Publication:
Is Investment in Africa Too Low or Too High? Macro and Micro Evidence

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dc.contributor.authorEasterley, William R.
dc.contributor.authorDevarajan, Shantayanan
dc.contributor.authorPack, Howard
dc.date.accessioned2014-08-26T20:32:35Z
dc.date.available2014-08-26T20:32:35Z
dc.date.issued2001-01
dc.description.abstractThe authors investigate the relationship between weak growth performance and low investment rates in Africa. The cross-country evidence suggests no direct relationship. The positive and significant coefficient on private investment appears to be driven by Botswana's presence in the sample. Allowing for the endogeneity of private investment, controlling for policy, and positing a nonlinear relationship make no difference to the conclusion. Higher investment in Africa would not by itself produce faster GDP growth. Africa's low investment and growth rates seem to be symptoms of underlying factors. To investigate those factors and to correct for some of the problems with cross-country analysis, the authors undertook a case study of manufacturing investment in Tanzania. They tried to identify why output per worker declined while capital per worker increased. Some of the usual suspects--such as shifts from high- to low-productivity subsectors, the presence of state-owned enterprises, or poor polices--did not play a significant role in this decline. Instead, low capacity utilization (possibly the by-product of poor policies) and constraints on absorptive capacity for skill acquisition seem to be critical factors. If Tanzania is not atypical, the low productivity of investment in Africa was the result of a combination of factors that occurred simultaneously, not any single factor. What does this tell us? First, we should be more careful about calling for an investment boom so that Africa can resume growth. Unless some or all of the underlying problems are addressed, the results may be disappointing. We should also be more circumspect about Africa's low savings rate; it may be low because returns to investment were so low. The relatively high level of capital flight from Africa may have been a level rational response to the lack of investment oportunities at home. Second, there is probably no single key to unlocking investment and GDP growth in Africa. All of the factors contributing to low productivity should be addressed simultaneously.en
dc.identifierhttp://documents.worldbank.org/curated/en/2001/01/888056/investment-africa-too-low-or-too-high-macro-micro-evidence
dc.identifier.doi10.1596/1813-9450-2519
dc.identifier.urihttps://hdl.handle.net/10986/19725
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 2519
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectADJUSTMENT PROGRAMS
dc.subjectAGGREGATE PRODUCTION FUNCTION
dc.subjectAGRICULTURE
dc.subjectAVERAGE GROWTH
dc.subjectAVERAGE GROWTH RATE
dc.subjectBLACK MARKET
dc.subjectBLACK MARKET PREMIUM
dc.subjectBUDGET DEFICITS
dc.subjectCAPITAL ACCUMULATION
dc.subjectCAPITAL FLIGHT
dc.subjectCAPITAL GAINS
dc.subjectCAPITAL GOODS
dc.subjectCAPITAL INVESTMENT
dc.subjectCAPITAL STOCK
dc.subjectCAPITAL STOCK GROWTH
dc.subjectCAPITAL- LABOR
dc.subjectCAPITAL- LABOR RATIOS
dc.subjectCAPITAL- OUTPUT RATIO
dc.subjectCAPITAL-LABOR
dc.subjectCAPITAL-LABOR RATIO
dc.subjectCAPITAL-LABOR RATIOS
dc.subjectCOMPETITIVE PRESSURES
dc.subjectCONVENTIONAL ANALYSIS
dc.subjectCOUNTRY DATA
dc.subjectCOUNTRY GROWTH
dc.subjectCOUNTRY REGRESSIONS
dc.subjectCOUNTRY VARIATION
dc.subjectCROSS COUNTRY
dc.subjectCROSS- COUNTRY ANALYSIS
dc.subjectCROSS-COUNTRY ANALYSIS
dc.subjectCROSS-COUNTRY GROWTH REGRESSIONS
dc.subjectCROSS-COUNTRY REGRESSIONS
dc.subjectCROSS-COUNTRY VARIATION
dc.subjectCROWDING OUT
dc.subjectDATA SETS
dc.subjectDEBT
dc.subjectDEPENDENT VARIABLE
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPMENT ECONOMICS
dc.subjectDEVELOPMENT RESEARCH
dc.subjectDOMESTIC SAVING
dc.subjectECONOMIC GROWTH
dc.subjectECONOMIC LITERATURE
dc.subjectECONOMIC PERFORMANCE
dc.subjectECONOMIC RESEARCH
dc.subjectEFFECTIVE USE
