Diversity in Economic Growth
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Diversity in Economic Growth

Global Insights and Explanations

Edited by Gary McMahon, Hadi Salehi Esfahani and Lyn Squire

Economists have long relied on cross-country regression analysis to identify the determinants of continued growth, but with only limited success. This book demonstrates the value of a different approach.
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Chapter 6: Explaining Four Decades of Growth in Sub-Saharan Africa

Augustin Kwasi Fosu and Ernest Aryeetey


Augustin Kwasi Fosu and Ernest Aryeetey The economic performance of Sub-Saharan Africa (SSA) since the 1960s has substantially lagged behind that of other regions of the world, showing little improvement in average real income per capita. The region remains one of the poorest areas in the world, with approximately 41 per cent of the population living on less than US$1 per day.1 According to Sala-i-Martin (2006), while the global poverty rate fell from 20 per cent to 7 per cent between 1970 and 2000, based on an income poverty line of $1.50 (purchasing power parity adjusted) daily, the SSA rate increased from about one-third to nearly one-half during the same period. Although evidence of worsening income inequality has likely been a contributing factor, much of this deteriorating picture of poverty in SSA is attributable to the lack of sustainable growth.2 The Growth Record The SSA region recorded a reasonably strong average annual GDP growth of 5.0 per cent over a period of about one-and-half decades from 1960, with contributions from a large number of countries (see Appendix 6.A1)3. However, the momentum could not be sustained in subsequent years, as the growth rate fell to as low as 1.2 per cent per year during 1981–85, a rate which was much smaller than the population growth of roughly 2.9 per cent, leading to a deterioration of 1.7 per cent annually in per capita income. It was not until the late 1990s that growth began to pick up sufficiently to...

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