Title of paper

The Historical Origin of African Economic Crisis and its Legacy: African External Trade and Finance, from Colonialism to China

Presenter's country

Ethiopia

Start Date

27-5-2016 4:00 PM

End Date

27-5-2016 5:05 PM

Location

Hall II

Submission type

Presentation

Abstract

The literature about the origin of the African economic crisis viewed from the external sector perspective lists a number of factors as its causes. The oil price shocks of 1973-74 and 1978-79, the expansion of the Eurodollar following this period, a rise in public expenditure by African governments following rising commodity prices in the early 1970s, the recession industrial recession in industrial countries and the subsequent commodity price fall, and a rise in real world interest rate, policy failure on the part of the African governments are usually mentioned as major factors. Surprisingly, almost all the literature starts its analysis either in the early 1970s or, at best, after independence in the 1960s. The main argument in this paper is that one has to go beyond this period not only to adequately explain the debilitating effect of the external sector on the continent, but also to propose a policy on how to address them. This historical pattern is recently re-emerging and further strengthened by Africa’s recent economic engagement with China. The conclusion that emerges from such analysis is that the African economic crisis from this perspective is essentially the problem of trading in primary commodities historically with the West and recently with China and its resulting structure. Thus, a sustained growth and poverty reduction is impossible without structural transformation of the continent.

This document is currently not available here.

Full text coming soon.

Share

COinS
 
May 27th, 4:00 PM May 27th, 5:05 PM

The Historical Origin of African Economic Crisis and its Legacy: African External Trade and Finance, from Colonialism to China

Hall II

The literature about the origin of the African economic crisis viewed from the external sector perspective lists a number of factors as its causes. The oil price shocks of 1973-74 and 1978-79, the expansion of the Eurodollar following this period, a rise in public expenditure by African governments following rising commodity prices in the early 1970s, the recession industrial recession in industrial countries and the subsequent commodity price fall, and a rise in real world interest rate, policy failure on the part of the African governments are usually mentioned as major factors. Surprisingly, almost all the literature starts its analysis either in the early 1970s or, at best, after independence in the 1960s. The main argument in this paper is that one has to go beyond this period not only to adequately explain the debilitating effect of the external sector on the continent, but also to propose a policy on how to address them. This historical pattern is recently re-emerging and further strengthened by Africa’s recent economic engagement with China. The conclusion that emerges from such analysis is that the African economic crisis from this perspective is essentially the problem of trading in primary commodities historically with the West and recently with China and its resulting structure. Thus, a sustained growth and poverty reduction is impossible without structural transformation of the continent.