The Economist has an interesting debate going on about Africa’s growth prospects. The consensus appears to be that structural factors – such as institutions, culture, colonial history and what not – are the main culprits in the tragic tale of African underdevelopment. I agree. Bad governance, the historical accident of colonialism which halted the natural processes of state formation, among other things such as historical low population densities and a culture that mystifies most things are what continue to deter African nations from realizing their full potential.
Gilles Saint-Paul argues that:
“most African countries are trapped at a “low-trust” equilibrium where basic property rights are not enforced and corruption is rampant. Essentially if I do not expect others to fulfil their side of the contract, it is rational for me not to fulfill mine, and transactions eventually disappear“
One of my favorite economists, Daron Acemoglu, adds that:
“The economic problems of African nations are a consequence of their postcolonial institutions, which are themselves the continuation of the precolonial institutions.“
But Lant Pritchett is quick to remind us of the folly of lumping all the sub-Saharan African countries together, pointing out the stark differences between places like Botswana and Somalia or Cote d’Ivoire and Mozambique.
Have you seen the recent McKinsey report; they group the economies of the continent by type (transition, pre-transition, diversified, and oil exporters) and have some nice diagrams as well:
Lions on the move: The progress and potential of African economies
Yeah, I looked at the report over the summer and was a bit encouraged by it. The report rightly claims that urbanization is the only key to sustainable long-run growth. Now all that needs to happen is for African states to manage the urbanization process. But Lagos, Nairobi, Jo’burg, Dar, among others are not setting the right pace as far as the integration (housing, jobs, social services, etc) of rural-urban migrants is concerned.