## _wp0752

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### Key observations on African growth (Introduction)
- Historical context and recent performance:
  - "growth in total GDP will likely have exceeded 5 percent in 2006 for the third straight year" and "per capita growth is running in the range of 3.5-4 percent in recent years."
  - IMF growth forecasts for 2007 are "6.3 percent for GDP and 4.4 percent for GDP per capita."
- Central question:
  - Is current growth in parts of Africa "sustain[able]" for 10, 15, or more years—sufficient to lift entire countries out of poverty as East Asia did after 1960?
- Plausible drivers of growth derailment:
  - Weak economic and political institutions (references: Acemoglu et. al., 2003; Satyanath and Subramanian, 2007; Jones and Olken, 2005a).
  - Greater propensity for conflict or civil strife.
  - Bad macroeconomic policies, particularly inflation, protectionism, and/or overvalued exchange rates; overvaluation is "robustly correlated with crises."
- Additional constraints:
  - Inadequate education and poor health could limit returns on private investment and impede manufacturing and productivity-enhancing sectors.
- Benchmarking approach:
  - Use post-1945 countries that started with weak institutions and low income but sustained rapid growth; "Relatively few (we count no more than 12–see below) initially poor countries have managed to sustain rapid growth (and improve their institutions) to an extent described below in the past 50 years."
  - Most benchmark countries experienced rapid growth in exports, frequently in manufactures.

### Empirical data, groups, and recent African growth experience
- Data contribution and caveats:
  - Detailed dataset assembled from standard international sources; years covered and data weaknesses documented.
  - Positive signs: broad institutional improvements, widespread macroeconomic stability, extensive trade liberalization, recent debt reductions.
  - Caveats from benchmarking: Doing Business indicators show high regulatory costs of exporting in much of Africa; real exchange rate overvaluation is common in Africa; health indicators much less robust than benchmark countries at take-off.
- Country grouping rule:
  - Countries divided by whether they attain per capita growth over the past decade >2 percent.
  - Nineteen African countries had per capita growth over the last decade above 2 percent (Group 1).
  - Thirty-one African countries were below this threshold (Group 2) (31 countries for which data are available).
- Aggregate recent statistics (Table 1a and Appendix Table 9 references):
  - Average GDP growth over the last decade: 4.5 percent unweighted and 4.1 percent weighted by population.
  - Average GDP per capita growth: 2 percent unweighted and 1.4 percent weighted.
  - World Economic Outlook growth for Africa: 3.6 percent in 2004 and 3.5 percent in 2005.
  - IMF expectations: growth of 3.9 percent in 2006 and 3.7 percent in 2007.
- Cross-country variation:
  - Examples with per capita growth above or close to 3 percent: Botswana, Lesotho, Mauritius, Mozambique, Rwanda, Tanzania, and Uganda.
  - Notable outlier: Zimbabwe (continuing decline).
- Group 1 specifics:
  - Average growth in Group 1 was 4.8 percent per annum over 1996–2005.
  - After dropping outliers, average per capita growth was 3.1 percent—"significantly below what was experienced in the Sustained Growth benchmark countries."

### Benchmarking, sustained growth cases, and manufacturing exports
- Benchmark selection and summary:
  - 12 Sustained Growth (SG) countries selected that had weak institutions at take-off and sustained high rates of growth.
  - SG set: China, Indonesia, Malaysia, Singapore, South Korea, Taiwan Province of China, Thailand, Vietnam, Tunisia, Dominican Republic, Chile (exception), and one more—total 12.
  - On Polity IV measure (1-7), SG average at take-off was 2.2.
- Criteria for sustained growth accelerations (Hausmann, Pritchett and Rodrik, 2004):
  - Improvement in growth rates of at least 2 percentage points per capita (acceleration).
  - Sustained growth of at least 3½ percent per capita for seven years.
  - Higher post-acceleration income than pre-acceleration peak.
  - Growth per capita must remain above 3 percent after seven years.
- Why manufacturing exports mattered historically:
  - Manufacturing exports helped create a middle class that favored strengthening institutions.
  - Sustained Growth cases often experienced a virtuous circle of improving economic and political institutions.
  - Natural resource export surges often did not lead to institutional improvement (natural resource curse risk).

### Institutions, inequality, micro-institutions, and conflict
- Broad political and economic institutions:
  - Good institutions: effective property rights, enforceable contracts, law and order, efficient bureaucracy.
  - Bad institutions: expropriation, corruption, political instability, conflict, collapse of public order.
  - Institutional strength affects investment incentives, crisis vulnerability, and adjustment capacity.
- Empirical comparisons:
  - Improvement in sub-Saharan Africa’s institutions to the mean of developing Asia could be associated with as much as an 80 percent increase in per capita income (from $800 to over $1400).
  - For SG cases at acceleration (time T): average Constraint on the Executive = 2.2.
  - In Group 1 African countries today: average Polity score = 3.8.
  - Conclusion: political institutions in much of Group 1 "are not today very strong, but potentially good enough ... so as not to be an obvious constraint on sustained growth."
- Inequality:
  - Gini in Group 1 close to SGs at start; Group 1 Gini = 44.5 vs SGs 39.5; Berg, Ostry and Zettelmeyer (2006) indicate inequality limits the duration of growth spells.
- Micro-institutions (World Bank Doing Business):
  - Time for paying taxes: Group 1 = 229 hours vs SGs = 348 hours.
  - Total amount of tax payable: Group 1 = 45 percent of gross profits vs SGs = 44.2 percent.
  - Costs of entry (percent of per capita income): Group 1 = 123 percent; SGs = 25 percent; average developing country = 78 percent.
  - T-test confirms Africa has a disadvantage in costs of entry.
  - Macro and micro institutional indicators may not co-move; enforcement lags regulation changes.
- Conflict and fractionalization:
  - All conflicts: Group 1 not significantly worse than SGs at SG start.
  - Internal conflict: more prevalent in Africa; concentrated in a few countries.
  - Fractionalization: all African countries fare significantly worse than SG cases on ethnic, religious, and linguistic fractionalization (e.g., Group 1 Ethnic (Easterly & Levine) = 0.68 vs SGs = 0.30).

