Document Type

Article

Publication Date

2011

Abstract

Economic theory suggests that inequality between nations is caused by a failure to strike an optimal balance between capital, goods, and labor within a framework of appropriate rules and regulations. This leads to misallocation of a nation's resources - both capital and physical - resulting in distorted use and flow of capital and goods. Politics, regulation and policy-making lie at the heart of such "distortions" which come at a huge cost to societies. Due to these distorted flows, Africa was left behind in the race for economic development, as compared to the other regions of the world. Such distortions have been attributed also to the faulty policies in the 1980s and 1990s of the International Financial Institutions - the IMF and the World Bank - which stressed structural adjustment and an open market economy witiVlimited state intervention. Additionally, WTO's trade regimes further impacted the "flow of goods" due to the unfair trade regime, which put the African countries at a disadvantage when competing with the rest of the world for domestic and international markets. In aggregate, these distortions in the flow of capital and goods have had a negative impact on the economic development of the countries in Africa. Some countries provide an interesting contrast to Africa in terms of managing the distortions in the flow of capital and goods. For instance, India, through better management of its economic policies, has been able to monitor and manage the flow of capital and goods and, thereby, has been able to achieve sustained economic growth. India's growth has been an outcome of a concerted effort to maintain the balance between reforms and regulations. By maintaining this balance through a gradualist approach, the African countries too can march on to the road of economic progress. The signs progress are also actually becoming visible in Africa, as in the case of Botswana and Mozambique.

Comments

Originally published:

Jauhari, Alka. "Africa's Economic Resurgence: Is it Possible?" Africa Review 3.1 (2011): 17-31.

DOI:10.1080/09744053.2011.10597302


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