Explaining African Economic Performance

TLDR

Africa has experienced slow growth and a massive exodus of capital, making it one of the most capital‑hostile regions. The study reviews aggregate and microeconomic literature to identify key explanations for Africa’s performance. The authors review aggregate and microeconomic literature, along with political‑economy studies, to analyze how government behavior contributes to the identified performance issues. The evidence aligns, highlighting four key factors—lack of trade openness, high risk, low social capital, and poor infrastructure—as drivers of Africa’s sluggish growth.

Abstract

Africa has had slow growth and a massive exodus of capital. In many respects it has been the most capital-hostile region. We review and interpret the aggregate-level and microeconomic literatures to identify the key explanations for this performance. There is a reasonable correspondence of the two sets of evidence, pointing to four factors as being important. These are a lack of openness to international trade; a high-risk environment; a low level of social capital; and poor infrastructure. These problems are to a substantial extent attributable to government behavior, and the paper includes a review of the political economy literature addressing that behavior.