This article explores Africa’s new economic opportunities, paying particular attention to two economic prospects that are better than at any time since Africa gained independence. More specifically, it considers the exploitation of recent resource discoveries as a major source of revenues for Africa and the continent’s realistic chance at industrialization as China shifts its more labor-intensive manufacturing offshore. The article first assesses the implications of China’s economic growth both for middle-income countries globally and for low-income Africa, especially in terms of demand. It then looks at Africa’s distinctive geography and its important consequences, citing how resource endowment and location generate a simple but useful two-by-two categorization of Africa’s countries: coastal resource-scarce countries; landlocked resource-scarce countries; landlocked resource-rich countries; and coastal resource-rich countries. Finally, the article examines how Africa’s resource-rich and ethnically fragmented societies have influenced political allegiance.
Margaret McMillan and Kenneth Harttgen
This chapter examines Africa’s structural transformation, from its prolonged period of weak economic growth since the 1970s to the period of stronger growth over the past decade. It first describes the nature of structural change in Africa over the period 1960–2010 and compares structural change in Africa to that in other regions such as East Asia and Latin America over the same time period, paying particular attention to average incomes and level of employment shares across sectors including agriculture, manufacturing, and industry. It then considers evidence showing that structural change contributed positively to economic growth in Africa between 1960 and 1975, but negatively between 1975 and 2000 and positively again between 2000 and 2010. The chapter also reflects on the “data problem” and describes an empirical approach for understanding structural change in Africa.
Augustin Kwasi Fosu and Eric Kehinde Ogunleye
This chapter provides a panoramic view of the conceptualization, design, and implementation of growth strategies in Africa, from the pre-colonial period to the present. These strategies have been shaped by different schools of thought, interests, and emerging issues prevalent at the time. They have varied chronologically: from the colonial strategy of exporting commodities to feed Northern industries, the immediate post-independent import substitution, the Washington Consensus and the Post- Washington Consensus, to the current country-specific and regional cooperation strategies. Going forward, African countries need to craft growth strategies that ensure sustenance of the impressive growth recorded over the last decade. The growth must be more inclusive, through the optimal use of fiscal and natural resources as well as effective governance to improve job creation, and reduce inequality and poverty. In addition, any future strategy must be mindful of the environment and technological advances, and should entail strengthening regional integration and South–South cooperation.
Andrei Markevich and Tatiana N. Mikhailova
In this chapter we review economic, geographical, and historical literature on the spatial allocation of the economic activity in Russia. We distinguish three main factors that shaped Russian economic geography: physical geography, policy of the state, and historical circumstances. We discuss how these factors affected the location of population and economic activity from the sixteenth century to the present. We consider historical trends in population geography, industrial and migration policy during the imperial and Soviet eras, and the changes in spatial economy of Russia during the post-Soviet period.
A perennial debate casts European rule as either modernizing previously largely static African economies or, in contrast, as retarding their development both at the time and, via institutional path dependence, ever since. Both approaches understate the continuities in factor endowment before and during colonial rule; the importance of the differences between types of colony; and the significance of African responses to the constraints and opportunities of what proved to be the relatively short period of alien rule. This chapter examines colonial interventions in relation to long-term trajectories of economic development in Africa. Specifically, after reviewing the evolution of the literature, it asks how far colonial interventions, and African responses during the colonial period, altered or accelerated pre-existing patterns or paths of economic change in the continent, paths defined by Africans’ technical and institutional responses to the constraints and opportunities of their resource endowments, in the context of regional and trans-regional markets.
At the end of the nineteenth century, Ethiopia had a traditional economy dependent on ox-plough agriculture and crafts. Goods and services were exchanged through the barter system. This changed from the 1890s onwards with modern innovations such as the railway, telephone and telegraph, banking, and a national currency. In the first four decades of the twentieth century, import/export trade expanded, elementary education spread, new towns emerged, and manufacturing enterprises were born. Italian occupation of the country (1936–41) helped push forward the monetization of the economy. In the three decades after liberation (1940s–1960s), advances were made in the development of the services, manufacturing, and financial sectors. Basic education was expanded, and the government adopted a series of development plans to guide the process of economic and social development. The principle of disciplined state planning to transform the economy has continued under the EPRDF although the task remains incomplete.
This chapter examines the institutions of a property rights system. It discusses the two ways for institutions of property to be developed: (1) through explicit or implicit bargaining as individuals combine their bilateral and multilateral relationships into communities made up of people with shared values and (2) through the use of “political means” entailing the threat to use violence as one individual or organized group takes scarce resources or the products of those resources from another individual or group through plunder or conquest and extortion. Emphasis is placed on the fact that a positive analysis of the evolution of the institutions of property must account for the influence of the rules adopted voluntarily to facilitate cooperation and those that arise as part of an involuntary transfer process.
