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Will the economic crisis affect governance and conflicts in Africa?

Jorge Arbache's picture

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.

Governance indicators–political stability, government effectiveness, rule of law, and control of corruption–are lower for growth decelerations. PT Rule of law and control of corruption indicators, for example, decreased during economic collapses to -1.11 from -0.64, which is a substantial change. Correlation coefficients between the probability of growth acceleration and deceleration and governance indicators are negative, suggesting that growth decelerations are accompanied by deterioration of governance indicators.

Minor conflicts are more frequent during growth deceleration episodes than during normal times, whereas major conflicts are less frequent during growth acceleration and deceleration episodes than during normal times. The correlation coefficients suggest that economic collapses are associated with minor conflicts, and that major conflicts hamper chances of growth acceleration.

Given the severity of the current crisis, it may have unprecedented regional governance and political consequences, and may eventually fuel governance reform reversals. Because poor governance and conflicts are likely to hold back growth recovery and vulnerable groups are exposed the most to them, these issues cannot be overlooked by any agenda seeking to protect Africa from the adverse impacts of the economic crisis.

Comments

..."Many economists are now expecting the crisis to hit Africa harder and longer than was previously projected" You are right and there is no doubt Africa will suffer even the more. The economic crisis has affected major donor countries such as the United States and hence the aids coming from these donor countries are not going to come in as frequent as frequent as it used to be a few years ago when the economy was great. Most African nations such as Sudan, Liberia, Congo, etc., depend mostly on foreign aids for economic improvement and since these aids are not going to come in as frequent as it used to be, these countries are going to suffer even the more.

Submitted by GM recall on
Nowadays global economic crisis continued to threaten us. A lot of businesses and companies have been affected by this economic downturn. The ultimate means that we could have is to seek from government the funds that can be used to refinance most businesses but it seems that a lot of people are doubtless waiting on government help from the stimulus package in their times of trouble. A lot of companies do stumble even the most progressive one, they have no choice than to accept and fight against the recession. Anyway the General Motors is trying to convince the taxpayers to give them more short term loans to help them out and keep them from bankruptcy, a defect was found in 7 vehicles that carry the 3.8 Liter V6 – 3 Chevrolets, 1 Buick, 1 Oldsmobile, and 1 Pontiac. Luckily, none of these vehicles are newer than 2003. Affected models are from 1997 – 2003 model years of midrange sedans. 2004 owners and afterward can rest easy. Recalls are the least favorite things of car companies, even worse than non-obsolescent vehicles. Let's hope that nobody needs any personal loans to participate in the GM recall – GM should be footing the bill. Companies need to be more competitive during this hard time because if they won’t bankruptcy is likely to happen.

Submitted by malien on
African countries should be as much as possible engaged in the developing of the economy, and forget about the conflicts and the division of power. Even the Government's deficit spending - the old curse of Africa - looks positively small in comparison with the huge debts of the United States and some European countries. The new Obama’s administration proposes spending levels that will lead to a record high budget deficits in the United States, more than one trillion dollars - and will be placed up on top of a record deficit of outgoing Bush administration.

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