the economy of sub-saharan africa unit 1 economic growth

The Economy of Sub-Saharan Africa

Unit 1 Economic Growth and Demographic Change in Sub-Saharan Africa

Contents

Unit Overview 2

1.1 Economic Performance in Sub-Saharan Africa 3

1.2 Historical Background to Economic Growth in SSA 5

1.3 Demographic Change in SSA 7

1.4 Country Studies 12

1.5 Synthesising the Evidence: Is Africa Rising? 14

1.6 Conclusion 15

References 15


2 University of London

Unit Overview This first unit will introduce you to the major trends in economic perfor-mance and demographic change in the economies of sub-Saharan Africa. It will provide the historical background to modern economic development with a summary of the impact of slavery, colonialism, independence and de-mographic change on African economies. In order for you to grasp the diversity of Africa today, we will examine two case studies of African econo-mies, one that has attracted relatively large amounts of foreign investment and is Africa’s richest economy (South Africa) and one that has struggled with attracting investment and with demographic problems (Angola).

Learning outcomes

When you have completed your study of this unit and its readings you will be able to:

• evaluate the causes and variations in economic growth across the sub-Saharan African (SSA) region

• explain why economic growth in the region has been uneven, both over time and across different countries

• discuss the main concepts and measures of demographic change and interpret population trends in the SSA region

• outline the population challenges faced by countries in SSA and evaluate their relationship to economic growth

• interpret and discuss the growth challenges of a country that has experienced rapid growth and one that has been less successful.

Reading for Unit 1

Morten Jerven (2010) ‘African growth recurring: an economic history perspective on African growth, 1690–2010’. Economic History of Developing Regions, 25 (2), 127–54.

Renato Aguilar & Andrea Goldstein (2009) ‘The Chinisation of Africa: The case of Angola’. The World Economy, 32 (11), 1543–62.

Johannes Fedderke & Charles Simkins (2012) ‘Economic growth in South Africa’. Economic History of Developing Regions, 27 (1), 176–208.

Globalization 101 (2011) ‘Africa Rising: Myth or Reality?’.


Centre for Financial and Management Studies 3

1.1 Economic Performance in Sub-Saharan Africa Before we look at the factors that cause economic growth in sub-Saharan Af-rica, we would like you to first familiarise yourself with the wide variety of economic performance of the countries that make up the region. The follow-ing map (Figure 1.1) is from the African Development Bank.

Figure 1.1 GDP Current (US$ million), 2013

Source: data from African Development Bank

We have deliberately omitted the names of the countries in order to empha-sise the variation in economic output as measured by gross domestic product (GDP) – you can however find the names of each country by going to the Bank’s website.

A country’s GDP is a monetary measure of the value of production of goods and services within an economy during a given time period (nor-mally one year). This includes government spending, investment, consumption and net exports. In order to gauge the standard of living in an economy, economists often divide a country’s GDP by its population to find its per capita GDP. Note that although this is a good measure of living standards it is not necessarily equivalent to people’s wages or disposable incomes. The African Development Bank’s website also provides a user friendly database for comparing national incomes, living standards and other economic measures across the African continent.

Economic growth

In Table 1.1 below, we have provided figures on the growth in both real GDP (that is, GDP adjusted, to take account of changes in prices) and growth in real GDP per capita. You will note that growth in GDP per capita has been lower than aggregate GDP. This tells us that aggregate GDP is of-ten a poor indicator of a country’s living standards. This can be for a number of reasons. A country may have a very large population, thus resulting in a



low per capita GDP level. This issue is not unique to SSA and large develop-ing countries such as China and India also have comparatively large GDP levels, but low per capita GDP. It is also possible that a large proportion of wealth generated domestically does not trickle down to the domestic popu-lation, or it may be transferred out of the economy if the country has a large percentage of foreign-owned MNCs.

Another way of looking at GDP is to examine the components that contribute or add value to GDP. As pointed out above, GDP is a measure of all goods and services produced in an economy. In order to examine what sectors contribute to GDP, we can examine the value added to GDP by individual sectors in the economy. Looking again at Table 1.1, what is the value added to GDP by such sectors as agriculture, industry manufacturing and services? Another way of interpreting the data on value added is as a measure of change in the econ-omy. For example, as economies develop, a greater percentage value in GDP tends to be generated by manufacturing and services, while a lesser share tends to be generated by agriculture. You may have noted that in SSA, value added generated by agriculture has remained high, while that generated by manufacturing and services has shown a decline. To understand why this is the case, you will study the role of agriculture in the economies of SSA in Unit 2 of this module, and the prospects for change in Unit 8.