dc.subjectEMPLOYMENT
dc.subjectENDOGENOUS GROWTH
dc.subjectEXTERNALITIES
dc.subjectFACTOR ACCUMULATION
dc.subjectFINANCIAL INSTITUTIONS
dc.subjectFINANCIAL LIBERALIZATION
dc.subjectFOREIGN EXCHANGE
dc.subjectGDP
dc.subjectGENERAL PRODUCTION FUNCTION
dc.subjectGROWTH ACCOUNTING
dc.subjectGROWTH DEBATE
dc.subjectGROWTH MODEL
dc.subjectGROWTH MODELS
dc.subjectGROWTH PERFORMANCE
dc.subjectGROWTH PROCESS
dc.subjectGROWTH RATE
dc.subjectGROWTH RATES
dc.subjectGROWTH REGRESSION
dc.subjectGROWTH REGRESSIONS
dc.subjectGROWTH RELATIONSHIP
dc.subjectGROWTH THEORY
dc.subjectGROWTH TRAGEDY
dc.subjectHIGH GROWTH
dc.subjectHUMAN CAPITAL
dc.subjectIMPORTED INPUTS
dc.subjectINCOME
dc.subjectINCOME DIFFERENCES
dc.subjectINDIVIDUAL COUNTRIES
dc.subjectINEFFICIENCY
dc.subjectINFRASTRUCTURE INVESTMENT
dc.subjectINVESTMENT POLICIES
dc.subjectINVESTMENT RATE
dc.subjectINVESTMENT RATES
dc.subjectLABOR FORCE
dc.subjectLABOR PRODUCTIVITY
dc.subjectLEVEL OF CAPITAL
dc.subjectLIQUIDITY
dc.subjectLOCAL INDUSTRY
dc.subjectLONG-RUN GROWTH
dc.subjectLOW INFLATION
dc.subjectMACROECONOMIC POLICIES
dc.subjectMACROECONOMIC POLICY
dc.subjectMACROECONOMICS
dc.subjectMARKET DISTORTIONS
dc.subjectMARKET FORCES
dc.subjectMEMBER COUNTRIES
dc.subjectMICRO DATA
dc.subjectMONETARY ECONOMICS
dc.subjectNATIONAL ACCOUNTS
dc.subjectNOMINAL INTEREST RATE
dc.subjectOUTPUT GROWTH
dc.subjectOUTPUT PER CAPITA
dc.subjectOUTPUT RATIO
dc.subjectPER CAPITA GROWTH
dc.subjectPER CAPITA INCOME
dc.subjectPOLICY DEBATE
dc.subjectPOLICY RESEARCH
dc.subjectPOLICY VARIABLES
dc.subjectPOOR COUNTRIES
dc.subjectPOOR POLICIES
dc.subjectPOPULATION GROWTH
dc.subjectPRIVATE INVESTMENT
dc.subjectPRIVATE SECTOR
dc.subjectPRODUCT MARKETS
dc.subjectPRODUCTION FUNCTION
dc.subjectPRODUCTION FUNCTIONS
dc.subjectPRODUCTIVITY
dc.subjectPRODUCTIVITY GROWTH
dc.subjectPRODUCTIVITY OF CAPITAL
dc.subjectPUBLIC EXPENDITURE
dc.subjectPUBLIC EXPENDITURES
dc.subjectPUBLIC INFRASTRUCTURE
dc.subjectPUBLIC INVESTMENT
dc.subjectPUBLIC POLICIES
dc.subjectPUBLIC SECTOR
dc.subjectPUBLIC SPENDING
dc.subjectSAVINGS
dc.subjectSIGNIFICANT EFFECT
dc.subjectSIGNIFICANT IMPACT
dc.subjectSOCIAL CAPITAL
dc.subjectSTANDARD ERRORS
dc.subjectSTATE ENTERPRISES
dc.subjectSTATE-OWNED ENTERPRISES
dc.subjectSURPLUS LABOR
dc.subjectTECHNICAL CHANGE
dc.subjectTECHNICAL PROGRESS
dc.subjectTECHNOLOGICAL KNOWLEDGE
dc.subjectTFP
dc.subjectTOTAL FACTOR PRODUCTIVITY
dc.subjectUNDERLYING PROBLEMS
dc.subjectVALUE ADDED
dc.subjectWAGES
dc.subjectWEALTH
dc.subjectWORLD MARKET
dc.titleIs Investment in Africa Too Low or Too High? Macro and Micro Evidenceen
dspace.entity.typePublication
okr.crossref.titleIs Investment in Africa Too Low or Too High? Macro and Micro Evidence
okr.date.disclosure2001-01-31
okr.date.doiregistration2025-04-10T10:12:09.356398Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2001/01/888056/investment-africa-too-low-or-too-high-macro-micro-evidence
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticePoverty
okr.globalpracticeTrade and Competitiveness
okr.guid228721468767981507
okr.identifier.doi10.1596/1813-9450-2519
okr.identifier.externaldocumentum000094946_01012705513385
okr.identifier.internaldocumentum888056
okr.identifier.reportWPS2519
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2001/02/10/000094946_01012705513385/Rendered/PDF/multi_page.pdfen
okr.region.administrativeAfrica
okr.region.geographicalAfrica
okr.sectorOther Public Sector Management
okr.sectorPublic Administration, Law, and Justice
okr.topicPoverty Reduction::Achieving Shared Growth
okr.topicInternational Economics and Trade::Trade and Regional Integration
okr.topicEconomic Theory and Research
okr.topicEnvironmental Economics and Policies
okr.topicMacroeconomics and Economic Growth::Economic Growth
okr.unitPublic Economics and Macroeconomics and Growth, Development Research Group
okr.volume1
relation.isAuthorOfPublicationddcdf87a-9a86-50e0-b365-0d2c747a0607
relation.isAuthorOfPublication.latestForDiscoveryddcdf87a-9a86-50e0-b365-0d2c747a0607
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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