Elsa Artadi and Xavier Sala-i-Martin think the "worst economic disaster" of the 20th Century was "the dismal economic growth performance of the African continent." (Artadi, Elsa V. and Xavier Sala-i-Martin, "The Economic Tragedy of the XXth Century: Growth in Africa." National Bureau of Economic Research. Working Paper 9865. July 2003. Accessed at http://papers.nber.org/papers/W9865 on July 23, 2003).
Per capita income growth over the period 1960-2002 was trivial. Continental per capita GDP grew from US$1,500 in 1960 to about US$2,000 in 1980, and then sat there. Sub-Saharan per capita GDP has actually fallen since the oil crisis in 1974, and is now very close to what it was in 1960. (things have been a little better, but not much, in the late 1990s and early 2000s).
Poverty has increased both relatively and absolutely. While people with higher incomes have generally held their own, or made some progress, people with lower incomes have tended to lose ground. The resulting increasing income inequality has increased relative poverty. But poverty has also increased - dramatically - in absolute terms! Using a World Bank poverty definition of $1.00 of consumption per person per day, the percentage of persons in poverty for Africa as a whole increased from 42% in 1970 to 50% in 1995. For Sub-Saharan Africa, the poverty rate rose from 48% in 1970 to 60% in 1995. Things may have gotten modestly better since 1995.
The numbers in poverty have increased from 140 million in 1975 to 360 million in 2000 - at a time when the overall world poverty rate fell from 1.3 billion to 900 million.
"Poverty used to be an essentially Asian phenomenon. The excellent economic performance of Asia paired with the disastrous growth performance of Africa has turned poverty into an essentially African problem."
The authors have a lot of ideas: low investment rates, low starting
education levels, poor health, a tropical climate, economies closed to
international trade, high levels of government consumption in
proportion to GDP, lots of wars. Two items were particularly
- "...researchers like Acemoglu, Johnson and Robinson (2001) point
to the institutions left by the colonies. Indeed, the claim is that
colonial powers established "extractive institutions" in inhospitable
countries plagued by tropical diseases whereas they introduced
"European-style institutions" that guaranteed the rule of law and
property rights in those areas where they could actually move to live.
When they abandoned the colonies, the institutions remained. And the
current situation still reflects the colonial past.
Having bad institutions seems to be especially dangerous in countries that discover natural resources. A recent paper...shows that natural resources that are "easy to steal" (like oil and mining) turn out to have a very adverse impact growth by triggering corruption chains that end up destroying institutions such as the rule of law..."
- "Easterly and Levine (1997) postulate that a central problem for most African economies was its unusually large ethno-linguistic fractionalization. Such fractionalization could have arisen from the fact that the colonial powers divided the continent in ways that were arbitrary and unrelated to ethnicities. But, whatever the origin, ethno-linguistic fights tend to generate to inefficient economic outcomes. Of course, the worst economic outcome arises when ethnic conflicts lead to war. But bad economic consequences could also come from groups fighting over the appropriation of resources through regular politics or through the government budget..."
I posted on an earlier Xala-i-Martin "natural resource curse" paper on July 2, here: "The curse of a generous natural resource endowment".