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United Nations Economic Commission for Africa Articles
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5.1 Determinants of diversification in Africa: Economic Report on Africa 2007 - Click To Read Article Policies for Achieving Diversification 2.2 Sectoral performance IV: Economic Report on Africa 2007 - Click To Read Article The services sector Overview IV: Economic Report on Africa 2007 - Click To Read Article Growth prospects for 2007 and the medium-term outlook 5.1 Industrialization strategies still have a place in Africa: Economic Report on Africa 2007 - Click To Read Article Industrial production at the continental level was found to lead to deepening of diversification. III. BACKGROUND - Microfinance in Africa - Click To Read Article The model seeks to identify a microfinance methodology-model adapted to Africa's specific needs for poverty eradication. VI. Module III: National, Regional, and International Support - Click To Read Article Microfinance initiatives are more likely to succeed in a supportive national, regional, and international environment. Applying a systems’ perceptive, poverty eradication is recognized as a multi-scale endeavor with different partners participating at the local, national, regional, and international levels. Whereas the foregoing discussion has focused on microfinance lessons for the local level, this section will broaden the scope with lessons that scale up through the state to the global community. 4.1 Diversification trends at the regional level: Economic Report on Africa 2007 - Click To Read Article Figure 4.1 shows three different measures of diversification for African economies as a whole (see Ben Hammouda et al. (2006a) for detailed definition of the indices of diversification). Three concise comments on the general trend of Africa’s diversification experience can be made. Principle IV: Prioritize Operational Efficiency - Click To Read Article Key Principles for an African Model of Microfinance IV. Principle I: Prioritize Group Formation and Networking - Click To Read Article Key Principles for an African Model of Microfinance 6.6 Strengthening of institutions: Economic Report on Africa 2007 - Click To Read Article a prerequisite for positive diversification outcomes II. How Can MicroFinance Succeed In Africa? - Click To Read Article African microfinance is as diverse as the continent itself. An array of approaches have been used, ranging from traditional group-based systems, to specialised lending by banks and funded by international nongovernmental organisations (NGO) financial intermediaries. Consequently, examples of African microfinance offer an array of lessons of what works and doesn’t work. Drawing from these lessons, and those from non-African examples, OSCAL developed a Microfinance model based on four principles: 5.3 Conclusion: Economic Report on Africa 2007 - Click To Read Article This chapter has shown that there are clear and measurable determinants of diversification in Africa at the continental, subregional and country level. Despite the inadequacy of African data, it may be said that, at least at the continental level, the diversification process is highly influenced by investment, per capita income, level of openness, macroeconomic policy stances, governance, and conflict. 1.3 World macroeconomic imbalances: Economic Report on Africa 2007 - Click To Read Article Macroeconomic imbalances still a major concern IV Module I Key Principles for an African Model of Microfinance - Click To Read Article African microfinance is as diverse as the continent itself. An array of approaches have been used, ranging from traditional kinship networks and Revolving Savings and Credit Associations (ROSCAs) to NGOs and development projects, and funded by both the informal and formal financial sectors, as well as domestic and international and donors. Consequently, examples of African microfinance offer an array of lessons of what works and doesn't work. 2.1 Growth performance V: Economic Report on Africa 2007 - Click To Read Article Sustainability of macroeconomic balances remains a concern over the medium term 3.2 Financing Development: Economic Report on Africa 2007 - Click To Read Article Emerging issues and challenges for Africa 5.2 Africa’s diversification regimes revisited: Economic Report on Africa 2007 - Click To Read Article A further link to productivity 2.4 Growth prospects for 2007 and the medium-term outlook: Economic Report on Africa 2007 - Click To Read Article Africa is expected to grow at a rate of 5.8 per cent in 2007, slightly higher than the rate recorded in 2006 (5.7 per cent) (figure 2.8). Positive growth rates are projected for all subregions led by North Africa (6.6 per cent), East Africa (6.0 per cent), Southern Africa (5.4 per cent), West Africa (4.9 per cent) and Central Africa (3.5 per cent). 2.3 Social Development II: Economic Report on Africa 2007 - Click To Read Article Special focus on HIV/AIDS 1.1 Global Economic Performance: Economic Report on Africa 2007 - Click To Read Article World growth is moderate and likely to slow down in 2007 5.2 Diversification-deepening policies raise growth and TFP: Economic Report on Africa 2007 - Click To Read Article What then do these results imply? They mean that pursuing diversification-deepening policies could help accelerate growth. Important policy implications of this link arise with respect to the determinants of diversification that were discussed earlier in the chapter. 