Presentation for the seminar "Why is Africa (still) poor?", April 30, 2013, UMB, Norway. http://africapoor.wordpress.com/

1. Why is Africa (still) poor?
Ragnar Øygard
UMB School of Economics and
Business
April 30, 2013

2. Why is Africa (still) poor?
• Many causes – many
speakers
My explanation:
• History, institutions
and policy

3. Why is Africa (still) poor?
• The right question?
• Alternative question: Why is so much of the
world so rich?
• Turning point ca. 1800

4. Why is Africa (still) poor?
• Less growth in Africa than other parts of the
world since 1800 – and esp. last 50 years
– In total income
– In per capita income (high rates of population
growth)
But: very high growth rates last decade
And: There have been big improvements in health
and education

5. Why less growth in Africa?
Growth regressions - Robust findings:
Higher growth is correlated with:
-Higher saving and investment level
-Not being in Sub-Saharan Africa
So what is it with Africa?

6. Why less growth in Africa?
Geography
or
Institutions?

7. Geography
• Tropics
• Temperature
• Soils
• Disease
• Low population
density
• High infrastucture cost
• Landlocked
But: Botswana!

8. Institutions and Policy
Jared Diamond: «Guns, Germs and
Steel»:
-Few or no plants and animals
suited for domestication
-Little or no settled agriculture
-Not hierarchical settled farmer
societies
-Hunter-gatherers: «The original
Affluent Society» (Marshall Sahlins)
-Easy victim for European
colonizers

9. The Scramble for Africa
• Slave trade
• Division of Africa by
colonial powers
• Extractive institutions
– e.g. little investment in
education – as opposed to
in temperate colonies

10. The colonial legacy: Institutions
• Young, weak and
fractionalized states
with little basis in pre-
colonial divisions
• Weak notion of
«nationhood» – of
«being in the same
boat»
• The language of the
state is the colonizer’s
language

11. The colonial legacy: Institutions &
policy
• Young, weak and
fractionalized states:
Redistributive policies
• Extractive institutions
– autocratic regimes:
Weak «checks and
balances» and «rule of
law»
• Contested power –
civil war

12. The colonial legacy: Policy
At independence: Divison
between political power and
control over the economy
and businesses.
Adoption of policies of:
-nationalization and
-Import-Substituting-
Industrialization
- Trade barriers
- Overvalued exchange rates
- Parastatals and monopolies

13. Current trends: Reason for some optimism!
• Natural resource boom
• Growing sense of nationhood
• More democracy – e.g. constitutional transfer of
power.
• Better policies for broad based growth – e.g. by
investment in education, agricultue and rural
sectors
• Foreign direct investment
• Falling population growth rates
Africa can catch up – but it will take some time!