GROWTH WITHOUT DEVELOPMENT IN WEST AFRICA: IS IT A PRADOX?1 BY AKPAN H. EKPO2 [1] Paper presented at the Annual Conference on Regional Integration in Africa (ACGRIA5), organized by CREPOL, July 1-2, 2013, Praia, Cape Verde. [2] Professor of Economics and Director General, West African Institute for Financial and Economic Management (WAIFEM), Lagos. E-mail: ahekpo@waifem-cbp.org
OUTLINE INTRODUCTION AND MOTIVATION PERFORMANCE OF THE WEST AFRICAN ECONOMY: STYLIZED FACTS GROWTH AND DEVELOPMENT: REVIEW AND THEORETICAL ISSUES METHODOLOGY AND EMPIRICS CONCLUSION 2
1. INTRODUCTION AND MOTIVATION Modern economy and growth Growth Vs development Role of the State (Public Sector) Attributes of Growth Growth And the Economies of West Africa. 3
2. PERFORMANCE OF THE WEST AFRICAN ECONOMY: STYLIZED FACTS Data problems unemployment, poverty, incidence etc Economy grew by 7% in real terms in 2012 Sierra Leone has the highest growth rate of 19.7% followed by Burkina Faso Increased real GDP for almost all the countries Sustainability of growth trajectory Moderate Rates of inflation. 4
TABLE 1: MACROECONOMIC INDICES FOR WEST AFRICA Real GDP Growth % Africa West Africa Benin Burkina Faso Cape Verde Cote d Ivoire Gambia Ghana Guinea Guinea-Bissau Liberia Mali Niger Nigeria Senegal Sierra Leone 2012 6.4 6.9 5.4 9.0 2.5 9.8 6.1 7.9 3.9-1.5 8.3-1.2 11.1 6.7 3.4 19.7 2013* 3.9 6.7 5.0 6.9 1.0 8.8 5.6 4.4 2.0 0.3 8.1 5.0 3.6 7.4 4.0 13.0 2014** 4.8 7.2 4.9 7.0 3.1 9.1 7.5 7.7 4.2 2.8 6.8 6.7 6.0 7.2 4.8 13.8 2015 5.7 7.1 5.3 6.3 3.3 9.2 6.7 8.0 4.3 2.6 8.2 5.6 6.2 7.1 5.3 11.6 Togo 5.9 5.6 6.0 6.3 Source: African Development Bank. African Economic Outlook 2014 Notes: * estimates; ** projections 5
TABLE 2: REAL GDP GROWTH FOR WEST AFRICAN COUNTRIES 2000 2013 (%) Country Benin Burkina Faso Cabo Verde Cote d Ivoire Gambia Ghana Guinea Guinea Bisau Liberia Mali Niger Nigeria Senegal Sierra Leone Togo 2000 4.9 (1.9) 1.3 (-1.6) 16.6 (14.7) -2.5 (-4.6) -27.3 (-30.2) 3.8 (1.4) -5.6 (-7.3) -35.8 (-38.0) 55.1 (49.8) -4.7 (-7.5) -2.9 (-6.5) 6.3 (3.8) 3.0 (0.5) -23.3 (26.0) -1.7 (-4.3) 2005 2.9 (-0.4) 8.7 (5.7) 6.5 (5.5) 1.8 (0.4) -0.9 (-4.1) 5.9 (3.3) 3.0 (0.9) 4.3 (2.1) 5.9 (3.2) 6.1 (3.0) 7.2 (3.5) 6.5 (3.9) 5.6 (2.9) 7.3 (3.4) 1.2 (-1.4) 2012 5.4 (2.7) 9.0 (6.1) 2.5 (1.7) 9.8 (7.5) 6.1 (2.9) 7.9 (5.8) 3.9 (1.3) -1.5 (-3.9) 8.3 (5.6) -1.2 (-4.2) 11.1 (7.3) 6.7 (3.7) 3.4 (0.5) 19.7 (17.8) 5.9 (3.3) 2013 5.0 (2.3) 6.9 (4.1) 1.0 (0.1) 8.8 (6.4) 5.6 (2.4) 4.4 (2.3) 2.0 (-0.5) 0.3 (-2.1) 8.1 (5.6) 5.0 (2.0) 3.6 (-0.3) 7.4 (3.4) 4.0 (1.1) 13.0 (11.1) 5.6 (3.1) Source: African Development Bank Notes: Real per capita GDP Growth Rate (%) are in parenthesis. 6