Table 1.1 Real GDP and value added 2004–2012, Sub-Saharan Africa

2004 2005 2006 2007 2008 2009 2010 2012

Real GDP growth (annual %) 7.1 6.4 6.3 7.0 5.7 2.8 5.5 5.0

Real per Capita GDP Growth Rate (annual %)

4.5 3.8 3.7 4.5 3.2 0.3 3.0 2.4

Agriculture, value added (% of GDP)

17.5 17.3 17.6 17.8 19.0 19.9 18.4 19.4

Industry, value added (% of GDP)

33.8 35.7 36.1 36.0 37.6 33.1 35.5 35.7

Manufacturing, value added (% of GDP)

12.6 11.8 10.8 10.3 9.2 9.5 9.2 8.2

Services, value added (% of GDP)

48.7 46.9 46.3 46.2 43.4 46.9 46.2 44.9

Source: African Development Bank

Concealed in the data in Table 1.1 are large variations both within and across economies. While it is beyond the scope of this unit to go into these variations in full detail, the following facts on the SSA region produced by the World Bank (World Bank Development Indicators, 2008) give you some indication of the scale and magnitude of these variations:

• During 2000–2006 the average GDP per capita growth in SSA was 2.0%, up from −0.7% in 1990–1999.

• The ratio of income of the richest 10% of countries to the poorest 10% of countries rose from 10.5 in 1975 to 18.5 in 2005.

• The GDP of SSA was US$744 billion, which was equivalent to 28% of China’s GDP, 69% of Brazil’s, 74% of Russia’s, and 80% of India’s.



• The economies of South Africa and Nigeria comprised 56% of SSA’s GDP.

• Mauritius has the highest life expectancy (73.2 years); Swaziland has the lowest (40.8 years).

• In 2000–2006 the electric power consumption per capita (KWh per capita) of South Africa was 4,847; Ethiopia’s was 34.4.

From the above data you can see that SSA represents a vast and varied set of countries. Not only are these countries spread across a wide geographic area, but their economies show a similarly wide variety of growth experi-ences. These experiences reflect a wide range of factors from the effects of slavery, colonialism and independence. In this unit we first want to look at the historical background.

1.2 Historical Background to Economic Growth in SSA Economists have long debated the reasons why and how economies grow. An influential school of thought focusing on the relationship between eco-nomic growth and the rule of law has emerged as one of the most dynamic areas of investigation. This approach has argued that there exists a long run correlation between economic growth and the legal protection of property rights (eg Acemoglu, et al, 2001). Yet, even among the proponents of this ap-proach there seems some doubt as to what parts of the rule of law promote growth. For example, Acmeoglu and his colleagues (2001: p. 1371) have con-ceded that within legal protection there exists a ‘cluster of institutions’, which includes checks on government expropriation, an independent judici-ary, the protection of private property rights and institutions providing equal access to education and civil liberties that promote economic growth and development. However, this law-and-growth approach has found it dif-ficult to explain how many economies, such as China, experience rapid growth in the absence of developed legal institutions.

Another influential school argues that there is a long-term relationship be-tween financial development and growth. This approach argues that it is a country’s financial development or the depth of its financial markets (capital and equity) that determines economic growth. This has become known as the ‘finance and growth consensus’ (eg Levine et al, 1997). In Unit 6 you will examine debates over the application of this consensus in SSA. For the mo-ment, however, it is worth considering how these influential schools of thought might apply in SSA. In particular you might think of why some economies grow even though property rights protection is absent and cor-ruption rife; or indeed why some economies grow without the presence of a developed financial system? You might also think of other factors that affect growth prospects such as the effect of colonialism, national independence and famine and shortage.

A second question concerns ‘how’ economies grow. Many economists work-ing from the Neo-Classical perspective have viewed the process of economic



growth as a series of stages that are almost path-dependent. An early example of this was WW Rostow’s (1960) ‘stages of economic growth’, which postu-lated that economies achieve economic growth in five basic stages:

• from traditional society • to the pre-conditions for take-off • take-off • drive to maturity • high mass consumption.

