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May 2007 
Africa: African Politicians Imposed 'Economic Apartheid' On Afric
Posted on Sep 22nd, 2006
by 
Michael
Michael
A very important article, especially when one remembers that as many people have died in Africa in the past fifty years as in all other wars on earth combined, and that countries with declining rates of economic growth are far more likely to suffer coups and civil wars.
Africa: African Politicians Imposed 'Economic Apartheid' On Africa
Mmegi/The Reporter (Gaborone)
OPINION
September 13, 2006
Posted to the web September 14, 2006
Marian L. Tupy
What a difference a decade can make. In ten years, an economy growing at an annual rate of 7 percent doubles in size. How can a country generate high rates of economic growth and the resulting improvements in standards of living? The divergent growth paths of sub-Saharan Africa and post-Communist Europe over the last decade point to the importance of economic freedom.
The eight ex-communist countries that became members of the European Union in May 2004 grew at a compounded average annual rate of 4.8 percent between 1995 and 2004. Their growth was thus a full 3 percentage points higher than that of the Eurozone, which grew at 1.8 percent per annum.
Estonia saw its per capita income adjusted for inflation and purchasing power parity rise by 95 percent during that time. Incomes in other EU8 countries rose by between 86 percent and 41 percent. Only in the Czech Republic did incomes grow by less, having instead risen by 28 percent. Yet even the Czech Republic performed better than the countries of the Eurozone, where incomes rose by a mere 17 percent over the last decade. On these trends, standards of living in the EU8 are converging with the rest of Europe.
The path from communism to capitalism was not an easy one and much work still remains. But the EU8 has seized the opportunity offered by the fall of the Berlin Wall. They have eliminated thousands of restrictions, liberalised prices and foreign trade, and privatised most state enterprises. They made doing business substantially easier. Their economic freedom increased as a result.
The Economic Freedom of the World: 2006 Annual Report, just published by the Fraser Institute in Canada, notes that economic freedom in the EU8 increased from 5.41 in 1995 to 6.99 in 2004, on a scale of 0 to 10. In the 27 countries of sub-Saharan Africa that were rated by the Fraser Institute, economic freedom rose from 5.08 in 1995 to a mere 5.57 in 2004. Concomitantly, African economic performance over the last decade was much more mixed.
Eleven out of 27 countries experienced economic contraction. Those countries that grew did so at an average rate of only 2.2 percent. If one subtracts oil-producers that experienced economic expansion over the last decade, such as Cameroon, Chad and Nigeria, the number of growing economies shrinks to 13 out of 27. No country measured by the index experienced economic growth as high as that in the EU8.
Moreover, 11 out of 27 countries saw their incomes per capita fall over the past 10 years. The biggest fall was experienced by the Democratic Republic of Congo (32 percent), Guinea-Bissau (27 percent) and Zimbabwe (27 percent). Some African countries saw their incomes rise quite substantially. Per capita incomes in oil-rich Chad, for example, rose by 122 percent. By eliminating the oil-producers, however, the number of African countries that have seen their incomes rise shrinks to 14.
The stellar pupil among the growing non-oil producing countries is Botswana, which grew at a compounded average annual rate of 4.57 percent and saw its income rise by 57 percent. With 7.1 points out of 10, Botswana was as free as South Korea. She was also Africa's freest economy.
Critics of globalisation and capitalism often describe the international economic order as a remorseless struggle between the West and the rest. Some have gone as far as to suggest that there exists a form of "economic apartheid" that separates the rich North from the poor south. But, the membership of the rich countries' club is not closed to anyone. Ex-communist countries seized the opportunity offered to them by the end of communism. They have embraced economic freedom and are on their way to becoming rich.
Unfortunately, many African countries avoided reform and wasted the last decade as a consequence. If those countries suffer from "economic apartheid," it is one that was imposed on them by African politicians who refuse to acknowledge the importance of economic freedom as a necessary precondition to economic development.
