Why has Africa Grown So Slowly Xavier SalaiMartin

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

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

Distortions and the Cost of Investment • Investment is low in Africa • Investment

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

Survey of Business Leaders

Survey of Business Leaders

Human Capital (1): Education • School Enrollments are low • Investment in Education does

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

Survey of Business Leaders

Survey of Business Leaders

Human Capital (II): Health • Life expectancy has increased in African over the last

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

Survey of Business Leaders

Survey of Business Leaders

Geography, Tropics and Institutions • Most Sub-Saharan Africa has adverse • • Geography: Landlocked

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-IMartin and Subramanian 2003)

Survey of Business Leaders

Survey of Business Leaders

Survey of Business Leaders. Corruption and the Natural Resource Curse

Survey of Business Leaders. Corruption and the Natural Resource Curse

Survey of Business Leaders

Survey of Business Leaders

Survey of Business Leaders

Survey of Business Leaders

Openness (Globalization? ) • Africa is essentially CLOSED (1% of world trade) • And

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

Is Globalization to Blame? • What is it? Free Movement of – Capital –

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

Excessive Public Spending and “bad government”

Excessive Public Spending and “bad government”

Survey of Business Leaders

Survey of Business Leaders

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

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

Ethnic Fractionalization and Conflict • Countries at war between 1960 -2002: Algeria, Angola, Burundi,

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, Nigeria, Rwanda, Sierra Leone, Somalia, South Africa, Sudan, Togo, Uganda or Zimbabwe.

Survey of Business Leaders

Survey of Business Leaders

USING BACE COEFFICIENTS

USING BACE COEFFICIENTS

What to do? • African Countries – – – Peace Institutions/Markets Openness • Rich

What to do? • African Countries – – – Peace Institutions/Markets Openness • Rich Countries: – Change AID Programs: • Focus on R&D – Open Markets (especially EU, USA and Japan ‘s agricultural protectionism) • NGOs: – Education (progresa-type programs) – Health (doctors without borders)