The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics by William R. Easterly

Quest for future growth in Africaby Anonymous

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October 10, 2002: William Easterly's book The Elusive Quest for Growth points out that in the past African countries have borrowed heavily because they were willing to mortgage the welfare of future generations to finance their generation's (mainly the government clientele's) standard of living. In addition to incurring high debt, irresponsible governments sold off the national assets (oil, diamonds, etc) in order to live well while their people remained mired in poverty. African governments have often chosen destructive policies because they act in the interest of a particular class or ethnic group and not in the interest of the nation. Easterly demonstrates that neither aid nor investment nor debt forgiveness has proven to be the answer to developing African countries that have bad governments. He emphasizes that only African governments displaying a fundamental shift in behavior should receive aid or be eligible for debt relief. Easterly believes that a favorable climate for new generations of business people and entrepreneurs which encourages them to invest in knowledge, machinery, technology and skills is essential for Africa's future growth and development. Things like high inflation, black markets, corruption, high interest rates, high budget deficits, restrictions on free trade, and poor public services create poor incentives for growth. He proposes that a just rule of law, democracy, independent central banks, independent finance ministers, and other good quality institutions are needed to stop the endless cycle of bad policies that perpetuate poor growth in Africa. Easterly would agree that for Africa to have a bright future Africa must be a democratic continent with institutions that protect the rights and interests of minority groups, and that protect the right of private property and individual economic freedom. Governments must be faced with the right incentives to create private sector growth. Easterly envisions an Africa in which governments do not devote themselves to theft, but in which governments provide a national infrastructure -- health clinics, primary schools, and well-maintained roads -- and assistance to the poor within each society. He encourages the World Bank, the International Monetary Fund and other donors to only support aid to African governments that can present credible intentions to build a national infrastructure, to give aid where it will help the poor the most. Maybe then the quest for future growth in Africa will succeed more than it has for the last fifty years. Easterly suggests that poor countries can leap right to the technological frontier by imitating technologies from industrialized nations. He recommends that African governments and world organizations encourage this transfer of technologies from industrial nations to developing nations. Easterly points out that electric power, a phone line, and a computer translate to a vast store of knowledge on the Internet. He believes the decentralized nature of the electronics revolution could be very good for Africa.