Friday, May 16, 2008

Commodities will keep Africa growing: blessing or curse?

Commodities will keep Africa growing, despite a slowdown in the world economy (see article). That sounds like good news, but there is more to this story. Time for an update on the 'resource curse' and whether Africa is diagnosed with Dutch disease.

An important key to analyse whether commodities are a blessing or a curse lies in the closing remark of the above-mentioned article:
With commodity prices remaining higher than their historic averages and robust North-South and South-South investor interest in Sub Saharan African assets, the window of opportunity remained open to strengthen Africa's economic fabric.

Will Africa be able to use the resource rents to strenghten its economic fabric? What does history tell us? What do we learn from theories on natural resource and development?

This is a topic of much study and debate. Some believe that South Africa, one of the more diversified economies, already suffers from Dutch disease. Some others emphasise, like this case in Ghana with a focus on good governance, that economies can be protected against this disease.

Solutions that have been put forward focus on institutional strengthening, bargaining, accountability. transparency - all aspects of good govervance.  With mixed messages on good governance in the continent, it is highly likely that their will be mixed success in this process to escape the disease and strengthen Africa's economic fabric.

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