TABLE 3: Rate of Inflation in Selected West African Countries (%) Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 Cabo Verde The Gambia Ghana Guinea Liberia Nigeria Sierra Leone Benin Burkina Faso Cote d Ivoire Guinea-Bissau Mali Niger Senegal Togo 0.4 5.0 15.1 31.4 6.9 17.9 12.0 5.4 6.4 3.9 5.6 6.4 7.8 1.7 6.8 4.8 2.1 10.2 34.7 7.2 8.2 9.5 3.8 2.4 2.6-0.1 1.5 0.1 2.1 2.2 4.4 5.4 10.7 22.9 13.7 5.4 11.8 1.3-0.2 1.9 4.6 9.1 0.1 5.9 1.0 6.8 4.5 16.5 18.4 17.5 11.6 14.8 8.0 10.7 6.3 10.4 11.3 11.3 5.8 8.7 1.2 4.6 19.3 4.7 7.4 12.4 9.2 2.2 2.6 1.0-1.7 2.2 4.3-1.1 2.0 4.5 4.8 8.7 21.5 8.5 10.8 18.5 2.7 2.7 1.9 5.0 3.1 2.9 3.4 3.6 2.5 4.2 9.2 15.2 6.8 12.2 13.7 6.6 3.8 2.0 2.1 5.3 0.5 2.1 2.6 2.1 5.0 10.7 15.5 7.3 13.7 17.8 2.1-0.6 1.4 1.1 1.3 0.9 1.2 3.2 1.5 5.0 11.7 11.9 7.7 8.5 9.9 2.6 2.1 2.7 1.0 0.3 1.9 0.7 1.8 Source: 2011 Annual Report, WAIFEM, Lagos 7
Fiscal deficits Twin deficits - negative current Account/GDP - Deficit fiscal balance 8
TABLE 4: FISCAL BALANCE, INCLUDING GRANTS (% OF GDP) FOR WEST AFRICAN COUNTRIES, 2000 2013 Country Benin Burkina Faso Cabo Verde Cote d Ivoire Gambia Ghana Guinea Guinea Bisau Liberia Mali Niger Nigeria Senegal Sierra Leone Togo 2000-1.7 (-44) -3.8 (-13.2) -7.4 (-10.9) -1.2 (-2.8) -0.7 (-5.7) -5.3 (-6.6) -3.4 (-5.6) (8.8) 0.3 (-16.0) -3.0 (-9.6) -3.8 (-6.7) 5.9 (12.5) 0.5 (-7.0-9.3 (-6.5) -4.7 (-6.2) 2005-2.5 (-6.2) -5.1 (-11.5) -3.6 (-4.1) -0.8 (0.2) -7.2 (-11.2) -1.2 (-6.2) - 0.9 (-5.4) -5.9 (-1.8) 0.6 (-23.3) -4.7 (-10.1) -2.1 (-9.2) -1.2 (25.3) -3.2 (-7.8) -1.3 (5.8) -2.4 (-21.8) 2012-1.3 (-8.5) -3.1 (-0.8) -9.8 (-11.7) -2.6 (-3.8) -4.4 (-16.4) -5.8 (-12.4) -3.2 (-33.9) -2.7 (-9.5) -2.3 (-33.9) -1.3 (-3.0) -1.1 (-15.1) -1.4 (4.9) -5.9 (-10.3) -1.4 (5.6) -5.8 (-11.9) 2013-1.2 (-8.2) -3.2 (-0.7) -7.9 (-5.7) -2.0 (-6.4) - 3.3 (-16.0) -7.8 (-12.3) -5.2 (-20.2) -4.7 (-6.6) -2.6 (-48.0) 2.5 (-9.8) 0.1 (-15.2) -1.8 (8.2) -5.4 (-9.0) 00 (-2.1) -4.6 (-11.7) Source ADB, Tunisia Notes: Current Account /GDP (%) are in parenthesis 9
: 3. GROWTH AND DEVELOPMENT: REVIEW AND THEORETHICAL ISSUES where: Y Output L Labour range of capital goods.(2)..(3) Capital (K) is accumulated by foregoing consumption hence:.(31) 10
3. GROWTH AND DEVELOPMENT: REVIEW AND THEORETHICAL ISSUES (CONT D).(4) (J) Another assumption is that the technology frontier expands at a constant rate, g.. g.. (5) (6) 11
3. GROWTH AND DEVELOPMENT: REVIEW AND THEORETHICAL ISSUES (CONT D) (7) Government is an economic agent - production - distribution of growth Inclusive growth Vs sustained growth What is Economic Development 12
4. METHODOLOGY AND EMPIRICS.. Where: Y h Ls Ps Pr G A T ( 8) growth rate of GDP ideas and innovations acquiring skills and learning by doing primary school completion rate secondary school completion rate public sector strategies and policies adult literacy rates technology ) 13
4. METHODOLOGY AND EMPIRICS (CONT D) Xi control variables such as rate of inflation, public investment in GDP, access to drinking water, access to sanitation, shelter etc Importance of social indicators 14
