Modelling African Development Prospects

Abstract

Most of Africa is today in a desperate situation. It is the only continent where standards of living have declined continuously for nearly a decade and are still declining. The grave problem of generally declining development trends in Africa has in recent years been greatly compounded first by a devastating drought and famine and more recently by a serious external debt and financial crises. Drastic measures by the African countries themselves and unparalleled help from the industrial countries are urgently needed in order to overcome the unfolding of a human drama of poverty, hunger, desperation, and political strife of a dimension that the world has never seen before. It is clear, however, that we must look beyond the present crisis to determine the best course of action and the most appropriate policies that are necessary to encourage long-term development in Africa. This requires a careful analysis of present conditions in each African country, an evaluation of future potentials, a determination of the best policy mix to promote long-term development, and an estimate of the foreign aid and other resource flows from the developed countries that are required to achieve an acceptable growth rate in the future. In this Chapter we construct a quantitative framework or econometric model of a number of African economies and utilise such models for various policy simulations. The aim of such country studies is to suggest a methodology for approaching and resolving the present crisis and lay the groundwork for the resumption of long-term economic development on a sustained basis in Africa.

This paper resulted from work done at the United Nations and in a synthesis of a volume edited by Dominick Salvatore to be published shortly.