NCPA - National Center for Policy Analysis

Tough Economic Love For Africa

March 13, 1997

One area of the world that may be left out of the worldwide wave of economic growth is sub-Saharan Africa, say economists -- where population has grown faster than output for two decades and most people live on the edge of subsistence.

Specialists at the Harvard Institute for International Development are pressing Washington to create "a new partnership for growth" with African countries.

  • Instead of "guilt-induced aid handouts followed by indifference," analysts would like to see the countries granted market access, foreign debt concessions tied to economic reforms and technology transfers.
  • The World Bank and the International Monetary Fund have already begun to offer debt write-offs as a bargaining chip for domestic reforms.

Observers say it is hard to exaggerate the failure of four decades of development aid in the area south of the Sahara and north of South Africa.

  • Personal consumption levels are roughly one-twentieth that of the industrialized countries.
  • Despite tens of billions of Western dollars poured into the countries, the donors have not encouraged policy reforms.
  • Observers say that East Asia looked almost as hopeless in the 1950s -- then adopted reforms that skyrocketed it into the present.
  • Specialists cautiously estimate that Africa is capable of sustaining 5 percent growth in per capita income for several decades -- but only if it does everything right.

Needed reforms in Africa include prudent budgets, investment in education and infrastructure, deregulation of domestic markets and foreign trade -- as well as a warm welcome to foreign investors. Both liberal Democrats and conservative Republicans have introduced legislation to rewrite rules for trade and investment policy along the lines of the Harvard Institute recommendations.

Source: Peter Passell, "New Ideas Go Beyond Handouts in the War on African Poverty," New York Times, March 13, 1997.


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