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Poverty

Africa and “Bretton Woods II”

Shanta Devarajan's picture

As world leaders gather in Washington later this week to discuss coordinated solutions to the global financial crisis, the question of restructuring the international financial architecture, which has remained more or less what was decided at the Bretton Woods conference of 1944, has come up.

The impact of the financial crisis on the African financial system may be worse than we thought

The conventional wisdom that African financial systems have little to worry about in the wake of the global financial crisis needs to be challenged. In the attached note, I raise five* concerns:

More on financial crisis, market failures and government failures

Shanta Devarajan's picture

My earlier post on the lessons to be drawn (and not drawn) from the financial crisis for the balance between state and market in developing countries elicited a lively discussion on this blog. Many of the comments responded to other comments, which gladdens the blogger’s heart (and eases his workload). More seriously, I recently came across two papers that significantly deepened the points I was making in that original post. On t

A Mozambique Paradox

Shanta Devarajan's picture

There is widespread consensus that financial development is critical to economic growth, globally, and in Africa. Yet Mozambique, a country with very low levels of financial development (in a recent survey, only 13 percent of firms had obtained credit from the banking sector, rural credit is almost nonexistent), registered a GDP growth rate of over 8 percent a year over the last decade.

The African media and state accountability

Gözde Isik's picture

I attended a very interesting seminar today on the role of the media in governance and anti-corruption. Key speaker for the session was the first African-born winner of the Pulitzer Prize, Nigerian journalist Dele Olojede. Mr. Olojede talked about the information and communication revolution that has taken place in Africa in the last decade and how it has transformed the role of the media all across the continent.

Will the financial crisis reduce foreign aid?

Shanta Devarajan's picture

This question comes up frequently in discussions with policymakers, civil society and journalists. Two things need to happen for the crisis to lead to a significant reduction in foreign aid. First, the financial crisis has to lead to a major recession in donor countries. Second, the recession leads to such fiscal constraints that foreign aid is cut. Since the first is the subject of intense discussion among macroeconomists around the world (not all of whom agree) that a recession is inevitable, I loo

Poverty in Africa and elsewhere

Shanta Devarajan's picture

Poor people are poor because markets fail them and governments fail them.  That markets fail them is well-known.  Failures in capital markets mean that young people cannot get loans to finance their education; imperfect or nonexistent insurance markets mean that poor people will not get decent health care if left to unfettered markets; economies of scale as well as the simple fact that basic services such as water are necessities mean that markets will not ensure that poor people will get the services they need to survive.  As

Can Africa's growth be sustained?

Shanta Devarajan's picture

We had a fascinating seminar on this topic yesterday.  Goolam Ballin of Standard Bank said that Africa today looks like Asia did 20 years ago--poised to grow rapidly over the next two decades.  At the same time, he was worried about the next two years because of Africa's dismal experience in adjusting to the external shocks of the 1970s.  Nigerian central bank governor Chukwuma Soludo struck a distinctly more optimistic note, pointing out that, for example, Nigeria's non-oil sector was growing even

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