LITMIR.BIZ

      Source: Authors’ calculations based on data from World Bank Data Bank, World Development Indicators, World Bank: Washington D.C.

      The successful service exporters, ores and manufactures exporters, have increased the share of information technology (IT)-related exports in their service exports. The three groups which saw a decline in the share of their service exports in GDP also experienced a decline in the share of IT-related exports in their service exports. This is significant as IT-related exports have been particularly dynamic in the world economy.

      The countries in SSA have usually had a deficit in their current account balance. But only the agricultural exporters have experienced a very large increase in their current account deficit. Countries in most groups have experienced an increase in FDI inflows as a percentage of GDP except for the ore-exporting countries.

      An earlier paper had found that the overall trends in Latin American countries by export orientation were highly similar to those in SSA (Agarwal and Pirzada, 2015). Growth of GDP accelerates for all groups of countries just as it does in SSA, and the share of XGS in GDP increases for all groups just as it does in the case of SSA. The behaviour of investment is, however, different. In the case of SSA, the share of GFCF in GDP increased for all groups except the manufacturing exporters. In the case of LA, it increases for manufacturing exporters also. However, it is almost constant for exporters of natural resources, fuels and ores. The similarity in trends suggests strongly that the economic performance of these countries is driven by forces in the world economy.

      The acceleration of growth for exporters of agricultural and manufactured goods has been greater in LA than in SSA. Also, the absolute growth rates have been higher for these two groups. So, in general, countries in SSA have performed worse than those in LA even when the export orientation was similar. However, the increase in share of XGS and of GFCF has generally been greater in SSA when countries with similar export orientation are compared. This presages well for the future in SSA that the gap between countries in SSA and LA may narrow. It may also mean that countries in SSA perform better on the social front as do countries in LAC.

       Conclusions

      Despite a greater emerging correlation with growth rates of the world economy and major players like the US and China, SSA is far from realising the true extent of its economic potential, with the least average annual per capita GDP growth of 0.7% over the past half a century. With liberalisation and increased financial integration with the world markets over the decades (1965–2016), the African economies are influenced more significantly by international factors than before, and this brings with itself a fair share of both advantages and pitfalls.

      SSA’s share of exports in GDP (XGS), while high, has increased the slowest out of all regions and the burgeoning importance of remittances has failed to prevent the deterioration of the current account balance. The savings rate in SSA remains lower than the level attained in the 1970s, leaving the region vulnerable to the vagaries of the current account balance; however, the growth projections of 5%, if the current levels of the investment ratio and ICOR hold, lend credence to the expectation that the effective damage to economic growth can be limited.

      When it comes to deconstructing the poor performance of the Sub-Saharan African region, an analysis of export orientation indicates that the inability of the manufactures-exporting economies to be competitive in the world market (specifically, the presence of several small suppliers as opposed to single large suppliers like China and India) could be a potential reason for their lacklustre growth. While the exporters of agricultural commodities and ores have managed to maintain a favourable position, there is still a gap vis-à-vis Latin American countries with comparable export baskets. Given the general evidence of a greater increase in share of XGS and GFCF for SSA, it is reasonable to expect that this gap can be bridged to an extent. For ser vices, groups other than manufactures and ores exporters do poorly both in the share of service exports in GDP and in the share of IT-related exports in ser vice exports.

      The growth patterns of SSA and Latin American economies are closely tied to the state of the world economy and as such the time is opportune to work for the overall recovery of the latter with specific focus on the requirements of the former. Re-establishing the importance of constructive aid, opening channels for larger private financial flows and strengthening the negotiating power of such regions within international organisations such as the World Bank and IMF are necessary to bolster the lagging growth. Furthermore, provision of greater soft aid would help to raise investment rates and subsequently increase growth without a need for prior increase in domestic savings. Actions by the G20 that would increase world growth provide more appropriate balance of payments financing without onerous conditionality and more soft aid would help increase growth rates in SSA which would further the achievement of the goals of sustainable development.

       References

      Agarwal, M. and Pirzada, N. (2015). Sub-Saharan Experience of Growth: The Role of the least Developed and Fragile States, G. Kararach, H. Besada, and T. Shaw (eds.), Bristol: policy Press.

      Barro, R. J. and Sala-i-Martin, X. (1992). Convergence. Journal of Political Economy, Vol. 100, No. 2, pp. 223–251.

      Easterly, W. and Levine, R. (1997). Africa’s Growth Tragedy: Policies and Ethnic Divisions, The Quarterly Journal of Economics, Vol. 112, No. 4, pp. 1203–1250.

      Whitfield, L. (2012). How Countries Become Rich and Reduce Poverty: A Review of Heterodox Explanations of Economic Development, Development Policy Review, Vol. 30, No. 3, pp. 239–260.

      ¹Several studies have been undertaken by the World Bank to analyse the region’s performance.

      ²For instance, Easterly and Levine (1997) ascribe the poor performance of SSA to ethnic divisions, which leads to poor governance, conflict and also fragility.

      ³The list of LDCs is reviewed once in every 3 years by the United Nations Economic and Social Council (ECOSOC), based on recommendations of the Committee for Development Policy (CDP). The UN classifies countries as “least developed” in terms of their low gross national income (GNI), their weak human assets and their high degree of economic vulnerability. See http://www.un.org/en/development/desa/policy/cdp/ldc/ldc_list.pdf.

      ⁴Since we are analysing growth of per capita income, demographics has nothing to do with the analysis. There is no theory or empirical evidence that ties rate of growth of per capita income with rate of population growth.

      ⁵For an analysis of convergence, see Barro and Sala-i-Martin (1992). See also Whitfield (2012).

      ⁶The increase in the share of trade in GDP is also because of the increase in trade in intermediate goods. Intermediate goods are traded a number of times before they are incorporated in the final product. As a consequence, trade grows much faster than output.

      ⁷As

Скачать книгу