While Rostow’s ideas (driven from an anti-communist stance) gained con-siderable popularity among US policymakers at the time, his approach has proved of limited value in explaining the growth barriers faced by develop-ing economies. In particular, this approach was critiqued by economists such as Alexander Gerschenkron (1962) who drew on the experience of the European and Russian economies to show that growth was often discontinu-ous, occurring in spurts.

In your first reading for this unit you will see that the experience for many African economies has been not simply lack of economic growth, but rather one of discontinuous growth.

Reading 1.1

Please now read the article by Morten Jerven on the concept of growth recurring in Afri-can economies. Jerven challenges the traditional view which tends to focus on establishing the causes of chronic failure and stagnation in African economies. Instead he focuses on the idea of recurring growth at different periods of African history over differ-ent times.

Your notes should enable you to answer the following questions.

Why does growth tend to be recurring and subject to rent-seeking as opposed to permanent and sustainable?

Why do African economies tend to do better when the price of commodities is high, and worse when their prices decline?

Why does Jerven believe this has less to do with the resource base and more to do with institutional changes and the actions of political elites?

Looking specifically at the case of Ghana’s cocoa production (page 136) – explain why growth occurred, and why it was cut short.

How do the author’s findings challenge the path dependent view of growth?

Jerven’s article provides an interesting explanation for why many African economies experienced a spurt of growth post-independence, but this was not sustained. Even in those economies that have recently been successful in avoiding the so-called ‘development trap’, or bottom billion (eg Botswana), growth was not pre-ordained in the sense that there was nothing in the pre-existing institutional set up that would have predicted sustainable growth.

Jerven (2010) ‘Afrcan growth recurring: An economic history per-spective on African growth, 1690–2010’. Economic History of De-veloping Regions, 25 (2), 127–54.



Study Note 1.1 Bottom Billion

Paul Collier, a Professor of Economics and former director of development research at the World Bank, popularised the term ‘bottom billion’ in his 2007 book. He used the term (re-ferring to the bottom billion people trapped in poor or failing economies) to describe the development challenges facing the poorest countries, why they are failing and what poli-cymakers could do about it. Collier argued that the so-called bottom billion faced four separate ‘traps’ including:

a conflict trap a natural resource trap landlocked with bad neighbours bad governance in small countries.

Colliers’s approach is subject to some definitional issues and caveats. He points out that although landlocked is listed as a trap, being landlocked is not by itself sufficient to con-stitute a trap. A country may be virtually landlocked without being geographically landlocked. Some countries have just a sliver of coast (Democratic Republic of Congo), whereas others such as Sudan have a coast but much of the population live a great dis-tance from it. Collier is sceptical of the solutions offered by development aid, free trade and organisations such as the WTO.

1.3 Demographic Change in SSA One of the shortcomings of your previous reading is that is does not specifi-cally examine the issue of population. The author Jerven notes that the absence of historic data on population makes it difficult to measure produc-tivity trends over time. This is important since it is productivity or output per worker that drives economic growth. An economy with an abundant source of labour is often thought to have an advantage and can earn a demo-graphic dividend. But a large population also creates challenges in terms of employment, food security, education and health provision.

1.3.1 Key concepts of demographic transition

Before analysing population trends and policies in SSA, we will have to in-troduce some basic demographic terms and definitions first. We will explain the following terms: population size, structure and growth rate, crude death and birth rates, age-specific and total fertility rates, vital rates and rate of natural increase, migration, age structure, dependency ratio and demo-graphic investment. The subsection after that will discuss the effect of population growth on aggregate supply and demand, and the final subsec-tion will introduce a major theoretical idea in social demography – that is, ‘the theory of demographic transition’.

Study Note 1.2

Please be aware that throughout Subsection 1.3.2 a large number of definitional terms will be covered. You might find it helpful to note these as reference for the study of the second half of the unit.



1.3.2 Demographic terms and definitions

When we speak of population size, we refer to the number of people that con-stitute the population at a particular time. This point of time is usually the end of a year, though sometimes it may refer to the year’s mid-point.

