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Stimulating Growth and Investment in Africa: From Macro to Micro Reforms
Author(s) -
Gelb Alan,
Ramachandran Vijaya,
Turner Ginger
Publication year - 2007
Publication title -
african development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.654
H-Index - 32
eISSN - 1467-8268
pISSN - 1017-6772
DOI - 10.1111/j.1467-8268.2007.00155.x
Subject(s) - lagging , investment (military) , incentive , economics , per capita , per capita income , natural resource , business cycle , macro , business , development economics , economic policy , politics , market economy , macroeconomics , political science , medicine , population , demography , pathology , sociology , computer science , law , programming language
How do we stimulate investment and growth in Africa? This paper focuses on low‐income countries that are ‘good performers’ and not especially endowed with natural resources. Many of these countries have undertaken a set of economic reforms, and have recorded growth rates in per capita GDP of around 5 percent over the past 10 years. But some constraints to growth persist. We look at three things — how business environments create ‘external costs’ for firms and inhibit performance, how investors perceive the constraints to doing business, and the role of political economy factors especially in those countries with lagging indigenous business sectors. Our analysis of investment climate and other data leads us to several recommendations for governments, donors and the private sector itself, including the following: deepen macro reforms; build a strong, unified business forum; create incentives for more responsive governments; and improve risk mitigation and broaden this to domestic investors.