Monday, July 18, 2005

Economics 210


regarding the economy, Mbeki listed a number of factors hamstringing growth in African countries: Bureaucratic obstacles make it impossible to get a license to establish a business without bribery; few countries have any form of private land rights; most Africans have no access to open and stable financial institutions that could provide loans; and there are too many internal barriers to trade.

"The emphasis in Africa should be placed on strengthening national economies and democratic practice by freeing the private sector," he concluded. And for its part the West needs to remove barriers to African exports.

In a commentary published Tuesday in the Financial Times, Jagdish Bhagwati, professor of economics and law at Columbia University, and Ibrahim Gambari, undersecretary-general at the United Nations and special adviser for Africa, outlined five key policy measures that Africa needs. They are:

Debt relief must be extended to very poor nations.

New aid must be used productively. Additional aid should go to countries with good governments and given only to carefully devised projects and programs.

Aid to Africa must be spent on programs that are really beneficial, such as resolving the shortage of skilled labor and improving health.

African nations need to reduce their own trade barriers while seeking the removal of the subsidies and tariffs of rich countries.

Programs to make the private sector the backbone of development are necessary. This includes establishing micro-credit institutions which enable the poor to borrow without collateral, and establishing clear property rights. ...

Again, I have no comment on economics.. however, one problem is that most African "elites" have been schooled in the idea that the best development was thru a central government plan...which has a Marxist origin (and sounds logical since there was much exploitation by the private sector under colonialism) However, the bad news is that in reality, this means lots of bribery/paperwork and overhead....

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