The Political Economy of Economic Performance. Voxi Heinrich Amavilah
Table 5.3
When the world economy was in bad shape during the mid-1970s and the late 1980s, especially following the US-Iran crisis and the Arab-Israeli oil embargo, the economic situation was many times worse for sub-Saharan African countries (SSACs) than it was for the rest of the world (ROW). Through 1986, for instance, the average annual growth rate of SSACs was either declining or negative compared to three plus percent for the ROW. It went up for the next two years, and down for the next four. After 1992, however, the rate of growth of SSACs picked up, surpassing the average rate for the ROW by 2000. Many experts, including the World Bank and International Monetary Fund (IMF), began to talk of a permanent turnaround for the SSACs. The 2007–2010 financial and economic crises—together the Great Global Recession (GGR)—mostly in the developed countries spread quickly to the developing countries via known channels and slowed down economic performance everywhere. However, “in [sic] previous global downturns, Sub-Saharan Africa has usually been badly affected—but not this time” (Sayeh 2012, 1). In fact, even post-GGR, in 2015 Africa’s growth rate was still unusually high, convincing some to write of “the twilight of the resource curse” (Economist 1/7/2015, 1). Edwards, Johnson and Weil (2016) has since written a four-volume account of “African successes” focusing on “government and institutions” (Volume 1), “human capital” (Volume 2), “modernization and development” (Volume 3), and “sustainable growth” (Volume 4). The successes appear to have deep roots, because, while there was a strong correlation between commodity prices and GDP growth in Africa during the 1961–2014 years, with commodity prices leading the way, except during the mid-1970-early-1990s, GDP grew faster than commodity prices in the “Africa rising” period (Arias and Wen 2015). “The twilight of the resource curse” is the idea that African economies have diversified away from commodities and toward telecommunication, transportation, and finance such that even African billionaires have made their money in these new areas.
It remains clear to-date that the “Africa rising” experience put many African countries on their positive performance trajectories unseen in many years past. Many experts have credited improvements in macroeconomic policy and reform in these countries as reasons for growth, but few among them have given satisfactory explanations. This is the phenomenon which interests the essays in this book. The essays fill the gap in current understanding of the performance of SSACs. They outline some factors and forces behind the good performance of SSACs, and sketch the way forward. All-in-all the essays suggest two broad themes—a weakness that represents an unavoidable tradeoff between depth and breadth. The first theme is about the factors and forces responsible for performance. These include (a) the intensity of use of newer technologies (mainly mobile phones and the internet); (b) the gathering importance of technical knowledge; (c) the role of conventional factors and forces of production (both local and global); and (d) the quality of institutions.
The significance of the intensity of use of newer technologies suggests that the obstacle to the good economic performance of SSACs is not lack of technology, but rather the difficulty of spreading technology and its underlying knowledge from advanced to developing countries and even within SSACs themselves. Therefore, the second theme of the book focuses on the way forward. First, it characterizes the problems that frustrate the spread of knowledge and technological innovations. Last, it stresses resource intra-actions and interactions as sources of technological change and long-run economic growth.
Each essay stands alone, making some repetition unavoidable. However, since a main objective of the book is to provoke a positive (encouraging) positive (objective) inquiry into the performance of SSACs, I hope some repetition provides a reasonably general perspective within which other studies can proceed. Thus, although the scope is SSACs, I believe the book is suitable for all readers interested in the economic performance of developing countries for research and policy reasons. However, it is most suitable for advanced undergraduate and graduate students in economic development and related fields, academic libraries with an Africa focus, and for policymakers both in SSACs and internationally. Specifically, graduate and executive courses in international trade, international business, international economics, growth theory and development studies, and so on will find this book relevant.
First, in both writing and researching these essays, I benefited enormously from existing literature, individuals, and institutions too vast to even think of listing here. Along the many that deserve mention by name are the following late individuals, from my undergraduate through graduate studies and more, who always, or encouragingly pretended to, like my ideas even when I didn’t: George C. Murphy (UCLA), Harland “HP” Padfield (UC Davis and UC Irvine), Emery N. Castle (Oregon State), Michael Rieber (University of Arizona), and my doctoral boss Richard T. Newcomb (University of Arizona).
Second, my editor Joseph Parry at Lexington Books, and his staff, especially Bryndee Ryan and Alison Keefer, have been exceptional. Let me tell a quick story: I first approached Joe about a different manuscript I tentatively called Selected Reading on the Anthropological Foundations of Economic Behavior, Organization, and Control. The manuscript was my edited collection of six previously published book chapters by B. Malinowski, M.J. Herskovits, Sir W. Arthur Lewis, Joan V. Robinson, Frank H. Knight, and J. Kornai on economic behavior, economic organization, and economic control. Lexington offered me a contract, and Mr. Parry and I were very excited about bringing the readings to market again in light of economics failure to predict the Great Global Recession of 2007–2010. Only Professor Kornai gracious gave us permission to his essay. The other holders selected to charge exorbitant amounts for their rights, and one in fact republishing their work only months later. I like to think my badgering them motivated republication and the economic literature is no worse off for it.
Third, I am grateful to the anonymous manuscript reviewer for corrections, critical comments, and valuable suggestions. Most of the suggestions are reflected at appropriate places throughout the book; others have opened up wide avenues for future thought and research.
Last, but far not least, I owe a debt of appreciation to my wife and daughter, and I invite all my cheerleaders to share with me the strengths of the book while I absolve them all from any of its weaknesses.
This introduction is a sales pitch for the gains that SSACs made just before the Great Global Recession (GGR) of 2007–2010. This chapter demonstrates that these countries have sufficient capability to reverse their misfortunes and they have done so remarkably in recent years. Whether or not the Great Global Recession (GGR) itself have caused irreparable harm is an interesting and important question, but one that needs a separate analysis. The empirical evidence presented here all points to an SSA that has fared quite well, especially relative to its performance history.
African countries have done relatively well since the mid-1990s. However, little is well understood about how that performance came about. The goal of this book is to enhance the understanding of the recent economic performance of SSACs. To accomplish the goal, I set six manageable objectives and pursue them as the chapters in this book. Empirical and analytical evidence from that pursuit suggests a discernible reversal of misfortunes for these countries. Whether the reversal itself is sustainable (permanent), or the 2008–2010 global recession has already ended the party for these countries are difficult questions to answer. Assuming that SSACs had sufficient capability for good performance before the GGR, even if the recession was a party spoiler, there are at least two things that can be done to revive the party. I outline those issues in the last two chapters, before I conclude.
Economic Performance of SSACs
In its Summer