Rachel Dicker 13164067
1) With reference to theories of growth and development, explain the contrasting growth experience of China and Sub Saharan Africa post 1980.
Economic growth, put simply, is “an increase in the amount of goods and services produced per head of the population over a period of time”; development is inextricably linked with this economic growth. By utilising theories of economic growth and development we can see how the Chinese and Sub-Saharan African economies have emerged, but, more notably, we can use these to look at patterns from past and present to show their experience and the implications of this growth for the future.
Development has become synonymous for industrialisation. Economic growth comes from increasing the Gross Domestic Product (GDP), this is done by producing more through the addition of more capital and labour. As you begin to use up the factors of production the law of diminishing returns can hinder growth. Therefore, a vital factor for the development of emerging markets is technology, which should be harnessed to improve means of production and other such things to see a progressive economy. In this sense I will be looking at both China and Sub-Saharan Africa to see how technology or the lack thereof has been utilised and the implications this has had on their economies.
There are a number of factors that have contributed to Sub-Saharan African (SSA) countries generally not experiencing the rates of growth and development as other emerging market regions, such as China. However, there has been a notable number of changes within these economies that might be cause for some optimism in regards to the business environments. In the 1980s Africa underwent major change and established some pro-market institutions in a majority of the countries (Hoskinsson, et al, 2000) Some scholars have noted a promising rise for investment opportunities due to what is being called Africa ‘rising’.
[figure 1: Bloomberg 2015]
As shown in figure 1, Kenya and Nigeria are an indicator of top global growth in 2015, with more growth predicted for the future. Nigeria is expected to expand 4.9 percent this year and Kenya is likely to grow 6 percent.
The region is made up of 48 countries with a population of 973.4 million as correct of 2014 (The World Bank). Furthermore, over 60% of that demographic is under 30, showing promise for an increasing working age population. Africa can use this vast labour potential to increase GDP and therefore increase the wealth of the continent.
It should be noted that GDP does not measure the sustainability of growth which is necessary to continue development.
Other contributing factors to SSA’s growth in recent times are largely attributed to government actions to take actions which further better the business climates by ending political conflicts and allowing for growth to accelerate broadly between countries and sectors.
Structural changes have paved the way for allowing...