The Promise Of Economic Development: Convergence

Guess which is the fastest growing region in the world after East Asia? Would you believe Sub-Saharan Africa?

The “dark” continent isn’t as dark as its reputation (excerpt):

Africa: Second Fastest-Growing Region in the World
By Antoinette M. Sayeh

Sub-Saharan Africa is the second fastest-growing region of the world today, trailing only developing Asia. This is remarkable compared to the current complicated state of the global economy, with Europe still struggling and the United States slowly on the mend.

In 2012, Sub-Saharan Africa maintained solid growth, with output growth at 5 percent on average. The factors that have supported the region through the Great Recession—strong investment, favorable commodity prices, and generally prudent macroeconomic management—continued to be at play.

However, performance varies across countries, and the region has seen growth at two different speeds. Growth was very strong among oil-exporting and low-income countries. Exports such as oil, minerals, agricultural products, and tourism supported demand in these countries. Sectors that have been particularly dynamic include construction, agriculture, and mining (especially due to new extractive industry capacity coming on stream). In contrast, growth in middle-income countries slowed significantly in 2012, reflecting their closer ties to the euro area. South Africa was also adversely affected by labor unrest in the mining sector.

Our latest Regional Economic Outlook shows a broadly positive near future for the region, with a moderate acceleration of growth expected in 2013–14. This favorable prospect reflects in part the gradually improving outlook for the global economy. Domestically, investment in export-oriented sectors remains a key driver of growth. One-off factors will support growth in some countries, such as Nigeria’s economy rebounding after floods, recovery of agriculture in regions previously affected by drought, and gradual normalization of activity in some post-conflict countries, such as Côte d’Ivoire…

Too often looked down on as a continent of banana republics, corrupt autocracies and endemic ethnic conflict, Africa is beginning to fulfil its potential. Some, such as Botswana, have long mirrored the economic success of East Asia, but have been overshadowed in the global awareness by such economic disasters such as Somalia and Zimbabwe.

Policies promoting macroeconomic stability, increasing investment, and a growing middle class are all having an impact on development.

If Africa, and particularly the poorer parts of Africa, can maintain this performance, it would mark the end of the last bastion of pervasive absolute poverty in the world.

Don’t look now, but global competition (and global opportunities) is only just beginning to heat up.