Is Investment in Africa Too Low or Too High? Macro and Micro Evidence

Devarajan, Shantayanan ; Easterley, William R. ; Pack, Howard

World Bank, Washington, DC

关键词: ADJUSTMENT PROGRAMS;    AGGREGATE PRODUCTION FUNCTION;    AGRICULTURE;    AVERAGE GROWTH;    AVERAGE GROWTH RATE;   

DOI  :  10.1596/1813-9450-2519
RP-ID  :  WPS2519

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The authors investigate the relationshipbetween weak growth performance and low investment rates inAfrica. The cross-country evidence suggests no directrelationship. The positive and significant coefficient onprivate investment appears to be driven by Botswana'spresence in the sample. Allowing for the endogeneity ofprivate investment, controlling for policy, and positing anonlinear relationship make no difference to the conclusion.Higher investment in Africa would not by itself producefaster GDP growth. Africa's low investment and growthrates seem to be symptoms of underlying factors. Toinvestigate those factors and to correct for some of theproblems with cross-country analysis, the authors undertooka case study of manufacturing investment in Tanzania. Theytried to identify why output per worker declined whilecapital per worker increased. Some of the usualsuspects--such as shifts from high- to low-productivitysubsectors, the presence of state-owned enterprises, or poorpolices--did not play a significant role in this decline.Instead, low capacity utilization (possibly the by-productof poor policies) and constraints on absorptive capacity forskill acquisition seem to be critical factors. If Tanzaniais not atypical, the low productivity of investment inAfrica was the result of a combination of factors thatoccurred simultaneously, not any single factor. What doesthis tell us? First, we should be more careful about callingfor an investment boom so that Africa can resume growth.Unless some or all of the underlying problems are addressed,the results may be disappointing. We should also be morecircumspect about Africa's low savings rate; it may below because returns to investment were so low. Therelatively high level of capital flight from Africa may havebeen a level rational response to the lack of investmentoportunities at home. Second, there is probably no singlekey to unlocking investment and GDP growth in Africa. All ofthe factors contributing to low productivity should beaddressed simultaneously.