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, (1990 international dollars, log scale) 4 Source: Malanima (2011); Álvarez-Nogal and Prados de la Escosura (2012); Broadberry, Campbell, van Leeuwen and van Zanden (2012).

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.