Friday 3 July 2009

Is there an African economics distinct from conventional economics?

By the question in the title, I mean "are the models and estimates from economics taught in the West suitable for examining Africa's economies?"

When an economic model is presented, it is intended to represent the human behaviour and processes that lead to exchange of goods and money. Many economic models have for a long time assumed individual utility maximisation, that is, people act individually in a way that they choose in preference to other actions. The definition often does not require that people make themselves most happy or most long-lived, but merely that they chose the actions, so the definition is tautological. It is given content by some common assumptions about how utility behaves. For example, if someone is observed to choose to play football for two hours rather than basketball for two hours, then it will often be assumed that they will choose to play football for one hour rather than basketball for one hour. Or, if they choose dancing rather than football and choose football rather than reading, then it is assumed they will choose dancing to reading.

The assumptions can and have been changed in some models. They are flexible, so the method used should be able to describe African economic behaviour. Whether there are adequate models to describe some common situations faced in Africa is a different matter. For example, I will wager, from a position of ignorance, that the number of models describing frequently ruptured, government free, barter economies in the East of the DR Congo is far less than the number of models describing developed country recessions.

That said, even in Africa there are more countries who go through expansion and recession than experience East Congolese conditions. The exceptional circumstances in Africa may be omitted from the Western models, but the models still explain much about African economies. The greater incompleteness of the models may be apparent as a weaker overall fit, or parameters estimated less well. Parameter differences may also emerge if people in Africa make different choices to people elsewhere, on average.

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