Part five - Political Economy: Crisis and reform

02 August 2006
23:25

Tho african countries are different, there are common and distinct challenges:

· Rural, poor
· Lack capital, technology, expertise.
· Dependent on commodities exports

Different development strategies reflect different political perspectives:
· Populist - govt ownership, social welfare (ghana)
· Capitalist - growth focus, more tolerance for inequalities (kenya)
· Marxist - collective ownership etc (Tanzania, Ethiopia)

Common themes:
· Nationalist, independence focus
· Import-substitute industrialisation with state-owned industry
· Bias against agriculture

Common problems:
· Low growth
· Poor investment
· Fiscal and trade deficits
· Poverty
· Inequality

1973 oil shock and 1979 price shock worsen, 1980's opens with production and welfare crises.
· Growth flattens
· Food shortages
· Industrial decline
· Trade shrinks, payment soars (debt)
· Infrastructure and services decay
· Aid dependence
· Political instability

This leads to great influence of IMF and World Bank
· BUT African govts reform selectively and basically as little as can get away with
· Don't want to lose sources of patronage etc

Everyone agrees 80's approach has failed, but disagree as to why:
· SA wrong and aimed at debt collection above all
· SA not done properly