Political instability and economic development in Sub-Saharan Africa: Further evidence

After more than three decades of independence, many countries in Sub-Saharan Africa have not yet developed stable political systems. Since the 1960s, when African countries began to achieve independence, many of them have encountered significant levels of institutional instability. In recent years, political violence has emerged as the most common method of governmental change. In this study, the effects of political violence on economic and human development in Sub-Saharan Africa are examined. It is seen that political instability is a significant constraint to the improvement of the human condition in the region.     

NEPAD AND THE CAPITAL FLOWS INITIATIVE: CAN AFRICA WALK THE WALK?

In the 1960s and early 1970s the future of Africa looked bright and promising. Economic growth and development on the continent was considerably higher than in other developing regions. However, during the middle 1970s political instability increased and economic development started to deteriorate, both contributing to the marginalization of the continent. The continued marginalization constitutes a serious threat to the participation of Africa in the global economy. Nepad calls for a reversal of this process through a new partnership between Africa and the international community (Nepad, 2001: 1 and 2).     

The world bank in Africa: Historical reflections on the African present

This paper offers a historical commentary on the World Bank's influential report, Accelerated Development in Sub-Saharan Africa. A very broad perspective is adopted, partly to identify the main points of connection between historians and development economists, and partly because the Report, though widely commented on, has not been addressed directly by historians of Africa. The principal aim of the paper is to show how Africa's past bears upon its present by linking the economic history of the continent to its contemporary development problems. The analysis is divided into two parts. The first part deals with some of the unstated assumptions underlying the Report. The second part focuses on the World Bank's assessment of the current “crisis” in Africa, and offers a long-run interpretation of the relationship between population, resource use, institutional change, and political incorporation. The paper concludes by drawing attention to the dangers of excessive specialization among experts, and by pressing the case for reuniting history and development economics.     

SOUTH AFRICA AND THE NEW PARTNERSHIP FOR AFRICA'S DEVELOPMENT: ECONOMIC SPIN-OFFS AND LINKAGES

The New Partnership for Africa's Development (NEPAD) is a concerted effort by Africa's political leaders to develop a comprehensive and integrated strategic policy framework to raise current levels of socio‐economic development and reduce high levels of poverty across the African continent. The NEPAD framework recognises the need for African countries to pool their resources together in order to enhance regional development and economic integration. To this end, NEPAD emphasises capacity building and also seeks to solicit and disburse funds towards infrastructural development programmes and poverty alleviation projects, among others. South Africa's involvement with the rest of Africa has increased significantly since 1994. Trade exports, foreign direct investment (both market and resource‐seeking in nature) and public‐private partnerships have mushroomed in many parts of the continent. Many South African firms are providing the financial impetus for the infrastructural development and rehabilitation of African economies. This paper discusses salient economic linkages between South Africa and the rest of Africa within the framework of NEPAD. South Africa is the economic hub of sub‐Saharan Africa (and indeed of the African continent), with significant agricultural, manufacturing and services capacity. South African firms have invested in the development of a number of sectors in the rest of Africa, taking advantage of the new investment incentives offered by the NEPAD framework. The target sectors range from mining, the hospitality industry, engineering and construction, finance to telecommunications. These investments and economic involvements are crucial to the development of African countries and the relevant sectors that are important for the realisation of some of the objectives of NEPAD.     

NEA Presidential Address: Gender Inequality and Human Development in Sub- Saharan Africa

This Presidential Address considers the effects of gender inequality on human development in Sub-Saharan Africa. Parameter estimates from quantile and ordinal categorical latent variable specifications of the relationship between components of the Human Development Index and measures of gender inequality suggests that human development in Sub-Saharan Africa increases with respect to improvements in several measures of gender inequality. The results suggest that inegalitarian laws, norms, traditions and codes of conduct toward women constrain both human and economic development in Sub-Saharan Africa.     

Aid and economic growth in LDCs: Evidence from Sub-Saharan Africa

This paper uses a disaggregated cross-national time-series aid data and a Least Squares Dummy Variables (LSDV) model to investigate the effects of aid on economic growth in Sub-Saharan Africa. We find that, contrary to what some critics of aid argue, aid has a small but positive and significant effect on economic growth in Sub-Saharan Africa. A simultaneous equation specification of the model shows that aid affects economic growth in Sub-Saharan Africa directly and indirectly through increased domestic savings and investment.     

