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Domestic demand, net exports and Africa’s growth

Shanta Devarajan's picture

At the recent Africa Economic Conference, UN under-secretary general and executive secretary of UNECA, Abdoulie Janneh, said "[Africa’s] previous growth, while benefiting from improved macroeconomic management, was largely dependent on commodity exports and resources flows from outside the continent." 

Analysis done for the IMF’s Regional Economic Outlook  tells a somewhat different story. 

Decomposing Africa’s GDP growth into its two components, growth in domestic demand and growth in net exports (exports minus imports), they find that the lion’s share was due to domestic demand changes, and only a small portion to changes in net exports.  One reason for the latter could be that, as export earnings surged, African countries imported a lot, leaving the change in net exports (and hence their contribution to GDP growth) quite small.

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Submitted by francis konan on
the findings show that there is an ongoing structural change in the African domestic economy. The increase in demand (C+I+G) was financed by the increase imports through the exports earnings. As long as the increase in demand is financed by the exports earnings Africa is assured to have to have a sustainable growth

Submitted by Brian Scott on
Increased intra-African business and moving away from a reliance on international exports was cited as key in Africa's development. For a number of years, Asian economies were the fastest growing in the world. Development experts held up the "Asian model" of export-led growth, high levels of foreign investment, rising per capita incomes and highly competitive manufacturing industries, as examples for other developing regions to emulate. Many more African nations are taking advantage of the liberal trade opportunities under AGOA but many more are facing significant challenges in their efforts to increase trade. Brian

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