Saturday, January 22, 2011

Encouraging news from Africa

Earlier I had blogged about the economic resurgence of Africa over the past decade. Maxim Pinkovskiy and Xavier Sala-i-Martin have three graphics which reinforces the impression about an African resurgence.

There is a clearly evident connect between rising per capita incomes and declining poverty rates since the mid-nineties.

Much the same trends come from measurements of African welfare, using Amartya Sen’s index of GDP-per-capita x1 minus the Gini coefficient. It shows that African welfare declined substantially between 1970 and 1995, but the trend was reversed dramatically between 1995 and 2006.

All this has been accompanied by falling inequality, including after mid-nineties when economic growth rates rose steeply. This proves that growth was not confined to a narrow elite and was more broad-based.

Their main conclusion is that "Africa is reducing poverty, and doing it much faster than many thought", especially in the 1995-2006 period. More encouragingly, they also find that "growth from the period 1995-2006, far from benefiting only the elites, has been sufficiently widely spread that both total African inequality and African within-country inequality actually declined over this period".

Further, they also write that "African poverty reduction cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic". All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty.

All this raises the question, is Africa today at the same stage East Asia and Asia Pacific were in the seventies?

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