Infrastructure & Growth in Africa

Generally, Africa lacks behind other continents in the area of infrastructure. This deficiency is particularly greater in the area of sanitation (65% coverage for sub-sahelian countries against a total of 82% for developing countries as a whole), electricity (24% against 58%) and rural road access (34% against 90%).

An annual growth of 7%, making it possible to attain the Millennium Development Goals on poverty reduction, will require a yearly investment of US$22 billion in infrastructure on the continent, 40%of which is in the transport sector, 25% in energy, 20% in water and the rest in telecommunications.

The four key areas under the infrastructure sector are sanitation, energy, transport and telecommunications.

2010 Annual Report – Investing in Infrastructure, African Development Bank

Chinese investment in Africa, African Development Bank

Africa’s infrastructure: A road to somewhere, The Economist, 21 July 2011
The Queensway syndicate and the Africa trade, The Economist, 13 August 2011 (the Economist’s view of the dark side of China’s involvement in Africa, involving China International Fund, Sonangol and others connected with the continent’s oil trade)

Economics & Riots

Olaf Storbeck has highlighted a useful piece of research on the links, if any, between fiscal austerity, economic conditions and social unrest. Needless to say, it is not a simple story. The analysis looks at the last 90 years and crunches data from 26 European countries. In days of old, there was in fact a strong and causal link between austerity and unrest. Interestingly, though, since the late 80s, this relationship has broken up and vanished. According to the results, in modern, industrial societies, there is no longer any palpable link between spending cuts and rioting.

The Association of British Insurers has revised its estimated figure of claims likely to be paid out by the insurance industry to be in excess of £200 million.

Comparisons with the French riots of 2005 can be found here. It might be worth remembering that, in France, the unrest lasted several weeks with a State of Emergency in place for over 3 months.

Some further links from marginalrevolution.com, a new study being proposed by the LSE and Guardian newspaper (5 Sep 2011) and ongoing material from the Financial Times.

Of course, Britain’s riots are not just about budget cuts and the state of the economy: policing methods, social morality, parenting skills, technology, inequality, alienation – the list is long! But when Iran starts its wagging its finger at the UK about “violent suppression” of human rights you have to worry about where this whole debate is going!

Indonesia’s Consumer Boom

Nomura, a Japanese bank, reckons Indonesia is creating a middle class (defined as one with disposable household income of over $3,000 per year) helter-skelter. The country’s bourgeoisie, 1.6m in 2004, now numbers about 50m. On Nomura’s measure, that is more than India and bigger than elsewhere in the region. The number could reach almost 150m by 2014, representing one of the world’s most enticing markets. Newly affluent Indonesians are certainly spending.

Indonesia’s middle class: Missing BRIC in the wall” , The Economist, 21 Jul 2011

UK Growth Trends

The faltering economy: Making do with less, The Economist, 21 July 2011
An assessment of whether demand or supply is to blame for Britain’s faltering growth path.

Also worthy of note is a recent article from the Centre for Business Research at the University of Cambridge. A paper by Bill Martin, The British Economy: As Good as it Gets?, argues that productivity weakness licensed by workers’ willingness to work for low real wages is symptomatic of an economy suffering deficient demand and excess indebtedness, and is not the result of a sudden loss of entrepreneurial flair. .By contrast, America’s productivity growth soared during the recession as firms sacked workers faster than their output fell. It has remained strong since, as hiring has been more sluggish than growth.

GDP & Remittances

According to the World Bank, more than 215 million people (3% of the world’s population) live outside their countries of birth. Remittances, the money sent home by migrants, are three times the size of official development assistance and they provide an important lifeline for millions of poor households. Remittances to developing countries are estimated to have reached $325 billion in 2010. The overall economic gains from international migration for sending countries, receiving countries, and the migrants themselves are substantial.

Also have a look at these articles published in July 2011:

Football in Brazil: The bountiful game, The Economist, 21 July 2011
The Philippines and remittances: The house that Saud built, The Economist, 21 July 2011

Measuring the Good Life

There’s been a lot of debate lately on measuring the well-being of societies – is wealth all that matters, or should we be looking at other things, like the balance between work and the rest of our lives? The OECD’s Better Life Index “…aims to involve citizens in this debate, and to empower them to become more informed and engaged in the policy-making process that shapes all our lives.”

Just one problem…as the index focusses just on the OECD many democracy-challenged countries in the Middle East, Africa and Asia are not included!

Services as a growth engine for emerging markets

Services have long been the main source of growth in rich countries. The article cited below argues that services are now the main source of growth in poor countries as well. It presents evidence that services may provide the easiest and fastest route out of poverty for many poor countries.

Service with a smile: A new growth engine for poor countries, Ghani et al, VOXEU (4 May 2011)