Financial Liberalization and Domestic Resource Mobilization in Africa: an Assessment
AbstractSub-Saharan Africa?s improving growth record in the first decade of the twenty-first century gives some hope that the potential for achieving the Millennium Development Goals will be enhanced by the improved economic conditions of the disadvantaged citizens of these countries. However, growth alone, even if it were much higher, would not be sufficient to ensure the achievement of the MDGs. The resources required for achieving them are beyond the capacity of most of these countries at present, and in the immediate future. Thus, for the region, the MDGs will be achievable only with substantial external resource inflows. In the immediate term, these resource inflows might also help to relieve the savings and foreign exchange constraints faced by most of these countries. However, movement to a higher growth and human development trajectory and eventual progress beyond such heavy dependence on external assistance require that these countries continue to develop their capacity for domestic resource mobilization. This is an area where progress is decidedly wanting for much of the region. Since 1980, Africa has had the weakest domestic resource mobilization record of any region (see Table 1 of the Appendix). On average, foreign savings have been necessary for funding more than 35 per cent of the region?s already low investment levels (see Table 2 of the Appendix). And, more to the point, these foreign resource inflows have come largely in the form of official development assistance rather than private capital flows. Given this record, if the region does not significantly improve domestic resource mobilization over the next decade, increased resource inflows pose a serious risk of entrenching (or institutionalizing) aid dependency?a situation in which high levels of external assistance perpetuate or exacerbate low savings rates. In this situation, countries lose the capacity to mobilize the resources necessary for generating even moderate growth in the absence of such aid. (...)
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Policy Centre for Inclusive Growth in its series Working Papers with number 45.
Date of creation: Apr 2008
Date of revision:
Publication status: Published by UNDP - International Poverty Centre, April 2008, pages 1-32
Financial Liberalization; Domestic Resource Mobilization in Africa: an Assessment;
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Abdullahi Dahir Ahmed, 2006. "The Impact of Financial Liberalization Policies: The Case of Botswana," Journal of African Development, African Finance and Economic Association, vol. 8(1), pages 13-38.
- Masao Ogaki & Jonathan David Ostry & Carmen Reinhart, 1995.
"Saving Behavior in Low and Middle-Income Developing Countries,"
IMF Working Papers
95/3, International Monetary Fund.
- Reinhart, Carmen & Ogaki, Masao & Ostry, Jonathan, 1995. "Saving behavior in low- and middle-income developing countries," MPRA Paper 13757, University Library of Munich, Germany.
- Campbell, John Y. & Mankiw, N. Gregory, 1991. "The response of consumption to income : A cross-country investigation," European Economic Review, Elsevier, vol. 35(4), pages 723-756, May.
- Van Wijnbergen, S., 1983. "Interest rate management in LDC's," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 433-452, September.
- Mwanza Nkusu & Selin Sayek, 2004.
"Local Financial Development and the Aid-Growth Relationship,"
IMF Working Papers
04/238, International Monetary Fund.
- Sayek, Selin & Nkusu, Mwanza, 2006. "Local Financial Development and the Aid-Growth Relationship," Proceedings of the German Development Economics Conference, Berlin 2006 23, Verein für Socialpolitik, Research Committee Development Economics.
- Ephraim W. Chirwa & Montfort Mlachila, 2004. "Financial Reforms and Interest Rate Spreads in the Commercial Banking System in Malawi," IMF Staff Papers, Palgrave Macmillan, vol. 51(1), pages 5.
- Dollar, David & Easterly, William, 1999.
"The Search for the Key: Aid, Investment and Policies in Africa,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 8(4), pages 546-77, December.
- Dollar, David & Easterly, William, 1999. "The search for the key : aid, investment, and policies in Africa," Policy Research Working Paper Series 2070, The World Bank.
- John Y. Campbell & N. Gregory Mankiw, 1989.
"Consumption, Income, and Interest Rates: Reinterpreting the Time Series Evidence,"
NBER Working Papers
2924, National Bureau of Economic Research, Inc.
- John Y. Campbell & N. Gregory Mankiw, 1989. "Consumption, Income and Interest Rates: Reinterpreting the Time Series Evidence," NBER Chapters, in: NBER Macroeconomics Annual 1989, Volume 4, pages 185-246 National Bureau of Economic Research, Inc.
