Prolegomena to Economics as an African Science

This chapter highlights the rational mechanics that underlines the formulation of propositions in conformity with the logic of linking economic production to a geographic location. It starts with a discussion of the relationships between the general dynamics of economics, history, and society and explores the ways in which economic ideas and proposition are received in the specific context of Africa, what interactions and transformations take place (i.e., according to what principles of selection), and what arguments and dynamic justifications are used to reinterpret and even “recreate” the continent as an economic entity. From this will progressively emerge some characteristic traits describing and specifying the “African reference,” as both contingent and necessary—an a posteriori necessity. The chapter also examines the philosophical foundations of development economics and discusses the autonomy of the pragmatics of development. Finally it stresses the need for conceptual reconstructions.

Development as Diffusion

This chapter considers economic development of sub-Saharan Africa from the perspective of slow convergence of productivity, both across sectors and across firms within sectors. Why have “productivity enclaves,” islands of high productivity in a sea of smaller low-productivity firms, not diffused more rapidly? Three sets of factors are summarized and analyzed: first, the poor business climate, which constraints the allocation of production factors between sectors and firms. Second, the complex political economy of business–government relations in Africa’s small economies. Third, the distribution of firm capabilities. The roots for these factors lie in Africa’s geography and its distinctive history, including the legacy of its colonial period on state formation and market structure.

Principles of Economics

Mainstream economists have promoted the idea of universally representative agents, which allows for simple modeling techniques to describe and predict human thinking and decision-making. Yet, there has been a debate in the economic literature on the existence of the rational “economic man” in Africa. The continent’s long history of oppression, its sub-optimal economic performance, and colonial fantasies, have contributed to the development of a discourse of otherness fed by prejudices. This chapter tackles some of these epistemological dilemmas and policy issues in that debate through a reconsideration of the basic principles of economics. A didactic approach is followed, popularized by Gregory Mankiw, and a list of ten principles different from the ones he proposed is produced. This chapter offers a series of counter-narratives to conventional economic thinking, and highlights how some of the recent developments in economics are consistent with analyses made in the study of Africa’s economic experience.

Africa’s Urbanization

This chapter examines Africa’s urbanization and the challenges and opportunities it presents, with emphasis on what it will take to make African cities efficient, sustainable, and inclusive. Using economic geography as an organizing framework, it proposes policies that not only support agglomeration benefits but also manage congestion costs. The discussion begins by sketching key elements of African urbanization (heterogeneity, income levels, capital investment, etc.) followed by a review of recent literature on urban growth models and how they apply to Africa’s urbanization process. It then considers what should be done to encourage efficient and inclusive African cities, while taking into account the diversity of countries as well as the continent’s geographical and social division.

Modeling African Economies

This chapter presents a stylized framework for modeling African economies using the dynamic stochastic general equilibrium (DSGE) approach. We introduce several features relevant to low-income countries, including a large population without access to financial markets, restricted international capital mobility, low governance quality, and explicit central bank balance-sheet effects. The calibrated model can be useful in addressing important macroeconomic policy issues in many African economies. The applications presented here include (i) reserve accumulation policy responses to aid surges, (ii) government spending, financing schemes, and fiscal multipliers, (iii) management of natural resource revenues, and (iv) public investment surges and debt sustainability.

Africa, the Next Intellectual Frontier

This introductory chapter presents the objectives of this volume and discusses the challenges of producing relevant knowledge. It starts with an exploration of the reasons why Africa has remained neglected in economics, despite its important contributions to the discipline. It then highlights Africa’s enduring intellectual influence on some of the world’s leading economists. It discusses the traditional reasons why that deep positive influence is little known and rarely acknowledged in mainstream economics. It also offers a different explanation of the neglect of Africa as a rich source of economic knowledge, highlighting the fact that economic thinking on Africa has generally mirrored the general evolution of macroeconomics and the dominant frameworks of analysis of the continent’s low-income countries have always been fraught with analytical sins and mimetic choices.

Economics and Culture in Africa

This chapter examines the articulation of two powerful determiners of individual and collective actions in the African context—culture and economy—from a point of view that could be called civilizational. The question is to determine in what measure the efficiency of an economic system is linked to its degree of adequation with its cultural context on one hand and, on the other, whether the efficiency of the resulting social system is dependent on respect of the functions assigned to each order by the group. A fruitful dialectics between economics and culture requires on one hand the assignation of each order to the finality for which it is the most efficient and, on the other hand, a better rooting of the African economies in their respective sociocultures.

Natural Resources in Africa

Empirical studies and international experiences of resource-rich developing counties (RRDCs) point to a resource bane rather than a boon. Most countries have failed to effectively deploy oil and mineral resource rents to build a broad-based domestic capital base for sustaining growth and economic diversification. In large measure this is because they started with initially weak economic institutions and “bad” political governance with limited checks and balances. Moreover, with natural resource rents flowing in, institutions were further worsened, due to weakening political accountability among other corrosive effects of the resource rents. However, though progress on the governance front is likely to be a daunting task, the recent democratic transitions in Africa hold a lot of promise for the Continent. Moreover, the two global initiatives of EITI and NRC can have substantial positive catalytic roles.

Measurement and Analysis of Competitiveness

This chapter evaluates the competitiveness of African economies. In contrast to the macroeconomic perspective which focuses on the behavior of the Real Effective Exchange Rate, the framework adopted in the chapter emphasizes the fundamental drivers of a country’s ability to maintain competitive advantage in international markets through high-value production and economies of scale while simultaneously raising the living standards of its citizens. The study compares a novel measure–the Trade Weighted Value added per capita–with the Real Effective Exchange Rate and demonstrates the merits of the former over the latter in evaluating the competitiveness of African economies.

Measuring Structural Economic Vulnerability in Africa

This chapter examines the structural vulnerability of Africa’s economy and the methodological issues involved in measuring it. It begins by proposing a conceptual framework for measuring economic structural vulnerability that distinguishes it from general vulnerability, from physical vulnerability to climate change, and from state fragility. It then considers the main features and evolution of structural economic vulnerability in Africa using an economic vulnerability index. It suggests that structural economic vulnerability is higher in the continent than in other developing economies, reinforced by physical vulnerability to climate change. In addition, Africa has the highest proportion of fragile states among all continents. Finally, the chapter indicates that structural vulnerability, if adequately measured, may be useful as a criterion for the international allocation of official development assistance and of concessional resources.