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Sources Of Slow Growth In African Countries

2200 words - 9 pages

IntroductionEconomic growth takes place when there is either an increase in the national income of a country, or in the country's productive capacity, this productive capacity being the country' ability to generate national income. (Gross national product)There are many challenges faced by most Sub-Saharan African countries including Zimbabwe in trying to achieve sustained economic growth. Most of the constraints stem from the social, political, economic and cultural setups and institutions of most Sub- Saharan countries. The major constraints will be briefly outlined and possible solutions will be identified in turn.ConstraintsCommodity Concentration in Trade: High Reliance or Dependency on One Primary ProductThis is the primary feature of most Sub-Saharan African countries. The dependency on one major export crop like tobacco in Zimbabwe, tea in Kenya, copper in Zambia and cocoa in Ghana leaves the country's export potential vulnerable due to changes in the world market for the respective products. The fall or decline in the export prices for copper in Zambia in the early 1990s left the country facing massive balance of payments short falls, even up to this year. The reduction in export earnings has a negative effect in capacity building as LDCs have to import material in order to improve productive capacity. In short; exogenous shocks to a single primary product can affect the prospects of improved growth.Market Concentration in TradeMost of the major exportable in Sub-Saharan African countries are usually sold in a few markets of the industrialised countries, e.g. flowers from Zimbabwe are exported to Europe and a few to America. This implies that economic fortunes of most African counties are strongly related to the rise or fall of the domestic prices and economic activities of some industrialised countries. The lack of a diversified export market is a hindrance to economic growth in a case where there is a depressed demand in the major market.Fluctuations in Primary Commodity Prices.The degree of fluctuation in trading of agricultural or primary products is higher as compared to changes in the prices of manufactured goods which are traded on the world market. This has the effect of reducing export income for most Sub-Saharan Africa. The challenge is to try and process our primary products and the export them as manufactured goods which will guarantee stability in export earnings which could be used to support or improve productive capacity by importing relevant technologies.Lack of Human Capital and Physical Capital.Physical capital includes buildings, machinery, and vehicles etc that are used in the production process. Lack of these essential materials has resulted in companies not reaching full utilisation of the capacity. The consequence of this is reduced industrial output which creates shortages and hence an inflationary environment is created alongside the black market for commodities in short supply.Human capital is the accumulation...

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