Thursday, April 10, 2008

African economic growth, but no social development

Higher economic growth is often perceived as the one key indicator every nation (with the possible exception of happiness-driven Bhutan) aspires to.  However, if economic growth does not lead to better living standards or come at an unaccounted expense to the natural environment, the desirability of such low-quality growth (see report from World Bank on Quality of Growth for example) needs to be questioned. 

It seems as if Africa has a lot of low-quality growth.  The latest Economic Report on Africa 2008 report by the Economic Commission for Africa, comes to the following conclusion:

The first main conclusion of this Report is that African countries have recorded strong economic performance for the third consecutive year, with an average growth rate of 5.8 per cent. This strong performance is due to a range of factors, including high commodity demand and prices and increased output in key sectors such as agriculture and services. 

The second is that despite high growth rates in recent years, this strong performance has not translated into meaningful gains in terms of social development. African governments need to increase investments in social sectors, and also improve the efficiency of social sector expenditures. At the same time, gains from growth need to increase, by better targeting of employment creation through broader and more 

flexible macroeconomic frameworks and sectoral policies. 

Increasing wealth and increasing poverty at the same time creates a negative spiral of ever-increasing relative deprivation and social division.  In some systems this increases the risks of violent outbursts by those who are left behind, in other systems this raises the risks of repression.  It seems to me that no system can sustain a spiral of rising inequality in the long run without imploding or resorting to some form of repression.

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