3.2 Financing Development II: Economic Report on Africa 2007 - Click To Read Article Monitoring implementation of commitments Overview V: Economic Report on Africa 2007 - Click To Read Article There are encouraging developments in external development financing but disbursements fall short of commitments. 3.1 Developments in trade negotiations IV: Economic Report on Africa 2007 - Click To Read Article Talks on trade facilitation progressing significantly 5.2 Is it factor accumulation or total factor productivity that drives growth in Africa?: Economic Report on Africa 2007 - Click To Read Article To investigate the link between growth and diversification, it was important to first quantify the contribution of TFP to economic growth. This section analyses the sources of growth for African countries using the standard growth accounting method, making it possible to disaggregate the shares of growth contributed by TFP, capital and labour. Growth in output is the sum of the growth in capital, labour and TFP. Capital accumulation is an essential element in the growth process, as it enlarges the economy’s capacity to produce. Increases in labour or labour force have traditionally been considered a positive factor in stimulating economic growth. 1.7 Conclusion: Economic Report on Africa 2007 - Click To Read Article Overall, the medium-term outlook for the world economy remains modest. 3.1 Developments in trade negotiations V: Economic Report on Africa 2007 - Click To Read Article The EPA negotiations 2.2 Sectoral performance II: Economic Report on Africa 2007 - Click To Read Article The industrial sector 6.1 Macroeconomic policies for diversification: Economic Report on Africa 2007 - Click To Read Article the need for pragmatism over orthodoxy 1.8 References: Economic Report on Africa 2007 - Click To Read Article References IV. Principle II: Prioritize Local Knowledge and Participatory Planning - Click To Read Article Key Principles for an African Model of Microfinance 3.0 Global Development Challenges for Africa in 2006: Economic Report on Africa 2007 - Click To Read Article This chapter deals with Africa’s global development challenges in 2006. These challenges particularly relate to trade negotiations at the multilateral and bilateral level and to financing development. 2.5 Conclusion: Economic Report on Africa 2007 - Click To Read Article Despite notable economic recovery in Africa since the turn of the 21st century, the continent still faces important challenges in attaining its development goals. 2.2 Sectoral performance III: Economic Report on Africa 2007 - Click To Read Article The energy sector 2.1 Growth performance VI: Economic Report on Africa 2007 - Click To Read Article External balances also driven by developments in the resource sector Overview I: Economic Report on Africa 2007 - Click To Read Article Moderate world growth and the threat of macroeconomic imbalances 3.2 Financing Development III: Economic Report on Africa 2007 - Click To Read Article Emerging issues on aid and debt 2.2 Sectoral performance I: Economic Report on Africa 2007 - Click To Read Article African economies are experiencing a structural shift whereby the service sector is becoming an important driver of growth. In 2004, the service sector contributed 49 per cent of GDP growth compared to 36 per cent for industry (including mining and quarrying) and 15 per cent for agriculture. In 2004, all three sectors continued to grow, albeit at relatively low rates. The industrial sector had the highest growth rate at 9.05 per cent, although growth in the manufacturing sector fell by almost 3.8 per cent compared to 2003. Developments within each sector and for each subregion are discussed in more detail below. 1.5 Globalization trends and implications: Economic Report on Africa 2007 - Click To Read Article Trade remains uneven IV. Module II: Linking Microfinance to Poverty Eradication - Click To Read Article There is a fundamental linkage between microfinance and poverty eradication in that the latter depends on the poor gaining access to, and control over, economically productive resources, which includes financial resources. 6.4 Industrialization policies key to deepened diversification: Economic Report on Africa 2007 - Click To Read Article With regard to industrial policies, it helps to recall that economic transformation is both a necessary and sufficient condition for industrialization. However, economic transformation cannot occur in the absence of diversification. 4.1 Diversification trends at the subregional level: Economic Report on Africa 2007 - Click To Read Article The general picture of the continental performance that was shown in figure 4.1 masks the gains and losses made at the subregional and country levels. Figure 4.3 gives the situation at the subregional level and it compares five subregions defined around some of the RECs. In 1980, the most diversified subregions were COMESA and ECOWAS. The least diversified was CEMAC with SADC and North Africa in between. By 2002, the diversification gains at the subregional level had changed, with the most significant gains made by SADC, which is now the most diversified subregion on the continent. It is followed by COMESA and North Africa. CEMAC has remained the least diversified subregion. 2.3 Social Development I: Economic Report on Africa 2007 - Click To Read Article While growth has recovered on the continent, the gains in terms of social development and poverty reduction are still limited. This sub-section reviews the evidence on social development through the lenses of the MDGs. Following a discussion of progress and challenges for the various goals, the sub-section provides a more detailed discussion of the challenges posed by HIV/AIDS. More details on progress towards the MDGs in Africa is provided in various ECA documents, including a forthcoming report (UNECA 2007), as well as reports by other United Nations publications (e.g. UNDP and UNICEF 2002). 