current african issues In a broad survey this issue of Current African Issues presents a multifaceted picture of the current state of the African economy. After a period of falling per capita incomes that started in the 1970s, Africa finally saw a turnaround from about 1995. The last few years have seen average per capita incomes in Africa grow by above 3 per cent per year on average, partly due to the resource boom but also due to improved economic policies. Africa receives more aid per capita than any other major region in the world and there is a significantly positive effect of aid on growth One of the most notable aspects of the current process of globalisation is the increase in trade between Sub-Saharan Africa and Asia, particularly China and India. The authors conclude with a call for policy coherence among donors. The politically most problematic areas for policy change of those discussed in the paper are not aid policy but trade policy and the European Union CAP (Common Agricultural Policy). This is a challenge to EU policy makers, since the latter areas are probably the most important to change if we take our commitment to development seriously. The African economy and its role Arne Bigsten is professor of development economics and Dick Durevall is a lecturer in economics, both at the Gothenburg Univer- in the world economy sity School of Business, Economics and Law. a r n e b i g s t e n a n d d i c k d u r e v a l l ISBNISBN 978-91-7106-625-1 978-91-7106-625-1 no.40 Nordiska Afrikainstitutet (The Nordic Africa Institute) P.O. Box 1703 SE- 751 47 Uppsala, Sweden www.nai.uu.se 9 789171 066251 The Nordic Africa Institute (Nordiska Afrikainstitutet) is a center for research, documentation and information on modern Africa in the Nordic region. Based in Uppsala, Sweden, the Institute is dedicated to providing timely, critical and alternative research and analysis on Africa in the Nordic countries and to co-operation between African and Nordic researchers. As a hub and a meeting place in the Nordic region for a growing field of research and analysis the Institute strives to put knowledge of African issues within reach for scholars, policy makers, politicians, media, students and the general public. The Institute is financed jointly by the Nordic countries (Denmark, Finland, Iceland, Norway, Sweden). The African economy and its role in the world economy CurrenT AfriCAn issues 40 The African economy and its role in the world economy Arne Bigsten and Dick Durevall nordiskA AfrikAinsTiTuTeT, uppsAlA 2008 1 Arne Bigsten and dick durevall A background paper commissioned by the Nordic Africa Institute for the Swedish Government White Paper on Africa. INDexING termS: economic performance International economic relations International trade Capital movements Globalization Structural adjustment economic and social development Policy making Africa south of Sahara Sweden the opinions expressed in this volume are those of the authors and do not necessarily reflect the views of the Nordic Africa Institute. Language checking: Peter Colenbrander ISSN 0280-2171 ISBN 978-91-7106-625-1 (print) ISBN 978-91-7106-631-2 (electronic) © the authors and Nordiska Afrikainstitutet 2008 Printed in Sweden by elanders Sverige AB, mölnlycke 2008 Grafisk form today Press AB 2 The African economy and its role in the world economy ConTenTs List of tables and figures ................................................................................................................................. 4 List of acronyms ............................................................................................................................................ 5 Executive summary ........................................................................................................................................ 7 1. Introduction ................................................................................................................................................15 2. Comparative performance of the African economy .........................................................................................16 3. Financial flows to Africa ............................................................................................................................. 22 4. The Asian drivers ....................................................................................................................................... 26 5. Impact of debt reduction initiatives ............................................................................................................. 29 6. Opportunities for and constraints on growth ................................................................................................ 32 a. Growth perspectives ................................................................................................... 32 b. the sustainability of growth.......................................................................................... 33 c. Growth opportunities vs. constraints ............................................................................. 33 d. Poverty traps ............................................................................................................. 34 e. Aid strategy and growth ............................................................................................... 35 7. Impacts of HIV/AIDS ....................................................................................................................................37 a. HIV/AIDS: a constraint on economic development? ............................................................37 b. HIV/AIDS and human capital........................................................................................... 30 c. HIV/AIDS and gender .................................................................................................... 40 d. HIV/AIDS and agricultural production ................................................................................41 e. HIV/AIDS and the public and private sectors .....................................................................41 8. Gender and economic growth ......................................................................................................................44 9. Brain drain ................................................................................................................................................ 48 10. Trade policy reform and African development ............................................................................................. 50 11. The role of principal internal and external economic actors ........................................................................... 53 12. Concluding remarks .................................................................................................................................. 55 Appendix: Data .............................................................................................................................................. 58 References ................................................................................................................................................... 59 3 Arne Bigsten and dick durevall List of Tables Table 1: regional population and GDP shares and relative income levels 2005 ......................................16 Table 2: Annual per capita income growth 1961–2005 (% per year) ....................................................17 Table 3: Per capita income growth rates 1961–2005 for major recipients of Swedish aid and for countries that have been involved in armed conflict, 1990 and later .................................................................18 Table 4: Sectoral value added as % of GDP in Africa 1960–2005 ........................................................19 Table 5: export shares 1960–2005 ...............................................................................................20 Table 6: exports of goods and services as shares of GDP 1960–2005 ................................................20 Table 7: Life expectancy at birth 1960–2005 ................................................................................. 21 Table 8: Population growth rate 1960–2005 ................................................................................... 21 Table 9: Gross domestic savings (% of GDP) ..................................................................................22 Table 10: Gross capital formation (% of GDP) ..................................................................................22 Table 11: Aid allocation by regions 1960–2005 (current US$ per capita) ............................................. 24 Table 12: Aid as % of GNI 1960–2005 ........................................................................................... 24 Table 13: Sub-Saharan Africa’s trade with China: top 10 exports and imports .......................................26 Table 14: total debt service (% of GNI) ..........................................................................................30 Table 15: Selected indicators of the quality of health services in countries in sub-Saharan Africa heavily affected by HIV/AIDS ..................................................................................................................42 Table 16: School attendance ratios, girls/boys aged 16 to 20, selected countries ................................45 Table 17: migration rates in 1990 and 2000 (in %) ...........................................................................48