Finn Tarp, UNU-WIDER Development and Poverty in Sub-Saharan Africa MFA Planning Days, 27 September 2018

Introduction

Context The Economist (11 May 2000): Hopeless Africa The Independent (15 July 2009): Africa – the lost continent The Economist (3 December 2011): The hopeful continent – Africa rising A recent Afrobarometer survey suggests: ‘despite high reported growth rates, lived poverty at the grassroots remains little changed’ (Dulani et al. 2013) Others even question the growth revival referring to poor data

Questions What is really happening? What is going on at country level? Can one make sense of it all? Which are the policy implications?

Historical and Macro-economic Background

Brief historical points Independence in the 1960s Enthusiasm and progress Import substitution and high international borrowing The oil crises of the 1970s The international debt crisis Structural adjustment in the 1980s (“getting prices right”)

Real GDP per capita growth rate by region

Substantial variability: 16 GAPP country cases

Four key points A growth turn-around But still poor Heterogeneity (across countries and across time) Vulnerabilities looming

Poverty and Human Development

Monetary poverty headcount ratio at 1.90 USD (2011 PPP)

Life expectancy at birth

Human development index by region

But the poverty challenge remains significant Population of SSA doubled from 0.5 billion in 1990 to about 1 billion in 2013 Number of people in absolute poverty increased from 278 million in 1990 to 390 million in 2013 Seen against a poverty line of 3.10 dollar head count ratio only fell from 74% in 1990 to 65% in 2013

Structural Transformation

Agriculture value added

Manufacturing value added

Services value added

The basic story People leaving agriculture – but no productivity increase De-industrialization – too few jobs being created Low productivity services and informal sector growing (vulnerable employment)

Critical Issues for the Future

Major challenges Global demographic projections (2015-2050): from 7.3 to 9.7 billion, and Africa’s population is set to double to 2.5 billion (bigger than both China and India and Nigeria bigger than US) Structural transformation slow Jobs and employment creation lagging Agriculture and industrialization constrained Infrastructure and technology Climate change looming Many potential, but every reason to push decisively forward in African development over the next 15-20 years (remembering T x G = 69) Trickle down alone will not do the trick – see the ”Stockholm Statement”

UN High-Level Panel report on the post-2015 development agenda Called for: “..A quantum leap forward in economic opportunities and a profound economic transformation to end extreme poverty and improve livelihoods…” What will it take? Donor efforts in the social sectors have been highly successful – especially in the areas of health and education. However, for the movement of labour from the agricultural sector to the non-farm economy donors need to be more closely involved in the agricultural and industrial policies.

Development finance

Three big elephants in the room Trump Brexit Commodity prices

GROWTH AND POVERTY PROJECT: GAPP

Learning to compete: L2C

UNU-WIDER research output Growth and Poverty in Sub-Saharan Africa: Oxford University Press, edited by Channing Arndt, Andy McKay and Finn Tarp Measuring Poverty and Wellbeing in Developing Countries: Oxford University Press, edited by Channing Arndt and Finn Tarp Made in Africa: The Brookings Press, by Carol Newman, John Page, John Rand, Abebe Shimeles, Måns Söderbom, and Finn Tarp Manufacturing Transformation: Comparative Studies of Industrial Development in Africa and Emerging Asia: Oxford University Press, edited by Carol Newman, John Page, John Rand, Abebe Shimeles, Måns Söderbom, and Finn Tarp Africa’s Lions: The Brookings Press, edited by Haroon Bhorat and Finn Tarp Beating the Odds: Jumpstarting and Sustaining Inclusive Structural Transformation: Princeton University Press, by Celestin Monga and Justin Lin (see also Justin Lin’s WIDER Annual Lecture) Building State Capability: Evidence, Analysis, Action: Oxford University Press, by Matt Andrews, Lant Pritchett, and Michael Woolcock, (see also Pritchett’s WIDER Annual Lecture) The Practice of Industrial Policy: Business Coordination in Africa and East Asia: Oxford University Press, edited by John Page and Finn Tarp Growth, Structural Transformation and Rural Change in Vietnam: A Rising Dragon on the Move: Oxford University Press, edited by Finn Tarp Growth, Employment, and Poverty in Latin America: Oxford University Press, edited by Garry Fields et al. A LOT MORE: see https://www.wider.unu.edu/publications and https://www.wider.unu.edu/ including a series of special issues of journals and stand alone articles

Other material Stiglitz: https://www.wider.unu.edu/plenary-session/beyond-manufacturing- export-led-growth - see both the video, slides and the background paper that can be downloaded from the page Aryeetey: https://www.wider.unu.edu/event/wider-annual-lecture-22- political-economy-structural-transformation-has-democracy-failed see both the video and the slices that can be downloaded Tarp and colleagues: https://www.wider.unu.edu/publication/development- and-poverty-sub-saharan-africa this is a working paper on the very topic of the presentation.