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Root Causes of African Underdevelopment

  • Sambit Bhattacharyya

    ()

    (RMIT University, Melbourne, Australia)

What is the root cause of Africa’s current state of under-development? Is it the long history of slave trade, or the legacy of extractive colonial institutions, or the fallout of malaria? A precise answer still eludes us. This paper investigates the relative contribution of these historical factors using an instrumental variable approach. The results show that malaria matters the most and all other factors are statistically insignificant. The mechanism through which malaria impacts economic performance is demonstrated by a strong negative relationship between malaria and national savings and a two period overlapping generation model. The model shows that high malaria incidence adversely affects growth by increasing both mortality and morbidity. Increased mortality from malaria induces households to increase current consumption and save less for the future. Increased morbidity on the other hand adversely affects labour productivity. The combined impact of these two effects is a slowdown of capital accumulation and economic growth.

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File URL: http://lp3e.fe.unpad.ac.id/wopeds/200704.pdf
File Function: First version, 2007
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Paper provided by Department of Economics, Padjadjaran University in its series Working Papers in Economics and Development Studies (WoPEDS) with number 200704.

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Length: 32 pages
Date of creation: Apr 2007
Date of revision: Apr 2007
Handle: RePEc:unp:wpaper:200704
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