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The East African Community; Prospects for Sustained Growth

Author

Listed:
  • Catherine McAuliffe
  • Sweta Chaman Saxena
  • Masafumi Yabara

Abstract

The East African Community (EAC) has been among the fastest growing regions in sub-Saharan Africa in the past decade or so. Nonetheless, the recent growth path will not be enough to achieve middle-income status and substantial poverty reduction by the end of the decade—the ambition of most countries in the region. This paper builds on methodologies established in the growth literature to identify a group of countries that achieved growth accelerations and sustained growth to use as benchmarks to evaluate the prospects, and potential constraints, for EAC countries to translate their recent growth upturn into sustained high growth. We find that EAC countries compare favorably to the group of sustained growth countries—macroeconomic and government stability, favorable business climate, and strong institutions—but important differences remain. EAC countries have a smaller share of exports, lower degree of financial deepening, lower levels of domestic savings, higher reliance on donor aid, and limited physical infrastructure and human capital. Policy choices to address some of these shortcomings could make a difference in whether the EAC follows the path of sustained growth or follows other countries where growth upturns later fizzled out.

Suggested Citation

  • Catherine McAuliffe & Sweta Chaman Saxena & Masafumi Yabara, 2012. "The East African Community; Prospects for Sustained Growth," IMF Working Papers 12/272, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:12/272
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    References listed on IDEAS

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    1. Rodrik, Dani, 1999. "Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses," Journal of Economic Growth, Springer, vol. 4(4), pages 385-412, December.
    2. Easterly, William & Kremer, Michael & Pritchett, Lant & Summers, Lawrence H., 1993. "Good policy or good luck?: Country growth performance and temporary shocks," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 459-483, December.
    3. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
    4. Commission on Growth and Development, 2008. "The Growth Report : Strategies for Sustained Growth and Inclusive Development," World Bank Publications, The World Bank, number 6507.
    5. Robert J. Barro, 2003. "Determinants of Economic Growth in a Panel of Countries," Annals of Economics and Finance, Society for AEF, vol. 4(2), pages 231-274, November.
    6. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    7. Jorge Saba Arbache & John Page, 2010. "How Fragile Is Africa's Recent Growth?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 19(1), pages 1-24, January.
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    Cited by:

    1. John C Bluedorn & Rupa Duttagupta & Jaime Guajardo & Nkunde Mwase, 2013. "The Growth Comeback in Developing Economies; A New Hope or Back to the Future?," IMF Working Papers 13/132, International Monetary Fund.

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