Revold M. Entov and Oleg V. Lugovoy
The goal of this chapter is to examine the performance of the Russian economy during the 2000s. We study sources of economic growth during the period, applying growth accounting framework and discussing standard assumptions and statistical problems. The relatively intensive growth of the Russian economy was accompanied by a very slow decline of inflation rates. The chapter discusses the specific features of the recent consumer price rise and considers several manifestations of inflation persistence over the past decade.
Federico Barbiellini Amidei, John Cantwell, and Anna Spadavecchia
The chapter explores the long-run evolution of Italy's performance in technological innovation as a function of international technology transfer, reconstructing the different phases and dimensions of Italian innovative activity, tracking the transfer of foreign technological knowledge through a number of channels, analyzing the impact of imported technology. The study is based on a newly constructed dataset, over the 1861-2009 period, composed of variables related to innovation activity performance, foreign technology transfer, and domestic absorptive and innovative capability. The analysis highlights, also by econometric assessment, the significant contribution of foreign technology to innovation activity results. Machinery imports and the accumulation of technical human capital contributed positively to innovation activity; inward FDI contributed positively to productivity growth, but not to indigenous innovation activity results. Differences across channels of technology transfer and historical phases emerge, also in connection with the evolution of human capital endowment and domestic innovative capacity.
The chapter discusses evolution and performance of Russia’s economic institutions. Outcomes and driving forces of institutional change in the country throughout its postcommunist history are analyzed and related to exogenous factors such as culture, resource abundance, and economic inequality. A failure to establish market-supporting institutions, including secure property rights, as a spontaneous outcome of economic liberalization and privatization is explained. It is argued that Russia’s natural wealth drove a wedge between institutions and economic growth. Institutions established de jure do not always function in accordance with their raison d’être and are often misused in pursuit of opportunistic gains. The 2008 global crisis did not have a healing effect on Russian economic institutions. Economic and political elites are unlikely to become champions of institutional modernization in the country, and improvement of Russian institutions could occur in response to grassroots demand articulated by civil society.
Michael Alexeev and Shlomo Weber
The handbook represents a comprehensive study of the Russian economy. The chapters analyze the current economic situation, trace the effect of Soviet legacies and post-Soviet transition, examine social challenges, and propose directions for reforms. The book begins with economic history of Russia, particularly the Soviet period, and then surveys the developments since the breakup of the Soviet Union. The next chapters describe Russia’s current institutional environment, including surveys of corporate governance, taxation, the informal sector, and corruption. This is followed by the analysis of economic branches, starting with the crucial natural resource sectors and proceeding to the other key sectors such as the military-industrial complex, railroads, research and development, and agriculture. The effect of industry on the environment is also evaluated. Though the branches of the “real” sector bear heavy Soviet legacy, the financial and foreign trade sectors represent a dramatic departure from the Soviet experience. The last two parts of the book are devoted to regional dimensions and social policy challenges in labor market, higher education, health care, and the demographic situation. Though a few chapters reflect positive views on certain aspects of the economy and institutions such as corporate governance and the tax system, most authors stress the seriousness of challenges facing Russia and the necessity and difficulties of reforms. The analysis and policy proposals herein will be useful to the readers interested in Russia and to Russia’s policy makers.
Vladimire Mau and Tatiana Drobyshevskaya
From the turn of eighteenth century, Russian economic development has been determined by catching-up approach with the Western countries. This task was central for all Russian administrations since Peter I up to the most recent time—and this is the key question for the analysis of Russian economic performance. The chapter discusses challenges and specific features of Russian economic development as catching-up modernization and provides an overview of the main stages of Russian economic history from eighteenth century. The main emphasis is on the period from the end of nineteenth through the end of the twentieth century. It was a time of wars and revolutions, industrialization, and an emerging centrally planned (communist) economy. Soviet communist economy is under special consideration—its characteristics, internal contradiction, attempts at amelioration, crisis, and collapse at the end of the twentieth century.
Where did stock markets come from? Stock exchanges and the rules and regulations that make stock markets possible were not invented by government but instead emerged from the market. From the world’s first major stock market in seventeenth-century Amsterdam to the world’s second and third major stock markets in the eighteenth and nineteenth centuries in London and New York, the markets developed over a long period when government officials did not understand them and refused to enforce most contracts in them. Officials viewed most of what went on in stock markets as forms of gambling and passed various prohibitions, yet brokers ignored the prohibitions and developed amazingly sophisticated contracts, including forward contracts, short sales, securitization, hypothecation, and options. Similar to the evolution of money, the stock markets grew out of a series of private choices and can be seen as a quintessential example of spontaneous market order.