- Abdul Abiad & Ashoka Mody, 2005. "Financial Reform: What Shakes It? What Shapes It?," American Economic Review, American Economic Association, vol. 95(1), pages 66-88, March.
- Campbell, John Y. & Mankiw, N. Gregory, 1990.
"Permanent Income, Current Income, and Consumption,"
3353762, Harvard University Department of Economics.
- Jonathan D. Ostry & Joaquim Levy, 1995. "Household Saving in France: Stochastic Income and Financial Deregulation," IMF Staff Papers, Palgrave Macmillan, vol. 42(2), pages 375-397, June.
- Vaidyanathan, Geetha, 1993. "Consumption, liquidity constraints and economic development," Journal of Macroeconomics, Elsevier, vol. 15(3), pages 591-610.
- Lazaros E. Molho, 1986. "Interest Rates, Saving, and Investment in Developing Countries: A Re-Examination of the McKinnon-Shaw Hypotheses (Taux d'intÃ©rÃªt, Ã©pargne et investissement dans les pays en dÃ©veloppement: ," IMF Staff Papers, Palgrave Macmillan, vol. 33(1), pages 90-116, March.
- Sunil Kumar Bundoo & Beealasingh Dabee, 1999. "Gradual liberalization of key markets: the road to sustainable growth in Mauritius," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(3), pages 437-464.
- Buffie, Edward F., 1984. "Financial repression, the new structuralists, and stabilization policy in semi-industrialized economies," Journal of Development Economics, Elsevier, vol. 14(3), pages 305-322, April.
- Bayoumi, Tamim, 1993.
"Financial Deregulation and Household Saving,"
Royal Economic Society, vol. 103(421), pages 1432-43, November.
- Philipp C. Rother, 1998. "Money Demand and Regional Monetary Policy in the West African Economic and Monetary Union," IMF Working Papers 98/57, International Monetary Fund.
- Maurice Obstfeld, 1981.
"Aggregate Spending and the Terms of Trade: Is There a Laursen-Metzler Effect?,"
NBER Working Papers
0686, National Bureau of Economic Research, Inc.
- Obstfeld, Maurice, 1982. "Aggregate Spending and the Terms of Trade: Is There a Laursen-Metzler Effect?," The Quarterly Journal of Economics, MIT Press, vol. 97(2), pages 251-70, May.
- Carmen M. Reinhart & Ioannis Tokatlidis, 2003.
"Financial Liberalisation: The African Experience,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 12(Supplemen), pages 53-88, September.
- Oludele A. Akinboade, 2000. "The relationship between financial deepening and economic growth in Tanzania," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(7), pages 939-950.
- Joaquim Vieira Ferreira Levy & Jonathan David Ostry, 1994. "Household Saving in France," IMF Working Papers 94/136, International Monetary Fund.
- Lekgatlhamang Setlhare, 2004. "Bank Of Botswana'S Reaction Function: Modelling Botswana'S Monetary Policy Strategy," South African Journal of Economics, Economic Society of South Africa, vol. 72(2), pages 384-406, 06.
- Nii K. Sowa & Ivy K. Acquaye, 1999. "Financial and foreign exchange markets liberalization in Ghana," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(3), pages 385-409.
- repec:fth:harver:1435 is not listed on IDEAS
- Mikesell, Raymond F & Zinser, James E, 1973. "The Nature of the Savings Function in Developing Countries: A Survey of the Theoretical and Empirical Literature," Journal of Economic Literature, American Economic Association, vol. 11(1), pages 1-26, March.
- Jean-Pierre Briffaut & George Iden & Peter C. Hayward & Tonny Lybek & Hassanali Mehran & Piero Ugolini & Stephen Swaray, 1998. "Financial Sector Development in Sub-Saharan African Countries," IMF Occasional Papers 169, International Monetary Fund.
- Jeffrey D. Sachs, 1981. "The Current Account and macroeconomic Adjustment in the 1970s," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(1), pages 201-282.
- Louis A. Kasekende & Michael Atingi-Ego, 1999. "Impact of liberalization on key markets in sub-Saharan Africa: the case of Uganda," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(3), pages 411-436.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Andre Lyra).
If references are entirely missing, you can add them using this form.