Governance, Aid & Growth

In July the World Bank issued its annual list of countries by income category: rich, middle, poor. Several African countries have graduated from poor to middle-income status. Yet some 15 of the 56 countries on the bank’s lower-middle income list (ie, over a quarter) also appear on the list of fragile and failed states maintained by the OECD, a rich-country club. They range from Côte d’Ivoire to Yemen; the most important of them are Pakistan and Nigeria. State failure, it appears, does not necessarily go hand in hand with other human woes, such as poverty.

Wealth, poverty and fragile states: MIFFed by misrule, The Economist, 21 July 2011

Conflict and fragility, OECD Development Co-operation Directorate (DCD-DAC) webpage (also see other links on governance, gender equality, poverty reduction, aid effectiveness and the environment)

New sources of aid: Charity begins abroad”, The Economist, 13 August 2011 (between 1951 and 1992 India received about $55 billion in foreign aid, making it the largest recipient in history. Now it seems on the verge of setting up its own aid-giving body. India’s switch from the world’s biggest recipient to donor is part of a wider change shaking up foreign aid.)

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)

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

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)