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Macroeconomists for the Poor

When growth alone is not enough

Luc Christiaensen's picture
Also available in: Français

Africa’s robust annual economic expansion of 4.5% during 1995-2013 has come along with appreciable progress in human welfare. African newborns can now expect to live 6.2 years longer than in 2000, the prevalence of chronic malnutrition among children under five declined by six percentage points, and the number of deaths of violent events dropped from 20 (in the late 1990s) to four. Africans are also more empowered, manifested, among others, through greater participation of women in household decision making.

At the same time, for every five adults, two remain illiterate, life expectancy still only stands at 57— 10 years less than in South Asia – and the number of violent events has been on the rise again since 2010. The human development challenge remains substantial. Moreover, despite being a major force behind Africa’s growth renaissance, citizens in resource-rich countries did not experience a commensurate jump in their education or health status. On the contrary, results from the World Bank’s recent Africa Poverty Report “Poverty in a Rising Africa,” suggest that it is especially resource-rich countries which are bad at converting their economic fortunes into better human development.
 

Testing times for South Africa

Marek Hanusch's picture

 Steven Hall, World Bank Group

Concerns about South Africa’s economy have been rising, after years of slowing growth following the post-financial crisis peak of 3.2% in 2011. South Africans lament the plunge of the Rand—a 30% depreciation against the U.S. dollar over the year 2015. They fear the potential of South Africa losing its high-prized investment grade credit rating. Many, especially the youth, live with high and largely chronic unemployment, currently at 25.5%, or 36% when including those who have given up looking for a job. Not surprisingly unemployment is the top concern for 72% of South Africans according to the 2015 Afrobarometer. Growth and job creation are crucial for sustaining the impressive economic and social progress the country has achieved since the end of apartheid—and to eliminate extreme poverty by 2030, as envisioned by the National Development Plan (NDP).

Ethiopia’s growth miracle: What will it take to sustain it?

Lars Christian Moller's picture



If you are curious to know which country has achieved double digit growth in the last 12 years, making it the fourth fastest-growing in the world, the answer is Ethiopia. And what is more striking is that if Ethiopia sustains its current pace of growth, it will become a middle income country by 2025.

Terra Ranca! A fresh start for Guinea-Bissau

Marek Hanusch's picture
Also available in: Portuguese

@ Daniella Van Leggelo Padilla, World Bank Group

As international donors gather this week in Brussels to mobilize resources for Guinea-Bissau, the government and people of this West African nation appear ready for a fresh start.

Mobile connectivity in Africa has already arrived

Borko Handjiski's picture

What is the main difference between high-income and developing countries?

Here is my take: People in the former have much more of pretty much everything. Almost everyone living in high-income countries has access to electricity; in poor (low-income) countries, 7 out of 10 people don’t. Most families in rich countries own a car, but only a few people living in the developing world do. On per capita basis, rich economies have 15 times more doctors than poor countries, consume 40 times more energy, have 50 times more ATMs, and so on.

Africa's McTipping Point?

Borko Handjiski's picture
Three quarters of a century since the opening of the first McDonald’s, the fast food chain operates around 34,000 outfits in around 120 countries and territories across all continents. In Sub-Saharan Africa (SSA), however, – a region of 48 countries and almost a billion people - only South Africa and Mauritius have been able to attract this global food chain.
 

This peculiarity cannot be explained only by the fact that the region is poor. The company has found a market in about 30 countries with GDP per capita of less than US$ 3,000 (in constant 2005 US$) at the time of their first McDonald’s opening. Hamburgers, Cheeseburgers, and Big Macs are also on offer in a dozen of low-income countries as well. When the first McDonald’s opened in Shenzhen in 1990, China’s GDP per capita was less than US$ 500 per person. Of course, Shenzhen’s per capita income was several times higher, but the company has also found a market in Moldova since 1998 when the GDP per capita of the 3 million person country was less than US$ 600 per capita. There are many cities in SSA today that have higher income, population concentration, and tourists than what Chisinau had in 1998; yet they do not have a McDonald’s. As a matter of fact, 22 SSA countries today have higher income per capita than what Moldova or Pakistan had when the first McDonald’s opened there, and 15 of them have higher income per capita even than what Indonesia or Egypt had at their McDonald’s openings (see chart).

Toing and Froing in Freetown

Mark Roland Thomas's picture



Countries coming out of crises undergo rapid structural changes, including migration and big economic shifts. This can complicate the measurement of their progress, sometimes in unexpected ways, as we found out recently in Sierra Leone.

Flogging a debt horse - Another take on a high profile debate

Mark Roland Thomas's picture

Co-author: Seyed Reza Yousefi

What does the “fiscal austerity” debate now blaring across the news mean for our clients? A recent academic spat turned media controversy centers on the role of national debt in holding back economic growth. We decided to take a closer look; it turns out to be instructive.

First, a quick recap… In 2010, Carmen Reinhardt and Kenneth Rogoff (RR) put together some historical economic averages to claim that high debt levels tended to accompany lower growth. They grouped countries in given years into four categories according to the debt-to-GDP ratio (0-30, 30-60, 60-90, 90+), finding:
“…our main result is that whereas the link between growth and debt seems relatively weak at ‘normal’ debt levels, median growth rates for countries with public debt over roughly 90 percent of GDP are about one percent lower than otherwise; average (mean) growth rates are several percent lower.”

African Debt since Debt Relief: How Clean is the Slate?

Mark Roland Thomas's picture

This blog post was co-authored with Dino Merotto, Tihomir Stucka, and Tau Huang. 

The benefits of debt relief have persisted, although some countries may now be borrowing too quickly.

Remember Jubilee 2000 and the HIPC Initiative? Remember the “Drop the Debt” and “One” movements in 2005? Live 8? Bono on the White House Lawn?  Those white “make poverty history” wristbands?

Seven years on, debt is now making headlines in the rich countries.  In Europe and the US the news is of sovereign debt downgrades amid speculation about capacity to rollover debts, and countries’ long-term fiscal capacity to repay.