At a recent videoconference with journalists, I was asked the question in the title of this post several times. Does the fact that private banks in the United States are going bankrupt mean that the free market system is a failure? Does the fact that the United States government is bailing out these banks and in some cases “nationalizing” them mean that state intervention is back?
Private Sector Development
Pour ceux qui ont raté le débat entre Sarah Palin et Joseph Biden, les deux candidats à la vice-présidence des Etats-Unis, je vous offre une alternative—un débat entre le professeur Kako Nubukpo de l’Université de Lomé et moi-même. Contrairement aux candidats américains, nous avons traité des sujets diff&eac
When asked about the East Asian financial crisis of the late 1990s, Ethiopian Prime Minister Meles Zenawi reportedly said, “I wish we had their problems.” I was reminded of this quip when thinking about the current financial crisis in the U.S. and its possible impact on Africa. In the U.S., there is a constant fear that turmoil in financial markets will spill over to the real sector—in terms of slow growth and unemployment.
My colleagues and I are trying to think through the implications for Africa of the recent turmoil in global financial markets. Here are four propositions.
Your first reaction to the title of this post may be: “Just when, for the first time in thirty years, Africa’s per capita GDP is growing (see Graph below) at the same rate as all developing countries, why are you asking whether Africa is growing too fast?” The reason is that we would like to know whether this growth is sustainable. Two colleagues at a recent conference on this topic offered some sobering thoughts.
In the past, policy advice on promoting trade in Africa may have overstressed the need for African countries to bring down their own trade barriers, such as import tariffs, and insufficiently emphasized the need to improve trade logistics, infrastructure, business competition, and regulation.