5.1 It is not just a matter of policy as institutions matter in diversification efforts: Economic Report on Africa 2007 - Click To Read Article Governance is one of the variables that capture the part that institutions play and it emerges as strongly significant. In fact, in absolute terms, looked at from the regional level, governance has stronger marginal effects compared to other variables in our investigations. 3.1 Developments in trade negotiations VI: Economic Report on Africa 2007 - Click To Read Article Other developments in international trade negotiations Overview II: Economic Report on Africa 2007 - Click To Read Article Growth in Africa has increased but it is still not enough Overview III: Economic Report on Africa 2007 - Click To Read Article Current account balances are driven by developments in the resource sector Overview VI: Economic Report on Africa 2007 - Click To Read Article Developments in trade negotiations 3.1 Developments in trade negotiations: Economic Report on Africa 2007 - Click To Read Article World trade expanded significantly between 2000 and 2005. Total world exports increased from $US6,451 billion in 2000 to $10,393 billion in 2005, an increase of 61 per cent. 1.2 Macroeconomic policies in developed countries: Economic Report on Africa 2007 - Click To Read Article Despite the recent oil price hikes, global inflation has remained low and stable (figure 1.3), partly due to restrictions to wage increases, a tight macroeconomic policy stance in both advanced and developing countries, and the supply of cheap manufactures from China. In general, there is little concern about overheating in most economies. 1.6 International migration and remittances: Economic Report on Africa 2007 - Click To Read Article Migration reduces human capital and labour productivity in developing countries 2.1 Growth performance III: Economic Report on Africa 2007 - Click To Read Article Higher but more volatile growth in oil-rich African countries 2.1 Growth performance VII: Economic Report on Africa 2007 - Click To Read Article Africa needs a new approach to growth policies 2.6 References: Economic Report on Africa 2007 - Click To Read Article References 4.1 Case studies on export diversification for selected African countries: Economic Report on Africa 2007 - Click To Read Article So far, diversification trends in relation to African economies indicate that different countries have achieved varying results. The overall conclusion is that, in general, African economies have failed to make gains beyond their initial positions in the early 1980s. It has also been pointed out that they reacted defensively to the crises that beset them in the 1980s. Their macroeconomic stabilization policies did not create an environment conducive for dynamic response, as a good number of countries in Asia and Latin America were able to do. Their defensive response as seen in the oil factor, perpetuated the status quo and worsened it in some instances. Earlier gains in such countries as Gabon, Nigeria and Sudan were eroded. 5.0 Diversification and Growth: Economic Report on Africa 2007 - Click To Read Article The presentation in the previous chapter has painted a varied picture of the results of Africa’s efforts to diversify its economies. At the same time, regional differences between Africa, Asia and Latin America were compared. The question then becomes why some countries or regions achieved breakthrough in their diversification efforts while others did not? Identifying the determinants of diversification is one part of solving this puzzle. Linking these policy instruments to growth and development outcomes through growth is the other part of the puzzle. This chapter is about fitting both parts of the puzzle together. 5.1 Faster economic growth could assist in diversification efforts: Economic Report on Africa 2007 - Click To Read Article The results for Africa, shown in table A5.1, suggest further that as income per capita increases, there is a tendency for African economies to experience improvement in their diversification processes. This is a very significant result and it is in line with other empirical evidence, (see Imbs and Wacziarg 2003), which shows that poor countries tend to diversify at first as their incomes rise, before they later begin to become more specialized. African countries also fit into this theory of the U-shaped stages of diversification. 5.2 Economic growth and diversification: Economic Report on Africa 2007 - Click To Read Article Exploration of the TFP link in Africa 6.2 Trade and sectoral policies for diversification: Economic Report on Africa 2007 - Click To Read Article returning to the basics 6.3 Financial sector links between investment and diversification: Economic Report on Africa 2007 - Click To Read Article With regard to financial sector policies, the starting point is the clear link between investment and diversification. The contribution of private investment to desirable diversification outcomes cannot be gainsaid. V. Material Benefits of Microfinancing - Click To Read Article Microfinance initiatives can play an effective role in addressing material poverty, the physical deprivation of goods, services, and the income to attain them. MFIs can help people become more economically secure. This, in turn, has a multiplier effect on people's standard of living, enhancing basic household welfare, such as food security, nutrition, shelter, sanitation, health and education services. MFIs can help prevent and extricate people from debt. Oftentimes, they liberate low-income households from moneylenders with outrageous interest rates that often reach 100% annually. Savings and credit services help people start or improve their own small businesses, providing income generation and employment for themselves and their families. V. Non-Material Benefits of Microfinancing - Click To Read Article Microfinance initiatives offer more than just material benefits; they can also address issues associated with "non-material" poverty, which includes social and psychological effects that prevent people from realizing their potential. 