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Question: Why is demography argued to have hindered African economic development? Discuss

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Question: Why is demography argued to have hindered African economic development? Discuss.

This essay has an upper word limit of 1500 words, so I suggest the word count is 1450-1500 except references.

Chicago Format.

This course is topic oriented, so you should stand as an ignorant to write it to make others understand my argument and related evidences.

EH483 – The Development and Integration of the World Economy in the 19th and 20th Centuries LT05: African economic development Dr. Stefania Galli S.Galli@lse.ac.uk Outline 1. The ‘African’ issue 2. Factors for underdevelopment 3. Post-colonial development 4. Conclusions The ’African’ issue In 1960, Africa deemed to be next on the way to development: expectations not met. “[i]t is only after 1975 that Africa experiences a true collapse—a plunge followed by continuing decline in the 1980s and 1990s ” (Arrighi 1992, p. 16) Economic failures, food shortages, conflicts and epidemics have all contributed to building a bleak picture of the continent ( a period known as the ’lost decades’) The ’African’ issue In recent years, however, improvements have been remarkable both in pure economic terms… 19711975 19761980 19811985 19861990 19911995 19962000 20012005 20062010 20112015 1.19 -0.90 -2.35 -0.36 -1.00 0.50 3.13 2.18 0.77 Table: SSA average GDP growth rate (%) . Source: World Bank, 2020 .. But even more so in terms of living standards 19902000 20002010 20102019 19902019 SSA 0.53 1.63 0.98 1.05 OECD 0.61 0.46 0.33 0.47 Table: SSA and OECD average HDI growth rate (%) . Source: World Bank, 2020 The ’African’ issue ‘While Africa’s economies too are now growing, in many African countries, people are just now returning to the levels of per capita income they enjoyed more than a half century ago’ (Akeyampong, Bates, Nunn, Robinson, 2014) This means that Africa is not statically underdeveloped and poor. Africa’s growth is not a new phenomenon. Structural impediments to growth? Evidence on wages suggests that Africa stood on par with Asia until 1950s. (Frankema and van Waijeinburg, 2014) Africa’s growth In recent years, however, improvements have been remarkable. 19711975 19761980 19811985 19861990 19911995 19962000 20012005 20062010 20112015 1.19 -0.90 -2.35 -0.36 -1.00 0.50 3.13 2.18 0.77 Table: SSA average GDP growth rate (%) . Source: World Bank, 2020 Outline 1. The ‘African’ issue 2. Factors for underdevelopment 3. Post-colonial development 4. Conclusions Geography Issues often mentioned: • • • • Disease environment Large ladlock mass: transaction costs to market North-South axis: limit diffusion of innovations, species, etc. Low soil fertility: high mobility • Yet, if growth has occured, it means that geography can only play a minor role. Demography Rapidly growing population with an abundance of youngsters. However: • Persistent low-density population • Most countries are small in global standards • Ethnic fractionalization is high Demography and the state “The fundamental problem facing state-builders in Africa—be they precolonial kings, colonial governors, or presidents in the independent era—has been to project authority over inhospitable territories that contain relatively low densities of people.” (Herbst, 2000) Low population density argued to hinder state capacity: - Taxation: Difficult to extract tax revenues from limited and dispersed population and build a state budget. - Low Social capital: State benefits ethnicity in power at the expenses of the whole population. - Limited long-term goals High inequality levels Low trust in the state (Collier and Gunning, 1999) Institutions Low trust in the system: • Slave trade: persistent diffused mistrust among groups more likely to supply the slave trade. • Colonialism: • Reliance on local authorities due to lack of state capacity, information asymmetry, and to limit resistance against taxation. Bribery and corruption become endemic. • Low trust in the colonial authority: forced labour. Trust found to be important for development as it underpins nation-wide agreement, trade with international parties and affects management and government practices. Resource abundance Resource abundance seen with favour, yet: • Tax revenues from resources offsets the need to develop fiscal capacity and a well-functioning state and limit the need for fair representation. • Benefits are often reaped by a minority: urban elite vs. Rural paesants • Profits often not re-invested in developmental projects (infrastructures, education, health: Botswana exception!) • In some cases, profits in the hand of foreign companies. Resource abundance Additional issues with primary commodity abundance: • High volatility in prices of primary commodity compared to manufactures or other industrial goods • No spill-over effect to industry and limited demand for human capital formation: countries locked into primary commodity production • Worsening terms of trade for primary commodities since late 19th century World by TOT ratios, 1980-2010 Resource abundance Countries locked in primary commodity production face a type of growth known as ’immiserizing growth’: • To maintain existing conditions in a situation where the price of primary commodities declines relative to the price of manufactured goods (terms of trade): Worsening TOT Increased Output Declining prices Outline 1. The ‘African’ issue 2. Factors for underdevelopment 3. Post-colonial development 4. Conclusions Industrialization, 1960-1980 Attempts towards industrialization to overcome immiserizing growth: Import Substitutions Industrialization (ISI) Higher possibility of capital accumulation and technological advance in industry than in agriculture; • Elastic demand of manufactured goods; • Incresed diversification. Focus on manufacturing activities but: • No cheap and abundant labour force like in Asia • Small domestic market Furthermore protection means inefficiency and government over-relies on subsidies to keep loss-making industries alive The crisis By the end of the 1970s: • • • • • Deterioration of economic standards Industrial efforts not realized Take off of indebtedness Ever-increasing corruption Worsening climate (droughts and unreliable precipitation) These set of elements argued to impede catch-up growth: need for reforms. The Structural Adjustment Programmes Structural Adjustment Programmes (SAPs) aim to reform institutions, reduce market failures, induce sound economic growth. • Strong emphasis on market liberalization and economy’s deregulation Implemented for the first time in Senegal in 1980 and by the end of the decade extended to the rest of the continent. The SAPs were developed to bring economic reforms to countries plagued by poor economic performances, under the directions of WB and IMF. The Structural Adjustment Programmes Mixed results: • Increased transparency; • Stronger monitoring of the resources But: • Increased volatility of growth rates; • Still limited industrialization. Success story: Botswana Investment in human capital and health usingdiamonds profits. Outline 1. The ‘African’ issue 2. Factors for underdevelopment 3. Post-colonial development 4. Conclusions Conclusions • Africa often seen as persistently underdeveloped: incorrect! • Numerous factors argued to have led to Africa’s underdevelopment: • Geography • Institution • Exogenous shocks • Post-independence attempts towards industrialization failed, intervention of WB and IMF • Only recently, growth taking a turn for the better: spur or long-term phenomenon? Economic History of Developing Regions ISSN: 2078-0389 (Print) 2078-0397 (Online) Journal homepage: https://www.tandfonline.com/loi/rehd20 DECENTRALIZATION AND CORRUPTION IN HISTORICAL PERSPECTIVE: EVIDENCE FROM TAX COLLECTION IN BRITISH COLONIAL AFRICA Leigh A. Gardner To cite this article: Leigh A. Gardner (2010) DECENTRALIZATION AND CORRUPTION IN HISTORICAL PERSPECTIVE: EVIDENCE FROM TAX COLLECTION IN BRITISH COLONIAL AFRICA, Economic History of Developing Regions, 25:2, 213-236, DOI: 10.1080/20780389.2010.527695 To link to this article: https://doi.org/10.1080/20780389.2010.527695 Published online: 22 Dec 2010. 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