Wednesday, 26 March 2008

And in the next decade...

As I mentioned in my post last Friday, Botswana, Burundi, and Gambia seem to have outperformed relative to the predictions of classical growth theory, which estimates growth rates purely on the basis of investment, education, population growth, and starting income. Their growth must have been due to other factors - they seem to have had the economic "X factor".

On the other hand, they may have been, if not exactly lucky, then beneficiaries of circumstances or factors of a transitive nature. So I looked at the growth rates for all African countries over the period from 1991-2006 using IMF data. If Botswana, Burundi, and Gambia have some special features, then one would expect continued outperformance, making allowance for extreme events during the period.

In terms of absolute growth rates, Botswana was near the top of the performers in Africa, beaten only by two oil producers, two market economies, and a tiny island state. However, its growth rates were half what they were in the 1980s, so it probably was performing in line with its classical predictions. I've made the assumption that savings and education did not plummet between the two periods, but not checked, being busy and lazy and that.

Gambia was in the top 25 percent of performers in absolute terms in 1991-2006, and its growth rate picked up by one percent from the previous decade. Again assuming no huge changes (increases, this time) in savings and education, Gambia seems to have retained its growth outperformance.

Burundi was the third worst African performer in 1991-2006. But it was in conflict since 1993, so it is difficult to take lessons from its performance.

In summary: one piece of evidence saying continued outperformance; one piece saying a reduction to expectations; one piece which can't be used. I wouldn't like to build a theory on this evidence.

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