Lessons for Africa from Central Asia's single commodity dependence

2489 Kb

The final Brenthurst Discussion Paper by Drs Greg Mills and Terry McNamee, which examines the development cases of Azerbaijan and Kazakhstan.

The Paper finds inter alia that both countries:

• Share the same challenge as many African states in both managing their dependency on natural resources, and in shaking off a negative image and legacy.
• Have radically improved their growth rates over the past decade.
• Planning for diversification and development is being managed by a team of internationally-recruited experts.

‘Zimbabwe’s Economy: A 2009 Report Card’ by Dr Stuart Doran

1411 Kb

After a decade of precipitous decline, Zimbabwe’s economy has stabilised during 2009. However, a survey of the country’s productive capacity shows these changes to be tenuous and shallow. Infrastructure has decayed –creating severe blockages to economic growth – and will continue to crumble without massive funding. Mining has great promise, but is beset by a difficult operating environment and serious uncertainties related to title. Meanwhile, commercial agriculture has been destroyed by the post-2000 ‘land reform’ programme, opening a gaping hole in GDP and export earnings, and leaving the population more heavily dependent on a communal sector that is burdened by innate defects and cannot ensure food security on its own. A previously diverse manufacturing sector has become largely moribund, as has the tourism industry, while financial institutions have been effectively bankrupted by hyperinflation. These and other deep structural issues indicate that Zimbabwe’s economic future is problematic, even with resolution of an endemic political crisis.

Georgia’s Economic Reforms

1002 Kb

The Discussion Paper describes the radical reforms undergone by Georgia since its 2003 Rose Revolution, the results of which are impressive: The country’s GDP has increased more than two-fold, the total volume of bank deposits and number of businesses more than five-fold, and economic growth has exceeded eight percent.

This has been the result of sweeping tax and other reforms designed to make the country and easier place to do business and more investor-friendly. This has included, for example, the wholesale privatisation of 13,000 industries, reform of the tax code including a reduction in corporate tax from 47 percent to 15 percent, the abolition of capital gains, interest rate and dividend taxes, and lowered personal tax at a flat rate of 25 percent (scheduled to reduce to 15 percent within five years); opening markets to the point that Georgia is among the four countries with the least import tax (the others being Singapore, Hong Kong and Macau); the easing of regulations; improving tax collection (up tenfold in revenue in five years); and putting an end to widespread corruption. Key international indices have reflected the success of the reforms: on the Doing Business Index Georgia is in 15th place; on the 2008 Economic Freedom Index it is in 32nd place (from 93rd place in 2005); and on the Corruption Perception Index it is in 67th place (from 130th place in 2005).

Chile & Costa Rica

570 Kb

Dr Lyal White examines the way in which Costa Rica and Chile have promoted investment and exports. The Report stresses the importance, inter alia, of the following attributes:

• A privately-run and privately-driven investment promotion agency.
• A highly competent, well-remunerated and effective technocratic class.
• Functional institutions as an investment point of entry.
• The targeting of specific sectors through specialized expertise and international networks.
• Long-term image building.
• The need for complementary policy initiatives.

Renewing Africa's Competitive Spirit

730 Kb

The Paper outlines five lessons to be taken from this crisis:

• International trade and the flows of real investment across borders as drivers of growth are not what have failed. In contrast, this is what has helped reduce the fall.
• The continuous need for global engagement and leadership by Africans. Just as the effects of global regulatory and policy errors have been devastating, there is a need for Africa to have a voice in global efforts to remove weaknesses and imbalances.
• A reminder that Africa’s future depends not only on how well we use commodity inflows, but also that this future needs to be about more than commodities.
• Without reliable banks and efficient credit markets, Africa will remain poverty-stricken. But convincing citizens to entrust their hard-earned savings to institutions requires reinstating a sense of value in the banking sector, building a reputation for fair play and fair returns rather than excess and profligacy.
• The need to strengthen and improve African competitiveness urgently.

Scan of Zimbabwe Economic Recovery Literature

636 Kb

The Paper provides a scan of the economic recovery literature on Zimbabwe.                                                                                        

Africa and the Global Economic Crisis

74 Kb

The Paper outlines short-, medium- and longer-term strategies for African countries in the current crisis.                                               

The Lake Kivu Consensus

152 - 500 Kb

The Lake Kivu Consensus is the fruit of debate at two meetings in Italy and Rwanda in 2008, which identified competitiveness as the critical element in an African strategy to increase employment and prosperity. The global economic crisis and Africa’s demographic bubble make the task all the more urgent.

Competitiveness is defined here as the ability to sustain an environment in which firms can profitably produce goods and services that the market will pay for.

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Global Experiences of Tackling Hyperinflation: Tentative Lessons for Zimbabwe

120 Kb

Ending hyperinflation is the necessary first step in putting Zimbabwe back on the road to economic recovery. In searching for the required policy ingredients to end hyperinflation, Zimbabwe can draw upon a surprisingly large body of international policy experience from more than 20 countries that, since 1920, have experienced and ended hyperinflation.