between long-run growth and a wider array of factors than any previous study. They consider such standard variables as initial income to capture convergence effects, schooling, political stability and indicators of monetary, fiscal, trade, exchange rate, and financial sector policies. They also consider such new measures as infrastructure development, cultural diversity, and economic spillovers from neighbors'growth. Their analysis: 1) improves substantially on past attempts to account for the growth experience of sub-Saharan African countries; 2) shows that low school attainment, political instability, poorly developed financial systems, large black-market exchange-rate premia, large government deficits, and inadequate infrastructure are associated with slow growth; 3) finds that Africa's ethnic diversity tends to slow growth and reduce the likelihood of adopting good policies; 4) identifies spillovers of growth performance between neighboring countries. The spillover effects of growth have implications for policy strategy. Improving policies alone boosts growth substantially, but if neighboring countries act together, the effects on growth are much greater. Specifically, the results suggest that the effects of neighbor's adopting a policy change is 2.2 times greater than if a single country acted alone.

Keywords: Economic Conditions and Volatility; Public Health Promotion; Health Monitoring&Evaluation; Economic Theory&Research; Environmental Economics&Policies; Achieving Shared Growth; Governance Indicators; Economic Growth; Economic Conditions and Volatility; Inequality (search for similar items in EconPapers)
Date: 1995-08-31
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Citations: View citations in EconPapers (2)

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