Revisiting Economic Growth in Africa

In recent years economists have debated the reasons that sub-Saharan Africa's economic growth record was substantially worse than in any other developing region during the second half of the twentieth century. In this book Benno Ndulu and his colleagues have provided a sophisticated and complex answer to this question, focusing on the interplay between the region's geographical endowments and the policies pursued by African governments. The two-volume publication and CD-ROM results from a multiyear project sponsored by the Nairobi-based African Economic Research Consortium, which brought together several dozen scholars and included detailed case studies of some twenty-six African economies. In its unrivaled breadth and in the impressive empirical evidence it offers to support a comprehensive explanation for Africa's postcolonial economic crisis, it deserves wide readership, despite its high retail price.

The project's case studies are assembled in the second volume and the CD-ROM that comes with the books. Although the overall content is difficult to summarize in such a short review, the quality is generally high. Nonetheless, not all the case studies are equally compelling, and too many read like World Bank reports, reporting a lot of aggregate macroeconomic statistics and paying perfunctory attention to social sector dynamics or institutional issues—an issue to which I return below.

The rest of this review will focus on the first volume, which provides the analytic grounding for the project and thus constitutes its most important contribution. Refreshingly, the book emphasizes the variation across African countries. In particular, the authors argue that the different natural and geographical endowments of African countries shaped the political-economy dynamics in each country. The large number of landlocked countries in the region proved to be a major disadvantage for Africa, since the absence of a coastline constrained many economies' linkages to the outside world and made these governments much more reliant on the policies of neighbors. Similarly, the study shows that the presence of oil resources typically implied both a higher level of per capita income and slower economic growth than was the case for countries that lacked these resources. In a variation of the "resource curse" argument, the authors argue that the presence of significant natural resource revenues increased the propensity for ethnic conflict and for politically mediated patronage policies, which slowed down economic growth.

The book's main thesis, however, is that a large proportion of African countries followed suboptimal economic policies in four distinct ways, which the authors label "anti-growth syndromes," and which relate directly to the politics in each country at the time. The "regulatory syndrome" describes a policy regime in which economic efficiency is sacrificed for the sake of politically motivated rent seeking, and the "ethno-regional redistribution syndrome" describes one in which the government redistributes income to specific ethnic groups in ways that compromise economic efficiency. "Intertemporal syndromes" offers a third category of bad policy, in which governments incur excessive debt, thus imposing fiscal burdens on future generations, while a final syndrome is "state breakdown," in which the state is unable to maintain internal security. Arguing that the four antigrowth syndromes were present in three-quarters of the sample years for individual countries between 1960 and 2000, the authors use a standard econometric model to estimate that these syndromes account for just over half the differential in economic growth across African countries during this period. Clearly these specific policy failures exacted a powerful negative effect on economic growth.

The argument is arresting, and the book's data in support of it are consistently interesting and thought provoking. A policy-focused explanation of Africa's economic record...