3.1 Developments in trade negotiations III: Economic Report on Africa 2007 - Click To Read Article Positions and prospects in WTO negotiations issue by issue 3.3 Conclusion: Economic Report on Africa 2007 - Click To Read Article It is expected that the recent renewed global attention to the problems of developing countries will contribute to redressing the trends towards marginalization of these countries. 1.4 World prices for African commodities: Economic Report on Africa 2007 - Click To Read Article Commodity prices on the increase 2.1 Growth performance I: Economic Report on Africa 2007 - Click To Read Article This section examines recent economic performance at the continental and subregional levels. It discusses disparities in growth performance and the factors behind the observed disparities across countries and subregions. The analysis pays particular attention to structural factors such as endowment in natural resources, the role of policies and institutions as well as non-policy drivers of growth, including exogenous factors such as natural calamities, geography, and civil conflicts. The discussion highlights key constraints to growth in Africa and strategies to address these constraints. 4.0 Diversification trends in Africa: Economic Report on Africa 2007 - Click To Read Article The diversification of African economies is one way through which the recent economic growth achievements could be sustained. Africa’s economic transformation can be achieved through both horizontal and vertical diversification. In addition, such diversification will help to build competitive economies that can productively be integrated into the global economy. Diversification is therefore a pre-condition if Africa is to register accelerated development. The scaling-up of current real growth to desired levels and in a broad manner can also be sustained if there is deepening in the diversification of African economies. 4.2 Diversification regimes in Africa: Economic Report on Africa 2007 - Click To Read Article Analysing the various diversification indices and the structure of the top ten export commodities for selected countries over the last two decades and a half provides some useful insights which can be used to define diversification regimes that characterize Africa. Five diversification regimes can be identified from Africa’s experience (see Ben Hammouda et al. 2006b). These regimes should not be viewed as steps or as a continuum that a country must follow as it moves from a concentrated to a diversified economy. Rather, the regimes are a result of the policy actions that a country has set in place over a given period of time. The particular regime that a country falls into is likely to be the result of a mix among the various diversification determinants. 4.3 Conclusion: Economic Report on Africa 2007 - Click To Read Article The following conclusions summarize the results of Africa’s export diversification efforts and results: 4.4 References: Economic Report on Africa 2007 - Click To Read Article References 5.1 There can be little diversification without an optimal trade policy: Economic Report on Africa 2007 - Click To Read Article The trade policy question and its role in economic growth and development continues to dominate much of the debate in this era of globalization. 5.1 The development model should determine the optimal trade policy: Economic Report on Africa 2007 - Click To Read Article The two-stage diversification process from economic history has been registered both in open and closed economies. The difference between the two is that the turning point after reasonable and sustainable development has been achieved occurs at a much earlier point for open economies compared to the case for closed economies. 5.1 Fiscal space is critical for diversification: Economic Report on Africa 2007 - Click To Read Article The positive but insignificant result for the impact of fiscal balance on diversification shows that macro stability plays a role for the success of diversification efforts. At the same time, a proactive fiscal policy, especially in terms of promoting public investment, can support efforts towards diversification. 