Transcript Dr Gardner
Claiming the credit: international organizations, foreign investors, and developmental states Leigh A Gardner Economic History Department London School of Economics Current performance in a long-run perspective • This not the first growth boom in Africa’s economic history • Previous period of growth from 1940s-1970s also characterized by optimism about future prospects • Longer-term performance comprised of periods of growth followed by reversals, with limited gains in per capita income. Global comparisons • Other world regions have experienced same boom-and-bust pattern for long periods • Transition to modern (sustained) economic growth is the exception rather than the rule • Key to transition is institutional change FIGURE 4: Real GDP per capita in four European countries, 1270-1870 (1990 international dollars, log scale) 6,400 3,200 1,600 800 400 1270 1284 1298 1312 1326 1340 1354 1368 1382 1396 1410 1424 1438 1452 1466 1480 1494 1508 1522 1536 1550 1564 1578 1592 1606 1620 1634 1648 1662 1676 1690 1704 1718 1732 1746 1760 1774 1788 1802 1816 1830 1844 1858 200 Britain Holland Italy Spain Source: Malanima (2011); Álvarez-Nogal and Prados de la Escosura (2012); Broadberry, Campbell, van Leeuwen and van Zanden (2012). 4 Lesson from European transition • 2 key institutional changes paved the way for modern economic growth: – Constraint on the executive – Expansion of state capacity • Problem? Institutional change takes time. Why is institutional change important? • Growth reversals are less severe in countries with better institutions – The reversal of fortune between South Asia and SSA was linked to the duration and severity of the reversal following the 1970s oil crises • Institutional change facilitates structural change and diversification Remaining challenges in Africa • Democratization and governance have improved since the 1990s • State capacity, measured in terms of tax revenue collected, has shown little improvement in many countries Elusive factor – sustained growth What gave rise to modern economic growth is the question that prompted the birth of economic history in the first place, and it remains as relevant today as it was in the late nineteenth century. - Kevin O’Rourke, Irish Economy Blog Question for Africa is not who can claim credit for current boom, but how to generate institutional change necessary for transition to modern economic growth.