Political instability, investment and economic growth in Sub-Saharan Africa

This paper explores the relationship between political instabilityand economic growth in Sub-Saharan African nations. A more comprehensivemeasure of political instability than has previously been developedis used in combination with a simultaneous equations model anddynamic panel estimation approach to produce several interestinginferences. First, the statistically significant inverse relationshipbetween political instability and economic growth identifiedby earlier studies is confirmed by the estimates presented here.Second, the estimated system of equations indicates that economicgrowth and political instability are jointly endogenous. Third,in addition to the direct impact that political instabilityhas upon growth, estimates confirm the hypothesis that politicalinstability indirectly decreases economic growth by decreasinglong-run capital accumulation. Fourth, failure to account forthe dynamic nature of growth equations as well as the endogeneityof explanatory variables may produce biased effects of politicalinstability on growth. Fifth, the broad measure of politicalinstability we use in this study can better capture the effectsof political instability on economic growth than 'elite' instabilitythat has been used by earlier researchers. Finally, principalcomponents estimation is used to develop a measure of politicalinstability that can serve as an alternative to the arbitraryweighting scheme used in previous research.     

Capital Flight Repatriation: Investigation of its Potential Gains for Sub‐Saharan African Countries*

Abstract: Despite the substantial recent increase in capital flows to sub‐Saharan Africa (SSA), the sub‐continent remains largely marginalized in financial globalization and chronically dependent on official development aid. The current debate on resource mobilization for development financing in Africa has overlooked the problem of capital flight, which constitutes an important untapped source of funds. This paper argues that repatriation of flight capital deserves more attention on economic as well as moral grounds. On the moral side, the argument is that a large proportion of the capital flight legitimately belongs to the African people and therefore must be restituted to the legitimate claimants. The economic argument is that repatriation of flight capital will contribute to propelling the sub‐continent on a higher sustainable growth path while preserving its financial stability and independence and without mortgaging the welfare of its future generations through external borrowing. The anticipated gains from capital repatriation are large. In particular, this paper estimates that if only a quarter of the stock of capital flight was repatriated to SSA, the sub‐continent would go from trailing to leading other developing regions in terms of domestic investment. The paper proposes some strategies for inducing capital flight repatriation, but cautions that the success of this program is contingent on a strong political will on the part of African and Western governments and effective coordination and cooperation at the global level.     

Economic incentives, natural resources and conflict in Africa

This paper reviews how rebel leaders motivate followers to fightin wars in Sub-Saharan Africa. Almost all rebel leaders do useeconomic incentives, but they also avail themselves of otherstrategies to motivate their soldiers, including political indoctrination,ethnic mobilisation and coercion. The type of incentive employedwill depend primarily on the nature of the state confronted.In particular, those movements that face competent nationalmilitaries will have to evolve into viable armies while rebelsfighting states that are weak and corrupt can afford to leadmovements that employ coercion and pursue economic agendas.     

Promoting of Investment in Africa*

Abstract: This paper examines the trend, constraints, promotion, and prospects of investment – domestic investment, foreign direct investment, and private portfolio investment – in Africa. After identifying the importance of investment in Africa's economic development, it was shown that all forms of investment are low in Africa and hence inadequate for the attainment of the MDGs and poverty reduction in the continent. The constraining factors include: low resources mobilization; high degree of uncertainty; poor governance, corruption, and low human capital development; unfavorable regulatory environment and poor infrastructure, small individual country sizes; high dependence on primary commodities exports and increased competition; poor image abroad; shortage of foreign exchange and the burden of huge domestic and external debt; and undeveloped capital markets, their high volatility, and home bias by foreign investors. The paper recommends that successful promotion of both domestic, foreign direct and portfolio investment in Africa will require actions and measures at the national, regional, and international levels. It concludes that the prospects are bright. New and attractive investment opportunities are emerging in infrastructure, particularly as most African countries now encourage public/private partnerships for investments in this sector. In addition to privatization, renewed interest within Africa in undertaking regionally based projects and joint exploitation of natural resources is creating other investment opportunities. Apart from the fact that investment in Africa yields the highest returns, investment risk in the continent is declining. In addition, much progress has been made in recent years to improve the investment climate in Africa. All this is of course is not to deny that obstacles do remain hence economic reforms to enhance domestic investment would need to be complemented by measures to attract increased foreign capital. Critical in such endeavors must be efforts to improve governance in some countries as well as to eliminate socio‐political violence in others and development of domestic capital markets, while government institutions must be modernized and upgraded.     

