It’s like the European Union but for East Africa.
In this podcast by the IMF, find out how Uganda, Kenya, Tanzania, Rwanda and Burundi stand to benefit from the creation of the East African Community. There will be a common currency as well as more trade and investment too. Will a union also expose them to more risk?
(version in Español)
Economists are paying increasing attention to the link between financial inclusion—greater availability of and access to financial services—and economic development. In a new paper, we take a closer look at exactly how financial inclusion impacts a country’s economy and what policies are most effective in promoting it.
The new framework developed in this paper allows us to identify barriers to financial inclusion and see how lifting these barriers might affect a country’s output and level of inequality. Because the more you know about what stands in the way of financial inclusion, the better you can be at designing policies that help foster it.
(Version in Español)
Low-income countries have spent a lot of time thinking about how they can achieve faster growth, and we have done some research to help them. We found that pursuing export diversification is a gateway to higher growth for these economies. Using a newly constructed diversification toolkit, our empirical analysis shows that both the range and quality of the goods a country produces has a direct impact on growth
Low-income countries have historically depended on a narrow range of primary products and few export markets for the bulk of their export earnings.
But export diversification is associated with higher per capita incomes, lower output volatility, and higher economic stability—relationships that can be tracked using our new publically available dataset, which gives researchers and policymakers access to measures of export diversification and product quality for 178 countries from 1962-2010.
We have looked at two measures of export diversification and their impact on economic growth. One measure captures diversification into new product lines, the other development of a more balanced mix of existing products. Analysis using these measures shows that export diversification in low-income […]
When meeting with people outside Africa, I’m often asked whether Africa’s growth takeoff since the mid-1990s has been simply a “commodity story”—a ride fueled by windfall gains from high commodity prices. But finance ministers and other policymakers in the region, and I was one of them, know that the story is richer than that.
In this spirit, in our latest Regional Economic Outlook: Sub-Saharan Africa a team of economists from the IMF’s African Department show that Africa’s continued success is more than a commodity story. In fact, quite a few economies in the region have become high performers without basing their success on natural resources—thanks in no small part to sound policymaking.
Last week, my colleague Hugh Bredenkamp talked about how the IMF is helping the low-income countries overcome the global economic crisis. This week, I want to follow this theme, but hone in more on sub-Saharan Africa. I know this region reasonably well, both from current and past vantage points. In my present role, I am the director of the IMF’s African department. Previously, I was minister of finance in Liberia and, before that, I spent a significant part of my long World Bank career working on African countries. Grappling with the kinds of economic challenges that affect the lives of millions of Africans is a passion for me.
In this first post, I want to talk about growth prospects for Africa. Let’s take a step backwards. Before the global recession, sub-Saharan Africa was generally booming. Output grew by about 6½ percent a year between 2002 and 2007—the highest rate in more than 30 years. This acceleration was broader than ever before, going beyond the typical short-lived commodity driven booms and touching many more countries. Hopes were high that the region was slowly but surely turning the corner.