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Macroeconomics and Economic Growth

Africa's MICs

Wolfgang Fengler's picture

Hardly a week goes by without an African investors’ conference or growth summit. Portuguese professionals are looking for opportunities in Angola. Silicon Valley companies are coming to Kenya to learn about its homegrown ICT revolution. This is not an irrational fad. Since the turn of the century, Africa’s growth has been robust (averaging 5-6 percent GDP growth a year), making important contributions to poverty reduction. The current boom is underpinned by sound macro policies and political stability. Unlike in some rich countries, public debt levels in most of Africa are sustainable.

One way to track Africa’s progress is by charting the number of countries that have achieved “Middle Income status”.

Is Tanzania attracting enough tourists?

Waly Wane's picture

Let's think together: Every week the World Bank team in Tanzania wants to stimulate your thinking by sharing data from recent official surveys in Tanzania and ask you a couple of questions. This post is also published in the Tanzanian Newspaper The Citizen every Sunday.

Tourism is among the world’s most lucrative industries. The latest figures from 2009 show that the industry generated US$852 billion in export earnings worldwide, accommodated more than 800 million travelers, and accounted for more than 255 million jobs or nearly 11 per cent of the global workforce in that year. It is no surprise then that this industry is considered a major driver for employment, growth and development.

We want jobs, jobs, jobs

Isis Gaddis's picture

Let's think together: Every week the World Bank team in Tanzania wants to stimulate your thinking by sharing data from recent official surveys in Tanzania and ask you a couple of questions. This post is also published in the Tanzanian Newspaper The Citizen every Sunday.

Jobs are at the very heart of living. Families escape poverty when their members secure gainful employment, and societies flourish when labor markets offer a wide range of job opportunities to citizens. And there is more to jobs than just monetary benefits. Not having a job or working under unfavorable conditions is often associated with low individual life satisfaction. Youth unemployment, in particular, can undermine the foundations of social cohesion, especially in fragile countries with a legacy of civil unrest and conflict.

Safety nets and poverty reduction: A hand-up not a hand-out

Wolfgang Fengler's picture

Do you sometimes wonder if the average person is benefiting when the economy is doing well? Aren’t the poor left behind, even in the most rapidly growing economies? Concerns around rising inequality exist in many countries, rich and poor, East and West. Kenya is among them.

Over the last 10 years, the economy grew at an average of about 4 percent. With population growth of 2.7 percent, every Kenyan would have benefited by a modest 1.3 percent per year, but that assumes the growth was distributed evenly.

Even though many governments around the world want to avoid rising inequality — at least this is what many say — they often don’t achieve it. One challenge is that the already well off tend to benefit more during periods of economic growth. The poor typically also benefit, but their income rises more slowly. Does this mean rising inequality is here to stay?

Only 14% of Tanzanians have electricity. What can be done?

Isis Gaddis's picture

Let's think together: Every week the World Bank team in Tanzania wants to stimulate your thinking by sharing data from recent official surveys in Tanzania and ask you a couple of questions. This post is also published in the Tanzanian Newspaper The Citizen every Sunday.

Energy fuels economic development and the evidence is before our eyes every day.  Businesses require a steady supply of energy to produce goods and services.  Electricity allows school children to study after sunset and hospitals need it to save lives Insufficient or irregular energy supply is associated with significant economic cost for businesses and households.  Lack of access to clean energy also creates a myriad of health and environmental hazards, such as indoor pollution from cooking on traditional open-fire stoves and deforestation.

Unfortunately, affordable access to clean energy remains an elusive dream for most Tanzanians, especially those living outside of urban centers and the poor:

For shared prosperity Tanzania needs a universal strategy

Jacques Morisset's picture

The figures don’t lie. Today, about 11 million Tanzanians live in poverty. This is too much. Equally worrisome is that since 2001 the national poverty rate appears to be stuck at approximately a third of the total population despite rapid and stable economic growth.

People need jobs

For a long time, the Tanzanian Government has defended itself: poverty reduction will catch up thanks to the massive public investment made in social and infrastructure sectors over the past decade. More children, including girls, are going to school, and the efforts to reduce infant mortality have registered spectacular achievements. However, it is estimated that those improvements will take one generation to translate into actual productivity gains and higher incomes.

“Seven” is the world’s defining number: what does it mean for Kenya?

Wolfgang Fengler's picture

As a fan of numerology, let me focus on a special number that captures a global trend: call it the lucky number seven. Since the end of last year, we are seven billion people in the world. We produce a total GDP of US$70 trillion (which means that globally per-capita income is US$10,000 on average) and the average life expectancy worldwide is--you guessed it--70 years.

Let’s extend the seven thread: if the world economy grew at seven percent per year, it would double within a decade (because ten years of seven percent growth don’t amount to 70, but 99 percent, due to the compounding effect). Now with population growth at one percent (thankfully not seven), average per capita incomes would increase from US$10,000 to about 18,000. That is quite a jump, and a level of prosperity that few of our parents and grand-parents would never have imagined.

Sadly though, averages will continue to mask wide disparities, both between countries and within societies.

Country policy and institutional assessment: How well are African countries doing?

Punam Chuhan-Pole's picture

Every year, the World Bank’s country teams and sector experts assess the quality of IDA countries’ policy and institutional framework across 16 dimensions to measure their strenght and track progess.  

The latest country policy and institutional assessment (CPIA) results show that despite difficult global economic conditions, the quality of policies and institutions in a majority of Sub-Saharan African countries remained stable or improved in 2011.

DOWNLOAD the indicators here: www.worldbank.org/Africa/CPIA

For several countries the policy environment is the best in recent years. Of the 38 African countries with CPIA scores, 13 saw an improvement in the 2011 overall score by at least 0.1. Twenty countries saw no change, and five witnessed a decline of 0.1 or more. The overall CPIA score for the region was unchanged at 3.2.  

In short, despite a challenging global economic environment, African countries continued to pursue policies aligned with growth and poverty reduction. 

What will it take to end poverty in Africa?

Shanta Devarajan's picture

My colleague Jim Kim has launched a social media campaign on what it will take to end global poverty (please send your solutions via twitter to #ittakes.) I was reminded of a blog post I did about four years ago entitled “Ending poverty in Africa and elsewhere”. 

My answer then and now is:  Overcome government failure.  By “government failure,” I don’t mean that governments are evil or even that they are incompetent or ill-intentioned.  Analogous to “market failure,” government failure refers to a situation where the particular incentives in government lead to a situation that is worse than what was intended with the intervention.  

For instance, governments finance and provide primary education so that poor children can have access to learning.  But if teachers are paid regardless of whether they show up for work, and politicians rely on teachers to run their political campaigns, the result is absentee teachers and poor children who don’t know how to read or write—precisely the opposite of what was intended.  We see similar government failures in health care, water supply, sanitation, electricity, transport, labor markets and trade policy.

Sweetening Kenya’s future – The challenges of the sugar industry

Wolfgang Fengler's picture

Do you ever wonder, looking at the food in your plate, where it has come from and who produced it?

Surely you have thought about what explains its price on the shelf! Kenyans love sugar, which they use liberally in their tea: on average each Kenyan consumes 400 grams of sugar per week, much more than their Tanzanian neighbors who consume approximately 230 grams. In Africa, only the residents of Swaziland and South Africa have a sweeter tooth.

Globally, 70 percent of the sugar that is produced is consumed in the same country and only 30 percent is exported. In principle this is good for customers in sugar-producing countries, as long as the supply is sufficient to keep prices low. In Kenya, this is not the case: there are occasional sugar shortages and, when they can be anticipated, prices rise to extraordinary levels. 

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