Political instability, policy uncertainty, and economic growth: An empirical investigation

This paper elaborates upon the effect of political stability on economic growth using a novel approach. Unlike the literature on growth that emphasizes the turnover of decision makers, this paper focuses on the volatility of economic policies as the relevant indicator of stability. The literature on growth ignores the microeconomic instability associated with frequent changes of government policies. The empirical results of this paper indicate that the effect of political instability on economic growth is not conclusive. Most of the commonly used proxies for political instability have failed to explain growth differences across countries. The political instability indices have no significant effect on growth when a reasonable set of core variables is also included in the regression equation. The results also show that almost all of the policy uncertainty variables are significantly and negatively correlated with economic growth. However, the instability of economic policies has no significant impact on the accumulation of capital.     

Do authoritarian regimes receive more Chinese development finance than democratic ones? Empirical evidence for Africa

This study is part of an emerging literature that aims to shed light on China's development finance activities in Africa using quantitative estimation techniques. This paper empirically investigates whether African authoritarian regimes receive more Chinese development finance than democratic ones. I use four different measures of democracy/autocracy which allows me to check whether my results depend on the specific indicator chosen. The OLS results suggest that Chinese development finance does not systematically flow to more authoritarian countries, controlling for strategic, economic, political, institutional and geographic confounding factors. The results are not driven by the specific democracy indicator used in the analysis. The findings remain virtually unchanged if I reduce the sample to Sub-Saharan Africa only. Furthermore, the results stand up to several robustness checks, including FE, RE and instrumental variable estimation.     

African Social Sciences and Development in the New Century: Challenges and Prospects

Abstract: This paper examines the travails of the social sciences in Africa since the post‐colonial era. It pinpoints the fact that the ability of the social sciences to be really meaningful to the delusive development quest by Africa has been undermined by a combination of structural and epistemological problems. These problems range from the dismal economic environment in the continent, the structural limitations imposed on research, poor conditions of service to laziness and epistemological inferiority among African social scientists. However, the paper posits that the current wind of change blowing across Africa, a re‐examination of the epistemology of the field and a conscientious self‐reappraisal will ultimately reposition the social sciences to play significant roles in the development of Africa.     

Reviewing China and Africa: Old interests,new trends – or new interests,old trends?

Africa was for a long time considered to be Europe's backyard. This situation since the turn of the century has changed considerably. With new actors pursuing their own economic interests, mainly representing the growing influence of so-called emerging economies, new multipolar realities have arrived on the continent. Access to and control over natural resources has entered a new stage of competition among external actors and in their interaction with local elites. Africa has changed as an arena, and realities are increasingly shaped by Chinese influence too. This overview on recent contributions to the debate summarises the current assessments of the degree, impact and effects of the Chinese economic expansion. It then reflects on the potential new scope for cooperation and development and ends with some conclusions on the possible options and opportunities this might offer.     

The Political Economy of Middle‐Income Traps: Is South Africa in a Long‐Run Growth Trap? The Path to “Bounded Populism”

The current literature on middle‐income traps has been dominated by economists who have relied on economic explanations mainly around stages of development and the structural transformation of economies. But there is an equally vigorous literature from political science which speaks to the political economy of transitions. We look at the dynamics of how economic modernisation triggers structural changes with winners and losers and how this is reflected in the polarisation of the political sphere amongst middle‐income countries. This paper asks the question of whether South Africa is an archetypical example of a country stuck in a trap and how this has affected the policy choices that it has made. South Africa needs to move up the value chain with a viable value proposition, and this requires a very different policy set and human capital plan.     

History of industrial decentralization in South Africa (Part I): The regional concentration of industry and the historical basis of the policy∗

This research deals broadly with the history and development of industrial decentralization in South Africa. It provides a basic analysis of a number of inseparable historic, political and economic issues, and is presented in two parts. This first part begins by tracing the economic forces that generated current concentrated patterns of economic activity in South Africa, and goes on to review the origins of the industrial decentralization policy. It concludes that despite a relatively rigid natural regional economic structure that developed historically, and despite the continued presence of the economic forces that brought this structure about, the government commenced with a policy of industrial decentralization in 1960. The second part of the research firstly assesses the development of the policy in an attempt to indicate reasons for major changes, and secondly discusses the impact of the policy with reference to current evidence. It concludes that the industrial decentralization policy may have had serious economic consequences to date, but may nevertheless have a continued role to play in the ongoing political development of the country. The approach throughout has been to provide a relatively compact chronology of the policy and its antecedents.     