Population structure refers to some aspect of a country’s, or region’s, demo-graphic profile (eg geographical or sectoral distribution, or its distribution in terms of age or of sex).

The growth rate of a population is a measure of the speed with which that population is changing – usually rising – per period of time (which is usu-ally per year). This growth rate can be expressed in percentage terms, although it is conventionally expressed per thousand.

Population growth reflects the behaviour of three demographic variables: mortality, fertility and migration. Mortality is often equated with the crude death rate (CDR), which measures the total number of deaths per period of time (most commonly, one year) divided by total population at the mid-point of that period. For example, the crude death rate for sub-Saharan Af-rica was 12.5 per thousand in 2010 – a decrease from 21.6 in 1970.

Mortality rates tend to follow a distinct pattern. They are generally charac-terised by a relatively high incidence of death among the very young (hence, concerns about infant mortality), followed by a sharp fall to a low incidence among young age groups, leading to an eventual rise among the elderly. However, this pattern can be altered by events such as famine, war and dis-eases such as HIV. These events can significantly affect life expectancy and increase mortality in the adult population. For example, infant and under-five mortality rates in SSA in 2010 were 11.4 and 69 per thousand, while adult mortality was 333 per thousand.

Fertility is regarded as the single most important determinant of population change. It is correlated with a number of factors such as societal values, age of marriage, female literacy and childhood mortality. Fertility is often equated with the crude birth rate (CBR) – that is, the total number of live births per time period (usually a year) divided by total population, counted at the mid-point of that period. This measure is called the ‘crude’ birth rate, because it averages the birth rate across the entire population, regardless of age or sex.

The basic and most frequently used index of fertility is the age-specific fertility rate (ASFR). This is a basic fertility index, which relates the number of live births among women of a given age group to the total number of women of that age range. The second most popular index of fertility, called the total fer-tility rate (TFR), can be derived from the ASFR. It measures the average number of children (live births) born to a woman of child-bearing age (usu-ally reckoned to be from 15 to 49 years of age). As long as the children survive, higher fertility rates translate into higher rates of population growth and a higher share of children in total population.



Birth rates and death rates are known as vital rates. The difference between them (that is, crude birth rate minus crude death rate) is known as the rate of natural increase. It measures the speed of changes in population size due to the difference between the number of births and deaths. This rate of natural increase is the most common measure of population growth.

Exercise 1.1

Now that you are familiar with these terms, please have a look at Table 1.2 and note the following:

the relationship between the annual rate of population change and natural increase the crude mortality rate and the rate across infants, the under-fives and adults Why do you think the under-five mortality rate (the probability of dying between

birth and the exact age of five) is regarded as an important indicator of develop-ment?

Why do you think the adult morality rate has varied considerably while infant and child mortality has decreased?

Why do you think the annual rate of population growth remains high despite a slowdown in the crude birth rate?

Table 1.2 Population, mortality and natural increase Sub-Saharan Africa

1950–55 1965–70 1985–90 1995–2000 2000–05 2005–10

Annual Rate of Population Change (%)

2 2.5 2.8 2.6 2.6 2.7

Crude Mortality 22.7 21.6 16.3 15.7 14.8 13 Infant Mortality 183 144 112 102 90 79 Under-five Mortality 307 244 188 169 147 126 Adult Mortality 508 434 360 401 422 381 Crude Birth Rate 47.4 46.9 44.9 42.2 41.0 39.6 Natural Increase (000’s) 18,596 33,543 65,360 79,436 89,460 103,644

Source: United Nations World Population Prospects (2012)

Note, however, that this rate does not include the effects of migration – that is, population movements into and out of the country. When migration is in-cluded, the rate refers to total change in population size. But bear in mind that it is not only international migration that can have a significant demo-graphic impact, but also internal migration.

To speak only of the importance of mortality, fertility and migration for pop-ulation growth neglects the effects of age structure. The age structure is an important population attribute, which shows the shares of various age groups within the total population. A population with a young age structure offers a built-in momentum for future population increase.

This highlights the important point that even with strict birth control measures, fertility will not quickly drop to replacement level – the level at which a woman will, on average, be succeeded by one or less than one daughter (and a man by one or less than one son). Remember too that even when fertility does start to fall, population will continue to expand, perhaps



for a further 50 years or more. This too is important, for it suggests that when they come to formulate their policies, officials must take a long-term view of the relationship between population size and resources.

