1. Why has Africa Grown So Slowly? Xavier Sala-i-Martin UPF June 2004

10. USING BACE COEFFICIENTS

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

13. Human Capital(1): Education School Enrollments are low School Enrollments are low Investment in Education does not lead to more enrollment: incentives Investment in Education does not lead to more enrollment: incentives

15. Human Capital (II): Health Life expectancy has increased in African over the last 40 years but: 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 We now face a public health crisis, a pandemic of biblical proportions

18. Geography, Tropics and Institutions Most Sub-Saharan Africa has adverse Geography: Most Sub-Saharan Africa has adverse Geography: Landlocked Landlocked Tropical 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-I- Martin and Subramanian 2003) INSTITUTIONS AND NATURAL RESOURCES (Nigeria, Sala-I- Martin and Subramanian 2003)

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

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

23. Excessive Public Spending

25. Ethnic Fractionalization and Conflict Countries at war between 1960-2002: 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, Niger, Nigeria, Rwanda, Sierra Leone, Somalia, South Africa, Sudan, Togo, Uganda or Zimbabwe.

27. What to do? Rich Countries: Rich Countries: –Change AID Programs: Forget 0.7% Forget 0.7% Forget Debt Forgiveness Forget Debt Forgiveness R&D R&D –Open Markets African Countries African Countries –Peace –Institutions/Markets