Akbar Noman

Good Growth and Governance in Africa: Rethinking Development Strategies

Why has the economic growth performance of Sub-Saharan Africa been disappointing on balance over the past 50 years? More importantly, what can be done to reverse that trend and to sustain and improve upon the accelerated growth experienced in recent years? What are the possibilities and policies for Africa to reduce poverty and achieve sustained, rapid economic growth? What are the lessons of success in both Africa and elsewhere? Could some of the policies that proved so successful in East Asia help reverse the deindustrialization of Africa in the past three decades and be the basis of its structural transformation? These were the questions posed to a diverse group of experts on development convened by the Initiative for Policy Dialogue (IPD). This volume reflects the highlights of their deliberations. It broadens the policy debate, expands the policy options, and proposes alternative development strategies. This book captures the lively, and sometimes contentious, debate, and provides a note of optimism for the future. Though success is not assured, this volume argues that there is good reason to believe that policies based on lessons of successes, notably in East Asia, can be adapted successfully in African contexts. Contributors to this volume - Yaw Ansu, Chief Economist, African Center for Economic Transformation David Bailey, Professor of International Business Strategy and Economics, Coventry University Kwesi Botchwey, Executive Chairman, African Development Policy Ownership Initiative (ADPOI) Augustin Fosu, Deputy Director, United Nations University World Institute for Development Economics Research (UNU-WIDER) Atsushi Hanatani, Senior Research Fellow, Japan International Cooperation Agency (JICA) Research Institute Aziz Rahman Khan, Emeritus Professor of Economics, University of California, Riverside Mushtaq H. Khan, Professor of Economics, School of Oriental and African Studies (SOAS), University of London Helena Lenihan, Senior Lecturer in Economics, University of Limerick Thandinka Mkandawire, Professor of African Development, Department of International Development, London School of Economics and Political Science Deepak Nayyar, Professor of Economics, Jawaharlal Nehru University Akbar Noman, Adjunct Associate Professor of International and Public Affairs, Columbia University Izumi Ohno, Professor, National Graduate Institute for Policy Studies Kenichi Ohno, Professor, National Graduate Institute for Policy Studies Banji B. Oyeyinka, Professorial Fellow, United Nations University Maastricht Economic and Social Research Institute on Innovation and Technology (UNU-MERIT) Padmashree Gehl Sampath, Researcher, United Nations University Maastricht Economic and Social Research Institute on Innovation and Technology (UNU-MERIT) Kunal Sen, Professor of Development Economics and Policy, University of Manchester Ajit Singh, Emeritus Professor of Economics, University of Cambridge Howard Stein, Professor, Center for Afroamerican and African Studies (CAAS), University of Michigan Joseph E. Stiglitz, University Professor, Columbia University Jomo K. Sunderam Assistant Secretary-General for Economic Development, United Nations Department of Economic and Social Affairs (UN DESA) Jee-Peng Tan, Education Advisor, World Bank Dirk Willem te Velde, Programme Leader, Investment and Growth Programme, Overseas Development Institute Rudiger von Arnim, Assistant Professor of Economics, University of Utah Robert Wade, Professor of Political Economy and Development, Department of International Development, London School of Economics and Political Science Matsuo Watanabe, Faculty of International Studies and Regional Development, University of Niigata Prefecture Nimrod Zalk, Deputy Director-General, Industrial Development Division, South African Department of Trade and Industry (DTI) Meles Zenaewi, Prime Minister of Ethiopia

Infant Capitalists, Infant Industries and Infant Economies: Trade and Industrial Policies at Early Stages of Industrialization in Africa and Elsewhere

Adam Smith explicitly assumed the existence of a class of capitalists. He spoke of a “previous accumulation” of wealth in the economy into the nature and causes of whose wealth he was inquiring. This “previous accumulation” predated and preconditioned his analysis: “the accumulation of [capital] stock must, in the nature of things, be previous to the division of labour, so labour can be more and more subdivided in proportion only as stock is previously more and more accumulated.”1

5. The Roles of Development Banks: How They Can Promote Investment in Europe and Globally

The financial sector should help support the real economy. To achieve this key positive role the financial sector needs to encourage and mobilize savings, intermediate these savings at low cost, ensure savings are channelled into efficient investment (including in innovation and structural change) as well as helping manage the risks for individuals and enterprises. In the context of industrial policy, it should help fund new sectors and deepen existing ones, to support national and regional development strategies. Ideally, the financial sector could help societies acquire and accumulate learning, valuable for increasing productivity, especially in a dynamic sense (Stiglitz and Greenwald, 2014).

Good Growth and Governance for Africa: Rethinking Development Strategies: Introduction and Overview

When the countries of Sub-Saharan Africa achieved independence in rapid succession starting with Ghana in 1957, there were high hopes for the region. A group of outstanding leaders would inspire to bring a new era to a sub-continent long suffering from colonial exploitation and developmental neglect. What has happened since has been disappointing: whilst standard economic theory predicts a convergence in economic outcomes, with those countries with lower per capita incomes growing faster than those with higher, there has been divergence, particularly for Sub-Saharan Africa, with incomes per capita in the region stagnating over 1960-2000 (as the gains of the first two decades of that period were wiped out in the next two) and poverty increased when in the rest of the world per capita incomes more than doubled and in some of the most successful developing countries increased four-fold or more (see the figures in Section II). Only the few years before the global economic crisis of 2008 brought respite to this picture of gloom for Africa, as annual growth soared to some 6% during 2006 and 2007, with only the East and South Asian regions exceeding it by a significant margin, but even this period of optimism appears fragile and built on soaring resource prices as much as anything else. This naturally raises the question: Why has the economic growth performance of SubSaharan Africa (hereinafter Africa) been so disappointing and more to the point, what are the policy options for reversing that trend? What are the possibilities and policies for Africa to achieve sustained, rapid economic growth and associated structural transformations and begin to catch-up?