In terms of feeding, clothing, housing, providing health and other forms of care, it is not only the young, but also the old who make heavy demands. Hence, the importance of the dependency ratio, which is defined as the popu-lation below the age of 15 (or the minimum official age at which people can undertake paid work) and above the age of retirement (say, 65) to those of working age (15–64). The more dependent young and old people there are in a population, the more resources have to be used to provide them with those basic necessities (that is, the higher will be demographic investment).

With this in mind please have a look at the Table 1.3, outlining the depend-ency ratio in SSA. What does this tell you about the age structure of the population and it likely impact on resources?

Table 1.3 Dependency ratios in sub-Saharan Africa

1950 1970 1990 2000 2005 2010

Dependency Ratio (Total) 81.8 88.6 93.5 89.1 87.9 87.0 Child Dependency 76.0 83.2 87.8 83.5 82.3 81.2 Old Age Dependency 5.8 5.5 5.8 5.6 5.7 5.8

1.3.3 Population growth and its effect on aggregate supply and demand

Population growth affects an economy’s aggregate supply as well as its de-mand. In terms of aggregate supply (the productive capacity of an economy), population growth makes available more people to work and to produce an output. This principle reflects a lagged response at work: at any given time, the number of new entrants to the labour force reflects past vital rates. Fur-thermore, population growth affects patterns of demand – and so investment. Income distribution is also an important determinant, although a reasonable generalisation is that in societies with low levels of per capita income, more is likely to be spent on consumption than on investment.

As for the pattern of consumption, the lower the level of per capita income, the more will be spent on food than on, say, manufactured goods. Not until a certain threshold income has been reached will food requirements be satis-fied – quantitatively and qualitatively – enabling consumer spending to shift towards manufactured goods.

There is also a more subtle point that has extremely important implications for growth. The faster population grows, the more investment is needed simply to maintain the existing average level of capital per member of the work force. This has implications for worker productivity, since demands for capital widening (that is, keeping per-worker availability of capital constant) rather than for capital deepening (that is, making available more capital per worker, on the basis of which improvements in labour produc-tivity can more readily take place) may inhibit rises in output per man-



hour and so constrain growth. In a developing country, half or even two-thirds of total investment may be used simply to keep up with the labour force growth – that is, to ‘stand still’ (Crook, 1997: p. 198).

1.3.4 The theory of demographic transition

The theory of demographic transition is the most important theoretical idea in social demography. It was developed in 1929 by an American demogra-pher called Warren Thompson. Having observed changes in birth and death rates in industrialised societies, he devised a simple, but powerful, theory, which states that as economic and social development proceeds, the mortal-ity and fertility of a country’s population typically both decline, sequentially, from high to low levels.

You should be able to identify this from Figure 1.2 below.

Figure 1.2 The Demographic Transition Model

CBR = Crude Birth Rate; CDR= Crude Death Rate

Source: Montgomery (2001)

The starting point is the pre-modern, pre-industrial stage, in which high fertil-ity commonly combines with high mortality to generate slow population growth. The end-point is the post-transition, post industrial, stage, when low fertility and mortality rates generate a low rate of natural increase, implying that the absolute size and rate of growth of population have stabilised. Demo-graphic transition itself describes the process of accelerated population growth that occurs between the initial and final stages. As you can see from the figure, the underlying reason for such population growth during the ur-banising/ industrialising and the mature industrial stages lies in improvements in mortality generally preceding a corresponding fall in fertil-ity.

There are different views about how, most effectively, to reduce fertility and hasten demographic transition. Some argue that development itself is the most effective contraceptive – take care of the people by giving them a higher living standard, and population will take care of itself. (The idea behind this is that those with higher incomes would not have to rely on children to



provide for them in their retirement). But much empirical evidence supports an alternative thesis, which suggests that post-war fertility declines in devel-oping countries have stemmed largely from deliberate efforts to control fertility through education, propaganda and organised family-planning policies, based on the use of modern contraception.

Looking carefully at Table 1.2, try to plot where the sub-Saharan region as whole would fit. You should note that focusing on the region as a whole conceals important variations in issues such as life expectancy, mortality and demographic transition itself. Many poorer countries in the region such as Chad, Burkina Faso, Guinea, Niger, Nigeria, Mali, Zambia and Zimbabwe are believed to have to stalled in their transition.