Between 1861 and 2011, Italy's GDP per person multiplied by about twelve times. An initially backward country, Italy converged to the productivity leaders in 1898-1992, whereas between 1861 and 1896, and again between 1992 and 2011, Italy's economic growth was weaker than that of the main advanced countries. Drawing also on the main results of the research presented in the rest of the book, Chapter 1 outlines Italy's initial backwardness, the causes of poor economic performance in the thirty-odd years after unification, and the features and reasons for Italy's secular convergence to the productivity leaders. The final part is devoted to a discussion, in a comparative perspective, of the causes of the country's slow growth in the early twenty-first century, arguing that, while some of the previous growth factors lost momentum from the 1990s onward, Italy's problems are mostly to be found in the inability by firms and institutions to adapt to the conditions of the international economy during the so-called "second globalization".
Stephen N. Broadberry, Claire Giordano, and Francesco Zollino
Italy's economic growth over its 150 years of unified history did not occur at a steady pace, nor was it balanced across sectors. Relying on an entirely new input (labor and capital) database, this chapter evaluates the different labor productivity growth trends within the Italian economy's sectors, as well as the contribution of structural change to productivity growth. Italy's performance is then set in an international context: a comparison of sectoral labor productivity growth rates and levels within a selected sample of countries (United Kingdom, United States, Germany, Japan, India) allows us to better time, quantify, and gauge the causes of Italy's catching-up process and subsequent more recent slowdown. Finally, the paper analyzes the proximate sources of Italy's growth, relative to the other countries, in a standard growth accounting framework, in an attempt also to disentangle the contribution of both total factor productivity growth and capital deepening to the country's labor productivity dynamics.
Fabien Eboussi Boulaga
This chapter highlights the rational mechanics that underlines the formulation of propositions in conformity with the logic of linking economic production to a geographic location. It starts with a discussion of the relationships between the general dynamics of economics, history, and society and explores the ways in which economic ideas and proposition are received in the specific context of Africa, what interactions and transformations take place (i.e., according to what principles of selection), and what arguments and dynamic justifications are used to reinterpret and even “recreate” the continent as an economic entity. From this will progressively emerge some characteristic traits describing and specifying the “African reference,” as both contingent and necessary—an a posteriori necessity. The chapter also examines the philosophical foundations of development economics and discusses the autonomy of the pragmatics of development. Finally it stresses the need for conceptual reconstructions.
Michael T. McBride and Gary Richardson
This article notes that many of the wars which have ever taken place have done so across religious divides. Whether religion can be considered an ultimate cause or an epiphenomenon of more fundamental differences, religion and conflict appear to be correlated. On the other hand, religion also serves as a source of cooperation and peace within religious communities. The article examines this dual nature of religion—as a possible source of both conflict and cooperation. It explores not only the relation between religion and violent conflict, but also that between religion and nonviolent conflict within individual countries between different religious groups for a variety of privileges and rights.
When Mikhail Gorbachev became General Secretary of the Communist Party of the Soviet Union in March 1985, the Soviet economic system was petrified with minimal growth. Gorbachev launched a frenetic attempt at economic revival with a mixture of disciplinary actions, technical improvements, and an attempt at a socialist market economy. Key steps were legalizing private enterprise in the form of cooperatives, liberalizing foreign trade, and passing command over state enterprises to their managers. The actual outcome, however, was a fiscal and systemic collapse of the communist system amid shortages, sharp output fall, competitive money emission, and rising inflation in 1991. In January 1992, Russian President Boris Yeltsin attempted a radical transition to a market economy. Its essence was price and trade liberalization, privatization, and fiscal stabilization. The financial stabilization did not succeed until after the financial crash of 1998, when Russia entered a decade of high and sustained economic growth.
José Antonio Ocampo and Jaime Ros
This chapter analyses the central features of shifting paradigms in Latin America, presents an overall evaluation of the development outcomes, and describes state-led industrialization, a concept that expands upon the more traditional concept of Import Substitution Industrialization. This paradigm was replaced during the 1970s in a few countries and the mid-1980s in the rest of the region by another that placed markets and integration at the centre of the world economy. The economic literature is full of caricatures of both paradigms. Following terminology that was common in Latin American structuralism in the past but has actually become quite fashionable in other schools of thought in recent years, the chapter refers to the industrial countries as the ‘centre’ and developing countries as the ‘periphery’ of the world economy.
Between 1965 and 2015, the structure of the Egyptian economy changed slowly. The share of agriculture in GDP halved, while industry increased correspondingly, but most of it represented increased value-added in the petroleum sector. The contribution of services remained almost constant. The balance of payments remained in deficit because exchange rate and import protection policies created an anti-export bias. Budget deficits persisted for structural reasons—expenditures increased in line with domestic inflation, while revenues depended upon exogenous sources (e.g. revenues from Suez Canal traffic, petroleum exports, foreign aid) and increased more slowly. The ratio of exports of goods and services to GDP was 17 per cent in 1965 and 14 in 2015; that of imports to GDP 21 and 23 per cent; of taxes to GDP 13 and 14 per cent. An important structural change in the labour market was a substantial increase in informal sector employment. The slowness of the structural transformations is largely attributable to an implicit political-economy compact whereby regimes provided the population large subsidies on goods and services and low taxation in return for political acceptance.