4. METHODOLOGY AND EMPIRICS (CONT D) Table 5: West Africa: Education Indices, 2000-2013 Country Benin Burkina Faso Cabo Verde Cote d Ivoire Gambia Ghana Guinea Guinea Bissau Liberia Mali Niger Nigeria Senegal Sierra Leone Togo Gross Primary School Enrolment Ratio Gross Secondary School Enrolment Adult Literacy Ratio Rates 2000 2005 2012 2013 2000 2005 2012 2013 2000 2005 2012 2013 81.2 45.0 122.8 77.3 90.5 86.0 57.5 76.0 112.7 62.2 33.6 98.4 68.1 68.7 112.8 98.5 58.3 114.2 90.8 90.4 80.1 114.0 80.1 50.0 100.9 80.5 113.3 118.6 82.2 111.5 90.0 82.5 106.7 89.3 116.2 102.4 85.7 68.9 84.8 83.5 128.1 129.5 108.8-21.6 10.4 67.2 36.9 17.9 35.2 18.5 7.0 24.5 15.9 32.1 34.6 14.3 72.2 42.9 19.4 32.4 27.6 10.1 34.7 22.6 45.0 47.7 23.8 90.4 57.5 54.0 29.4 45.2 36.9 14.7 43.8 41.0 54.9 58.2-36.8 57.9 41.4 53.2 23.6-42.4 84.3 56.2 50.0 67.3 41.0 54.2 60.8 43.4 28.7 61.3 42.1 - - Source: ADB, Tunis 15
4. METHODOLOGY AND EMPIRICS (CONT D) Table 6: West Africa Social Indicators 1990-2013 Country Benin Burkina Faso Cabo Verde Cote d Ivoire Gambia Ghana Guinea Guinea Bissau Liberia Mali Niger Senegal Sierra Leone Togo Public Expenditure on Education (% total expenditure) Life Expectancy at Birth Infant Mortality Rates (per 1,000) 2001-10 1990 2009-10 2012 2013 2000 2005 2012 2013 50.2 55.2 58.4 48.1 46.0 55.7 39.7 54.8 54.7 58.2 63.8 53.6 56.1 59.0 47.4 56.6 59.3 56.3 75.1 50.7 58.8 61.1 56.1 54.3 60.6 55.0 58.4 63.5 45.6 56.5 87.1 95.2 31.8 46.4 67.1 63.9 103.3 111.5 112.8 113.5 91.7 65.0 144.4 78.8 77.7 85.3 24.6 47.2 62.6 58.0 87.4 105.1 82.7 104.9 71.9 57.5 133.4 76.4 69.0 70.9 17.5 50.4 55.9 51.4 73.9 94.8 61.4 88.3 54.2 49.6 117.7 67.5 68.1 68.9 16.8 50.9 54.9 50.7 72.7 93.2 59.8 85.8 52.5 48.8 115.7 65.8 14.4 20.8 22.8 24.4 23.2 59.2 55.9 74.8 50.4 58.6 61.0 55.9 54.1 60.2 54.6 57.9 63.3 45.3 50.2 Source: ADB, Tunis 16
4. METHODOLOGY AND EMPIRICS (CONT D) Social indicators, growth and economic development - life expectancy - primary and secondary school enrolment 17
CONCLUSION We have analysed whether growth has resulted in economic development in the economies of West Africa. While the region has witnessed positive growth trajectories during the period 2005 2013, it is not clear whether economic development has occurred. 18
CONCLUSION (CONT D) This is partly due to the rather short period of analysis and lack of relevant data to adequately examine the subject. However, stylized facts show that the economy maintained reasonable rates of inflation while suffering from the challenges of twin deficits. 19
CONCLUSION (CONT D) An examination of relevant social indicators point to marginal gains in the areas of life expectancy at birth, primary and secondary school enrolment as well as adult literacy rates. Whether growth without development in the sub-region is a paradox remain inconclusive. Nonetheless, leaders, policymakers and technocrats in the sub-region should emphasise sustained growth and inclusive development. 20
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