World economic growth in 2009 is expected to decline to its slowest rate since the Great Depression. In the case of Sub-Saharan Africa, the latest IMF’s World Economic Outlook projects the region to grow by 3.25% this year, down from 5.4% in 2008. Many economists are now expecting the crisis to hit Africa harder and longer than was previously projected. Not only will the crisis impact human development and economic indicators, but Africa’s governance and conflicts may be affected as well. Although the channels through which economic collapses affect governance and conflicts are often country-specific, institutions in poor countries tend to be so strained that ethnic tensions and confrontational politics can get worse when competition for scarce resources increases.
Empirical evidence on growth accelerations and collapses in Africa between 1975 and 2005 suggests that governance and conflict indicators are substantially affected by growth volatility. Table 1 presents differences between sample averages during growth accelerations and collapses for key governance and conflict indicators. The World Bank’s Country Policy and Institutional Assessment (CPIA) score, a broad measure of policy and institutional performance, is lower during decelerations. Correlation coefficients (not reported) between the probability of growth acceleration and deceleration and CPIA indicator confirm that countries that experience more economic collapses have lower CPIA scores.