Optional Reading 1.1

You can read more about the demographic transition of the countries within sub-Saharan Africa in the United Nations Department of Economic and Social Affairs/Population Divi-sion (UNDESA, nd accessed July 2020).

1.4 Country Studies In this section you will study two contrasting countries – Angola and South Africa, to examine in greater detail the differences between a country that is struggling economically and one that has developed very successfully.

1.4.1 Country Study 1: Angola

We would now like you to turn to the case of a country that has been far less successful in term of economic growth than many of its neighbours. Alt-hough Angola, like many of its neighbours, has an abundance of natural resources, including gold, diamonds, petroleum, uranium and iron ore, it re-mains one of the region’s poorest and least developed economies. Angola has one of the lowest levels of per capita GDP in the region. This is reflected in data on absolute poverty which indicate that some 55% of its population live below the poverty line.

In terms of demographics Angola also performs very poorly. The average life expectancy is around 39 years, well below other economies in the region. Concealed in these figures are high levels of HIV infection as well as other diseases such as Malaria and Typhoid Fever.

Recent figures indicate that Angola has an annual population growth rate of around 2.2%. There are approximately 44.5 births and 24.8 deaths per 1,000 head of population. The fertility rate is 5.9. Consider for a moment what this tells you about demographic change in Angola. What is the natural growth rate of the population? Also concealed in the natural increase is a very high in-fant mortality rate. There are some 184.4 deaths for every 1,000 live births.



Reading 1.2

To understand how Angola’s problems are reflected in its economic performance we would now like you to turn to the article by Aguilar and Goldstein. The article seeks to evaluate the emergence of China and India as large trading partners for Angola, and it will also provide you with a useful overview of how Angola initially prospered moderately from its association with Portugal, but later suffered intensely from a protracted civil war.

Please study the article answering the following questions:

The authors express some surprise that despite a protracted civil war, Angola showed a remarkable ability to grow. Are you surprised by this?

What was the downside or cost to this growth? Why have foreign-owned oil companies gained such special concessions as protec-

tion from currency volatility? In what way has the economic emergence of countries like China and Brazil

changed the composition of Angola’s international trade? The article suggests that the advantage of China is that it provides aid without con-

ditionality – but also points out that it is important not to confuse absence of conditionality with a lack of control. What are the consequences of this control?

1.4.2 Country Study 2: South Africa

The South African economy has undergone considerable political and eco-nomic changes, particularly in the last two decades. Many of these changes have been positive. South Africa’s economy has performed impressively. Be-tween 1994 and 2007 the economy delivered an average GDP growth rate of 3.6% and average inflation of 6.3% (compared to an average growth rate of 1.4% and average inflation of 14.2% between 1980 and 1994) (Goldman Sachs, 2013). The performance of the economy post 1994 has been regarded as a ‘golden period’ and a peace dividend for South Africa. These changes have also been reflected in improvements in South Africa’s population data. By 2013, South Africa’s total fertility rate had dropped to 2.34, compared to 2.68 in 2003 (data sourced from Statistics South Africa, Mid Year Population Estimates, 2013). Over the same period, infant mortality fell from 62.6 to 21.7. In 2013 life expectancy stood at 59.6 years (up from 52.1 years in 2003). These improving trends are also reflected in mortality rates, which have fallen considerably since 2007. For example, between 2010 and 2011 mortal-ity decreased by 7.7%.

However, despite these improvements, the South African economy contin-ues to face many challenges. Deaths from infectious diseases accounted for 24.8% of deaths in 2010, many of these in the 15–64 age cohort. Tuberculosis alone accounted for 12% of deaths in 2010. Inequality remains stubbornly high as evidenced by the fact that although an increasing number of Afri-cans have entered the middle-class, 85% of Africans are still classed as poor, while 87% of white South Africans are in the middle and upper classes (this is despite the fact that the absolute number of white South Africans has

Aguilar & Goldstein (2009) ‘The Chinisation of Angola’. Reproduced in the Module Reader from The World Econ-omy.



declined) (Goldman Sachs, 2013) This gives us an interesting opportunity to look at economic growth.

