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Economic Growth in Africa: Comparing Recent Improvements with the "lost 1980s and early 1990s" and Estimating New Growth Trends

  • Willi Leibfritz
  • Gebhard Flaig

In the first part of the paper we look at economic growth in Africa over the past three decades. We divide the past three decades into two parts: A „lost period“ from 1981 to 1995 and a „recovery period“ since the second half of the 1990s. During the first period, Africa did not catch up but lost ground, Africa’s average per capita income declined. Since the mid-1990s the continent started to catch-up. The boom in the oil price and other raw material prices during the past decade explains only part of this rebound. Many countries also benefited from greater political stability and economic reforms. Although the improved growth performance has helped to improve human development and reduce poverty, poverty levels remain high in many countries and more needs to be done to make growth more “inclusive”.In the second part we estimate the trend growth rates for Africa and several individual countries. We use the Hodrick-Prescott filter with different values for the smoothing parameter lamda. For some countries we specify time-varying values for lamda in order to model breaks in the level and the growth rates of GDP trend. For Africa as a hole and for most countries we find relatively low trend growth rates until the mid-nineties. Since then the trend growth rates rose remarkably - for Africa from 2 % to about 5 %. In the last five years we observe a slight decrease to about 4½ %.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4215.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4215
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  1. Elsa V. Artadi & Xavier Sala-i-Martin, 2003. "The Economic Tragedy of the XXth Century: Growth in Africa," NBER Working Papers 9865, National Bureau of Economic Research, Inc.
  2. Gebhard Flaig, 2012. "Why We Should Use High Values for the Smoothing Parameter of the Hodrick-Prescott Filter," CESifo Working Paper Series 3816, CESifo Group Munich.
  3. Kalwij, Adriaan & Verschoor, Arjan, 2007. "Not by growth alone: The role of the distribution of income in regional diversity in poverty reduction," European Economic Review, Elsevier, vol. 51(4), pages 805-829, May.
  4. Augustin Kwasi Fosu, 2009. "Inequality and the Impact of Growth on Poverty: Comparative Evidence for Sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 45(5), pages 726-745.
  5. Morten O. Ravn & Harald Uhlig, 2002. "On adjusting the Hodrick-Prescott filter for the frequency of observations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 371-375.
  6. D.S.G. Pollock, 2007. "Investigating Economic Trends And Cycles," Discussion Papers in Economics 07/17, Department of Economics, University of Leicester, revised Apr 2008.
  7. Timothy Besley & Robin Burgess, 2003. "Halving Global Poverty," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 3-22, Summer.
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