Economics 3510 African Economic Development Spring 2009 Introduction Instructor: A. R. M. Ritter May 11, 2009

Agenda: I.Introductory and Administrative Matters II.Brief Geographical and Historical Overview Presentation based on maps; Geography; Political evolution Population Economy Literary presentation Pre-Colonial Epoch Colonialism and Independence Recent Experience, Summary

Ethnic Groups

The Scramble for Africa: Berlin Conference of to Divide Africa

The Recent African Development Experience Bad News: Economic Contraction, 1970s to 1990s – minus 0.9 % per capita per year, – 27 countries with declining GDP pc, Good News: Recent Growth Recovery late 1990s to % per year or about 2.4% % per capita per year, Bad News: 2009:caught in global recession

Explanation of earlier contraction: A Conjuncture of Negative Circumstances 1. Problems of Governance Political instability Civil war, weak governance and Corruption; 2. Burgeoning population growth rates, with 3. Health Problems HIV/AIDS epidemic in many countries (see chart) Malaria etc. 4. “Poverty Traps” or Interacting Vicious Circles 5. Inappropriate economic policies: Modern sector Industrial &Urban Bias Trade protectionism; Ineffective integrative schemes Exchange rate dysfunction Price Controls;

5. External Factors; Weak export commodities (see charts) Protectionism vs. some products, esp. Cotton New LDC competition (coffee) Competition from China for all manufactures “Resource (or Oil) Economy Syndrome” Growing debt burdens Falling aid volumes plus high aid dependence (see chart) 6. Environmental problems Desertification; Soil depletion Climate change

Renewed Economic Expansion, : Explanation 1. Buoyant world economy promotes recovery – primary commodity prices rise – new drivers of growth such as increased economic relations with China and India. 2. Some debt reductions and relief from servicing the debt 3. Increases in development assistance 4. Direct foreign investment has started up. 5. Reduced conflict in the region? (ambiguous) 6. Improved public policy 7. Improved governance

Result: Poverty levels decline; Personal & family incomes rise; Tax revenues and social expenditures (health & education) rise General improvement But: problems mentioned earlier remain; - some countries are in trouble; - peace and stability are tenuous in a few cases.

Comments above suggests some Prescriptions. Peace, Political Stability and Good Governance: 1. Peace, Political Stability and Good Governance: - Easily said; hard to achieve. Contain Population Growth and Contain HIV/AIDS 2. Contain Population Growth and Contain HIV/AIDS - difficult but imperative. Get Economic Policies Right 3. Get Economic Policies Right - again easy to say but hard to do.

4. Strong Democratic government: “first things first”: focus on necessary public goods: - law and order, - effective legal system, - monetary stability, - education, health, - anti-poverty-oriented social policies - infrastructure, - fair and reasonable taxation

2009: Renewed Contraction Central Causal Factors Not banking & finance; Commodity prices affecting foreign exchange prices, tax revenues, social expenditures, family incomes DFI slowdown