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Poverty

Can Zimbabwe Turn the Corner?

Praveen Kumar's picture

Much has changed in Zimbabwe since last November. There are signs of recovery following the return of price stability after full dollarization in January. However doubts about the political situation continue to obstruct further recovery.

The most visible sign of improvement is the demise of surreal hyperinflation which according to one estimate peaked at about 80 billion percent. Interestingly, full dollarization initially occurred not because the government chose it as a deliberate stabilization measure.  Exasperated residents simply abandoned the Zimbabwean dollar and moved on to using multiple hard currencies.  In January, the Government too abandoned the Zimbabwean dollar and started using the US Dollar and the South African Rand for both collecting taxes and spending.  Hyperinflation died a natural death in Zimbabwe, it was not tamed.

Are Fragile States "Too Poor to Grow?"

Shanta Devarajan's picture

Boy plays with tireA recent paper by my colleagues Humberto Lopez and Luis Serven entitled “Too Poor to Grow” asks whether, controlling for other factors, countries with higher poverty rates grow more slowly.  Their answer is “yes”.  The implication is that countries with high poverty may be caught in a poverty trap—they grow more slowly, so poverty rates stay high or even increase, which means they grow even more slowly, and so on. 

The idea echoes the one in Martin Ravallion’s post on this blog about why poverty rates are not converging. 

The two papers got me thinking about the large number (20) of fragile states in Africa.   These states have lower per-capita incomes and growth rates than non-fragile states.  More importantly, many of them have remained fragile states for a long time. 

Could it be that these countries are caught in a low-level equilibrium trap?  And if so, should aid policy—which treats them as worse-performing versions of non-fragile states—be adjusted to take into account the possibility that these countries are “stuck” in low growth, high poverty and poor governance?
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UPDATE: August 27, 2009:

Thanks to all who are taking the time to share their views on this post. Many of you seem to think that education can offer a way out of this vicious cycle. Some don't see hope for Africa until corruption can be successfully tackled. A few others advocate for more individual responsibility.  I was particularly impressed by the story David Kamulegeya shared with us (see the comment titled "it is about the attitude that people have about themselves") in which he describes his own experience navigating out of poverty.

Infant mortality rates in Africa will increase by 30,000-50,000 - Girls will fare worse

Norbert Schady's picture

The impact of the global financial crisis on infant mortality is a topic of great policy importance. However, estimates of the likely impacts of the crisis, cited by international institutions and in the popular press, differ wildly.

This blogpost summarizes the main conclusions from some of my own recent research on this topic, jointly with various colleagues.

These conclusions include:

African economic policies and the global crisis: Orthodox responses to a heterodox shock?

Shanta Devarajan's picture

When the global economic crisis hit Africa, I worried (along with others) that the continent’s economic reforms would be stalled or reversed.  Political support for these reforms may be undermined as economic growth slowed.  Furthermore, the response of high-income countries in response to the crisis—large fiscal deficits and greater government participation in the banking sector—was in the opposite direction of the reforms that African countries had been pursuing

Education and Finance in Africa

Shanta Devarajan's picture

At a recent conference that brought together African Finance and Education ministers, the keynote speaker, Tharman Shanmugaratnam, finance minister (and former education minister) of Singapore gave a beautiful speech about Singapore's experience that contained some potentially difficult and controversial messages for Africa.

How have policies and institutions in low-income African countries fared?

Shanta Devarajan's picture

Last Friday, the World Bank released its Country Policy and Institutional Assessment (CPIA) of low-income countries.  While the assessments are mainly used to determine the allocation of concessional IDA resources to poor countries, they can also provide a useful picture of the evolution of policies and institutions in Africa, as a r

Pourquoi il faut augmenter l'aide en faveur de l'Afrique

Shanta Devarajan's picture

Dans les pays riches, lorsque le taux de croissance économique diminue de 3 ou 4 points, les individus perdent leur emploi et, probablement, leur maison, mais ils les retrouvent lorsque la reprise économique intervient. Dans les pays pauvres d’Afrique, les enfants sont retirés de l’école — et sont privés de la possibilité de devenir plus tard des adultes productifs. Dans certains cas, les enfants meurent avant d’avoir eu la chance d’aller à l’école. Si l’effondrement actuel de la

Why aid to Africa must increase

Shanta Devarajan's picture

In rich countries, when economic growth declines by three or four percentage points, people lose their jobs and possibly their houses, but they regain them when the economy rebounds. In poor African countries, children get pulled out of school—and miss out on becoming productive adults. In some cases, children die before they have a chance to go to school. If t

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