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Africa's growth tragedy : a retrospective, 1960-89, Volume 1
Author:Easterly, William; Levine, Ross; Country:Africa;
Date Stored:2001/04/20Document Date:1995/08/31
Document Type:Policy Research Working PaperSubTopics:Environmental Economics & Policies; Achieving Shared Growth; Governance Indicators; Economic Theory & Research; Economic Conditions and Volatility; Health Monitoring & Evaluation; Inequality; Economic Growth; Public Health Promotion
Language:EnglishMajor Sector:(Historic)Economic Policy
Region:AfricaReport Number:WPS1503
Sub Sectors:Macro/Non-TradeCollection Title:Policy, Research working paper ; no. WPS 1503
Volume No:1Related Dataset:Africa's Growth Tragedy: Policies and Ethnic Divisions Dataset;

Summary: 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.

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