Marian L. Tupy is assistant director of the Project on Global Economic Liberty specialising in the study of Europe and sub-Saharan Africa.
Copyright © 2006 Mmegi/The Reporter. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). Click here to contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material.
Africa: African Politicians Imposed 'Economic Apartheid' On Africa
Mmegi/The Reporter (Gaborone)
OPINION
September 13, 2006
Posted to the web September 14, 2006
Marian L. Tupy
What a difference a decade can make. In ten years, an economy growing at an annual rate of 7 percent doubles in size. How can a country generate high rates of economic growth and the resulting improvements in standards of living? The divergent growth paths of sub-Saharan Africa and post-Communist Europe over the last decade point to the importance of economic freedom.
The eight ex-communist countries that became members of the European Union in May 2004 grew at a compounded average annual rate of 4.8 percent between 1995 and 2004. Their growth was thus a full 3 percentage points higher than that of the Eurozone, which grew at 1.8 percent per annum.
Estonia saw its per capita income adjusted for inflation and purchasing power parity rise by 95 percent during that time. Incomes in other EU8 countries rose by between 86 percent and 41 percent. Only in the Czech Republic did incomes grow by less, having instead risen by 28 percent. Yet even the Czech Republic performed better than the countries of the Eurozone, where incomes rose by a mere 17 percent over the last decade. On these trends, standards of living in the EU8 are converging with the rest of Europe.
The path from communism to capitalism was not an easy one and much work still remains. But the EU8 has seized the opportunity offered by the fall of the Berlin Wall. They have eliminated thousands of restrictions, liberalised prices and foreign trade, and privatised most state enterprises. They made doing business substantially easier. Their economic freedom increased as a result.
The Economic Freedom of the World: 2006 Annual Report, just published by the Fraser Institute in Canada, notes that economic freedom in the EU8 increased from 5.41 in 1995 to 6.99 in 2004, on a scale of 0 to 10. In the 27 countries of sub-Saharan Africa that were rated by the Fraser Institute, economic freedom rose from 5.08 in 1995 to a mere 5.57 in 2004. Concomitantly, African economic performance over the last decade was much more mixed.
Eleven out of 27 countries experienced economic contraction. Those countries that grew did so at an average rate of only 2.2 percent. If one subtracts oil-producers that experienced economic expansion over the last decade, such as Cameroon, Chad and Nigeria, the number of growing economies shrinks to 13 out of 27. No country measured by the index experienced economic growth as high as that in the EU8.
Moreover, 11 out of 27 countries saw their incomes per capita fall over the past 10 years. The biggest fall was experienced by the Democratic Republic of Congo (32 percent), Guinea-Bissau (27 percent) and Zimbabwe (27 percent). Some African countries saw their incomes rise quite substantially. Per capita incomes in oil-rich Chad, for example, rose by 122 percent. By eliminating the oil-producers, however, the number of African countries that have seen their incomes rise shrinks to 14.
The stellar pupil among the growing non-oil producing countries is Botswana, which grew at a compounded average annual rate of 4.57 percent and saw its income rise by 57 percent. With 7.1 points out of 10, Botswana was as free as South Korea. She was also Africa's freest economy.
Critics of globalisation and capitalism often describe the international economic order as a remorseless struggle between the West and the rest. Some have gone as far as to suggest that there exists a form of "economic apartheid" that separates the rich North from the poor south. But, the membership of the rich countries' club is not closed to anyone. Ex-communist countries seized the opportunity offered to them by the end of communism. They have embraced economic freedom and are on their way to becoming rich.
Unfortunately, many African countries avoided reform and wasted the last decade as a consequence. If those countries suffer from "economic apartheid," it is one that was imposed on them by African politicians who refuse to acknowledge the importance of economic freedom as a necessary precondition to economic development.
Marian L. Tupy is assistant director of the Project on Global Economic Liberty specialising in the study of Europe and sub-Saharan Africa.
Copyright © 2006 Mmegi/The Reporter. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). Click here to contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material.
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