The Prospects for Sustained Growth in Africa: Benchmarking the Constraints

59 Pages Posted: 13 Mar 2007

See all articles by Simon Johnson

Simon Johnson

Massachusetts Institute of Technology (MIT) - Entrepreneurship Center; National Bureau of Economic Research (NBER)

Jonathan D. Ostry

Georgetown University; International Monetary Fund (IMF)

Arvind Subramanian

International Monetary Fund (IMF); Center for Global Development

Date Written: March 2007

Abstract

A dozen countries had weak institutions in 1960 and yet sustained high rates of growth subsequently. We use data on their characteristics early in the growth process to create benchmarks with which to evaluate potential constraints on sustained growth for sub-Saharan Africa. This analysis suggests that what are usually regarded as first-order problems - broad institutions, macroeconomic stability, trade openness, education, and inequality - may not now be binding constraints in Africa, although the extent of ill-health, internal conflict, and societal fractionalization do stand out as problems in contemporary Africa. A key question is to what extent Africa can rely on manufactured exports as a mode of escape from underdevelopment, a strategy successfully deployed by almost all the benchmark countries. The benchmarking comparison specifically raises two key concerns as far as a development strategy based on expanding exports of manufactures is concerned: micro-level institutions that affect the costs of exporting, and the level of the real exchange rate - especially the need to avoid overvaluation.

Keywords: Economic growth, Africa, Trade liberalization, Imports, Exports

JEL Classification: O10, O18, O40, O55

Suggested Citation

Johnson, Simon and Ostry, Jonathan D. and Subramanian, Arvind, The Prospects for Sustained Growth in Africa: Benchmarking the Constraints (March 2007). IMF Working Paper No. 07/52, Available at SSRN: https://ssrn.com/abstract=969866

Simon Johnson

Massachusetts Institute of Technology (MIT) - Entrepreneurship Center ( email )

United States
617-253-8412 (Phone)
617-258-6855 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jonathan D. Ostry (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Arvind Subramanian

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Center for Global Development

2055 L St. NW
5th floor
Washington, DC 20036
United States

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