The Role of Institutions in Africa's Development Path

In the last two decades, Africa’s economic performance has garnered perhaps more scepticism than optimism. Since decolonization, economic growth dynamics have varied quite significantly across African countries. In the 60s and 70s, many African countries experienced sustained growth, however, growth rates were still low relative to other parts of the world. But by the late 70s, following the global oil crisis, economic climates across the continent began to deteriorate.

In a paper published in 2002, Bertocchi and Canova estimate that, for the period 1960-1973, the average economic growth rate in Africa was 2 per cent, whereas the world average was 3 per cent, and the average for the OECD was 4.2 per cent. A 1991 paper also finds evidence that Sub-Saharan Africa (SSA) nations experienced lower growth rates relative to other parts of the world between 1960 and 1985.

In the mid 90s, however, economic tides appeared to change. According to Arbache and Page, the average GDP per capita for the SSA region grew from -0.07 per cent during 1975-94 to just below 2 per cent in 1995-2005. Much of the improvement was ascribed to there being fewer episodes of (severe) economic downturns and faster growth in mineral-rich countries. Non-resource rich countries, however, also experienced more episodes of growth between 1995 and 2005, and this positive growth trend persisted. Between 2001 and 2010, The Economist reports, 6 of the 10 fastest growing economies were in Sub-Saharan Africa. According to The Economist, the economies of countries such as Nigeria, Ethiopia and Mozambique grew at more than 7 per cent annually between 2001 and 2015. Although the pace of growth across the continent slowed down in 2016 due to domestic and external shocks, the continent’s recovery has been quite robust, with overall growth expected to accelerate. This generally positive growth outlook over much of the last two decades might suggest that Sub-Saharan Africa’s economic fortunes may be on an upward trajectory, with economic development to follow closely.