6.5 Financing research to increase TFP: Economic Report on Africa 2007 - Click To Read Article The other major area in which new economic policies for diversification are required is in research. The majority of African countries, since the demise of diversification gain resorted to relying on factor accumulation as the main source of economic growth. Overview VII: Economic Report on Africa 2007 - Click To Read Article Diversification as a key pillar in Africa’s development efforts Overview VIII: Economic Report on Africa 2007 - Click To Read Article Evidence on the determinants and stages of diversification Overview IX: Economic Report on Africa 2007 - Click To Read Article Policies to increase diversification 3.1 Developments in trade negotiations II: Economic Report on Africa 2007 - Click To Read Article WTO trade negotiations evolving since 2001 3.4 References: Economic Report on Africa 2007 - Click To Read Article References 1.0 Recent Economic Trends and Prospects for 2007: Economic Report on Africa 2007 - Click To Read Article Developments in the World Economy and Implications for Africa 2.0 Recent Economic Performance in Africa and Prospects for 2007: Economic Report on Africa 2007 - Click To Read Article African countries still face the critical challenge of raising the rate of GDP growth and sustaining high growth rates over an extended period in order to accelerate progress towards meeting the Millennium Development Goals (MDGs). While growth has recovered over the past few years, very few countries have achieved and maintained the growth rates necessary to reduce poverty. Africa still tails behind other regions in most measures of human development. 2.1 Growth performance II: Economic Report on Africa 2007 - Click To Read Article Subregional growth performance varies substantially 2.1 Growth performance IV: Economic Report on Africa 2007 - Click To Read Article High growers vs. least performers: growth at the top and stagnation at the bottom 5.1 Investment is vital for an economy to diversify: Economic Report on Africa 2007 - Click To Read Article The inverse relationship between investment and the diversification index shown in table A5.1 indicates that as the level of investments increases, there is a tendency for economies to become more diversified. The smaller the diversification index gets, the more diversified an economy becomes, and vice-versa for specialization. Unless a country commits a sufficient portion of its national income to building capital stock, it is unlikely to be able to diversify. Investment as measured by gross fixed capital formation turns out to be a key determinant to Africa’s diversification results. 5.1 Insufficient investments in Africa have hindered the deepening of diversification: Economic Report on Africa 2007 - Click To Read Article Using the results for Africa shown in table A5.1, it is possible to compute what one could call a turning point in the relationship between investment and diversification. 5.1 Macroeconomic stance is crucial to diversification outcomes: Economic Report on Africa 2007 - Click To Read Article An important aspect of the diversification debate and of Africa’s experience has to do with the role that macroeconomic policy plays. This has also been investigated at the continental level in the results that are presented in table A5.1. Two important indicators of macroeconomic stability, depending on the macroeconomic policy in operation, are inflation and real effective exchange rates and these are found to be among the most critical determinants of diversification outcomes in Africa. 5.1 The results vary by diversification regime: Economic Report on Africa 2007 - Click To Read Article At this point, it is worthwhile to recall the five diversification regimes: those countries with little diversification; countries that started but got stuck in the diversification process; those with deepened diversification; backsliders in diversification; and the conflict and post-conflict countries. This report suggests that belonging to a particular regime has more to do with policy and institutional factors at the country level. Consequently, there are different determinants when the discussion is brought to the country level (see table A5.2 for correlation results). 5.2 Growth, productivity and diversification: Economic Report on Africa 2007 - Click To Read Article There is abundant literature that suggests that there is a two-way relationship between exports and growth. However, an important aspect of this evidence is that it is not just the level of exports that leads to growth but also the level of diversified exports or products. 5.4 References: Economic Report on Africa 2007 - Click To Read Article References I. WHAT CAN MICROFINANCE DO FOR AFRICA? - Click To Read Article When properly harnessed, microfinance offers a variety of benefits to the African people. Foremost, microfinance initiatives can effectively address material poverty, the physical deprivation of goods, services, and the income to attain them. When properly guided, the material benefits of microfinancing can extend beyond the household into the community. At the personal level, microfinance can effectively address issues associated with “non-material poverty, which includes social and psychological effects that prevent people from realizing their potential. IV. Introduction - MICROFINANCE IN AFRICA: THE MODEL - Click To Read Article The last twenty years have seen significant advances in understanding and providing financial services to better advance development and eradicate poverty. This includes providing the financial means to save, access credit, and start small businesses, with the potential to enhance community development, as well as local and national policy making. When properly harnessed and supported, microfinance can scale-up beyond the micro-level as a sustainable part of the process of economic empowerment by which the poor can lift themselves from poverty. IV. Principle III: Reinforce Microfinance to Advance the African Private Sector - Click To Read Article Key Principles for an African Model of Microfinance Like this article? Share it with your friends
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