Reading 1.3

Please now read the article by Fedderke and Simkins, which evaluates South Africa’s eco-nomic growth since 1914 using modern growth theory. This takes account of wide variety of factors such as employment and labour markets, capital stock, technological change, the determinant of investment, the contribution of human capital, fiscal and monetary policies and well as institutions and governance.

In your notes please identify the following, and answer the questions below.

the factors that have underpinned growth in South Africa the effects of segregation and apartheid the role of the financial sector and the potential risks in creates (you might like to

related these points back to those on the finance and growth consensus earlier) What does the author see as the contradictions between investment in capital stock

and human capital? Why might financial deepening be viewed as a positive force?

1.5 Synthesising the Evidence: Is Africa Rising? An interesting question that comes out of this unit is whether or not the economies in SSA are now on the rise. This is undoubtedly a complex ques-tion. Widespread poverty, weak infrastructure, high mortality rates and inequality continue to exist alongside increasing GDP, visible improvements in living standards and the inflow of investment from other emerging econo-mies like China. History also provides some important lessons on the sustainability of growth. In order to shed light on this question and synthe-sise the issues covered in this unit we would now like you to read the final article for this unit; a case study, ‘Africa rising: Myth or reality?’.

Reading 1.4

Please now read the case study Africa Rising. We would like you to use this case study alongside the material you have studied in this unit to answer the question:

Is the economy of Africa rising?

In forming your conclusion we would like you to be critical in your assessment of the vari-ous views put forward in the case study. In particular, you might like to contrast the daunting challenges set out in the study with the often-innovative mechanisms and part-nerships used by firms to ‘leapfrog’ bottlenecks.

Are these innovations enough to drive economic growth in the absence of good in-dustrial policies and better educations and health?

Please note your views and modify or amend them as you study the topics raised in the units that follow.

Fedderke & Simkins (2012) ‘Economic growth in South Africa’. Economic History of De-veloping Regions, 27 (1), 176–208.

Globalization 101 (2011) ‘Africa rising: Myth or re-ality?’ Globalization 101, 5 June.



1.6 Conclusion In this unit you have studied major aspects of economic growth and demo-graphic change in SSA. We started by introducing key terms and ideas surrounding economic growth, and then proceeded to analyse the historical growth experience of the SSA region. We then considered the question of population and key concepts surrounding the measurement of demographic change. We applied this to demographic data since the 1950s. The unit con-cluded by looking at the different growth challenges faced by two specific country studies and the prospects for the African continent as a whole. In Unit 2 we will return to a topic closely related to the growth prospects of many SSA countries – agriculture.

References Acemoglu D, S Johnson & J Robinson (2001) ‘The colonial origins of comparative development: An empirical investigation’. American Economic Review, 91 (5), 1369–401.

African Development Bank: www.afdb.org/

Aguilar R & A Goldstein (2009) ‘The Chinisation of Africa: The case of Angola’. The World Economy, 32 (11), 1543–62.

Collier P (2007) The Bottom Billion: Why the Poorest Countries are Failing and what can be done about it. Oxford UK: Oxford University Press.

Crook N (1997) Principles of Population and Development, with Illustrations from Asia and Africa. Oxford UK: Oxford University Press.

Fedderke J & C Simkins (2012) ‘Economic growth in South Africa’. Economic History of Developing Regions, 27 (1), 176–208.

Globalization 101 (2011) ‘Africa rising: Myth or reality?’, 5 June . http://www.globalization101.org/

Goldman Sachs (2013) Two Decades of Freedom: What South Africa is Doing with it: And What now Needs to be Done? 4 November. Available from: https://www.goldmansachs.com/insights/archive/colin-coleman-south-africa/20-yrs-of-freedom.pdf

Jerven M (2010) ‘African growth recurring: An economic history perspective on African growth, 1690–2010’. Economic History of Developing Regions, 25 (2), 127–54.

Levine R (1997) ‘Financial development and economic growth: Views and agenda’. Journal of Economic Literature, 35, 688–726.

Montgomery K (2001) The Demographic Transition Model. [Online]. Available from: https://pages.uwc.edu/keith.montgomery/Demotrans/demtran.htm

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the economy of sub-saharan africa unit 1 economic growth

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