Africa needs property rights to flourish
President Bush's new Africa initiative, and the recent events unfolding in Liberia, raise the question why, despite decades of aid, Africa remains impoverished. Over the years, the continent has been the site of large-scale experiments to reform its economies. But however ambitious, these projects have failed to generate sustained economic growth, say Stephen Haber, Douglass C. North and Barry R. Weingast (all of the Hoover Institution). Most African nations today are poorer than they were in 1980 sometimes by very wide margins.
As a result:
Of the continent's three-dozen countries, only two Botswana and Uganda have managed to grow at rates exceeding 3 percent per annum since 1980.
And two-thirds of African countries have either stagnated or shrunk in real per capita terms since the onset of independence in the early 1960s.
The main lesson is that no attempt at economic reform in Africa can hope to succeed if it ignores the concomitant need for political reform, say the authors. Without attention to their political foundations, markets cannot flourish. Donor governments and agencies must ensure that African countries indeed, developing countries everywhere undertake market reform, as the economists emphasise. But they must attend to the political security of markets as well as to the economic policies creating them.
Source: Stephen Haber, Douglass C. North and Barry R. Weingast (all of the Hoover Institution), If Economists Are So Smart, Why Is Africa So Poor? Wall Street Journal, July 30, 2003.
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FMF Policy Bulletin/ 5 August 2003
Publish date: 13 August 2003
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