Terrorism and its Determinants in the Sub‐Saharan Africa Region: Some New Insights

Terrorism is undesirable as it adversely affects the economic development of countries. This study explores the determinants of terrorism in 29 countries of sub‐Saharan Africa (SSA). The data is extracted from reliable sources spanning over 2005 to 2016. Econometric techniques relevant for panel data that control for unobserved heterogeneity (fixed effects) and endogeneity (generalized method of moment) are employed to estimate the specified models. The results indicated that low growth in per capita incomes along with political instability are the main driving forces responsible for terrorism. Similarly, military expenditures are influencing terrorism positively whereas corruption has impacted terrorism negatively in the SSA region. Further, the growth of both physical as well as human capital reduces terrorism. The paper suggests that the region should take appropriate steps for increasing income of the population, education and capital stock, along with ensuring political stability to eradicate terrorism from the region.     

The economic causes and consequences of social instability in China

This paper provides a survey of the economic literature relevant to social instability in China and moulds it into an argument. The objective is to offer a fresh view of economic policy and performance through the lens of the threat posed by social instability. This is a concept that economists rarely analyse, and yet it can lurk behind much economic policy-making. China's leadership has often publicly expressed its concern to avoid ‘social instability’. It is viewed as a threat both to the political order and to the continued rapid growth of the economy. This threat to growth in turn endangers the maintenance of social stability. The paper examines the likely economic determinants of social instability, using both surveys and other evidence. After discussing the determinants of China's rapid growth, the paper goes on to examine the likely mechanisms by which social instability can affect the growth rate. There is a case for more research on the role of social instability in the economic development process.     

History of industrial decentralization in South Africa (part II)∗: Historical development and impact of the policy

This research deals broadly with the history and development of industrial decentralization in South Africa. It provides a basic analysis of a number of inseparable historic, political and economic issues, and is presented in two parts. The first part firstly traced the economic forces that generated current concentrated patterns of economic activity in South Africa, and secondly, reviewed the origins of the industrial decentralization policy. It concluded that despite a relatively rigid natural regional economic structure that developed historically, and despite the continued presence of the economic forces that brought this structure about, the government began with a policy of industrial decentralization in 1960. The second part of the research, published here, firstly assesses the development of the policy in an attempt to indicate reasons for major changes, and secondly discusses the impact of the policy with reference to current evidence. It concludes that the industrial decentralization policy may have had serious economic consequences to date, but may nevertheless have a continued role in the ongoing political development of the country. The approach throughout has been to provide a relatively compact'chronology of the policy and its antecedents.     

The Political Economy of Urban Food Security in Sub-Saharan Africa

Sub-Saharan African cities in the late 1990s face a daunting set of problems including rapid growth, increasing poverty, deteriorating infrastructure, and inadequate capacity for service provision. Even as a renewed debate is shaping up around issues of urban development, there is little attention given to the question of urban food security. Whereas in the 1970s and 1980s, urban food problems in Africa commanded political attention, the nature of urban food insecurity in the 1990s is such that it has tended to lose political importance. This is largely because in the 1970s, the problem was one of outright food shortages and rapid price changes that affected large portions of the urban population simultaneously. The impact of structural adjustment, continued rapid growth, and an increase in poverty make urban food insecurity in the 1990s primarily a problem of access by the urban poor. Under circumstances where the urban poor spend a very large portion of their total income on food, urban poverty rapidly translates into food insecurity. The lack of formal safety nets, and the shifting of responsibility for coping with food insecurity away from the state towards the individual and household level has tended to atomize and muffle any political response to this new urban food insecurity. This paper briefly reviews urban food insecurity and generates a set of empirical questions for an analysis of food and livelihood security in contemporary urban sub-Saharan Africa, and then examines historical and contemporary evidence from Kampala, Uganda, and Accra, Ghana, to suggest some tentative conclusions.