### Trade outcomes, liberalization, and exchange rate overvaluation
- Export performance:
  - SG cases: average increase in manufacturing exports to GDP over growth episode = 36 percentage points.
  - Group 1 average Total Exports to GDP = 31 percent vs SGs at time of acceleration = 19 percent.
  - Group 1 Manufacturing Exports to GDP = 8.2 vs SGs initial = 2.2; SGs latest = 24.9.
  - Apparel, footwear, textile exports remain small (< 0.5 percent of GDP) in most Group 1 countries.
  - Over last ten years, no significant improvement in manufacturing or textiles exports from Africa is evident.
- Trade liberalization and openness:
  - Average percent of years open for SG cases since acceleration: 58 percent.
  - Augmented Sachs-Warner measure: Group 1 = 0.6 (out of 1); SGs at comparable stage = 0.4; average developing country today = 0.5.
  - Interpretation: many African countries are quite liberal on this measure.
- Exchange rate overvaluation (Frankel-inspired PPP proxy):
  - Sustained Growth cases: average degree of overvaluation = minus 18 percent (i.e., substantially undervalued).
  - Group 1 average overvaluation = 7 percent.
  - Group 2 average overvaluation = 18 percent.
  - Average amount of overvaluation during the spell: SG country = 11 percent; average African country = 37 percent.
  - Average African country likely to have persistent overvaluation twice as long and almost three times as large in magnitude as average SG country.
  - Statistical tests reject similarity of overvaluation measures between Group 1 and SGs.
- Exchange rate policy constraints:
  - Real exchange rate changes have serious distributional consequences, constraining policy choices.
  - Aid inflows have put upward pressure on exchange rates even without large private capital flows.
  - Sustaining competitive real exchange rates aided historically by caution in opening to capital flows.

### Costs of trading and doing business: micro vs macro discrepancy
- Import/export document and duration measures:
  - Average Group 1: about 12 documents and 57 days to undertake imports.
  - SGs: 9 documents and 21 days for imports.
  - Average developing country: 11 documents and 37 days for imports.
  - Export side: Group 1 time for export procedures = 44.8 days vs SGs = 19.1 days.
- Interpretation:
  - Macro measures of openness may be too coarse; micro measures reveal substantial frictions.
  - Scope exists for remedial action to improve micro-environment for importing and exporting.

### Human capital, health, infrastructure comparisons
- Education:
  - Average gross primary enrollment ratio: Group 1 = 91 vs SGs = 95.
  - Average gross secondary enrollment ratio: Group 1 = 32 vs SGs = 36.
  - Caveat: enrollment ratios do not measure quality.
- Health:
  - Life expectancy (1982 and most recent): Group 1 = 49.6 years in 1982 and 48.2 years most recently; Group 2 = 50.9 years in 1982 and 48.8 years most recently.
  - Example low life expectancy: Ethiopia and Mozambique = 42 years.
  - Evidence on whether health is a binding constraint on sustained growth is inconclusive; available evidence suggests the size of the effect is small.
  - Physicians per million: Group 1 average = 150; excluding starred exceptional cases = 88 per million; Korea had 600 per million at acceleration; Indonesia had 37.3 per million; Thailand had 129 per million.
- Infrastructure proxies:
  - Telephone mainlines and roads: many SG cases were worse off on these proxies when they started than Africa is today.
  - Example: China, Vietnam and Indonesia had two or fewer mainlines per 1,000 people at start.
  - Roads per surface area: t-test indicates no significant difference in means between Group 1 and SGs.
  - Conclusion: "There is no evidence that the Sustained Growth countries took off after a massive push in terms of public investment (including health)."

### Conclusions, prospects, and policy implications
- Two broad perspectives:
  - Deep determinants view (geography, institutions, history)—outlook bleak.
  - Optimistic view (commodity upturn or effective policy levers such as foreign aid)—outlook rosier.
- Main assessment:
  - Evidence suggests (but does not prove) that deep indicators for a group of “promising” African countries are not much worse today than they were in East Asia in the early 1960s or Vietnam and China circa 1980.
  - "Inherited institutional weaknesses in Africa—and internal conflict and societal fractionalization remain concerns—but the East Asian experience definitely demonstrates that some institutional weaknesses can be escaped."
- Proximate "how" for escapes from poverty:
  - Historically, escapes from poverty with weak institutions generally involved exports and—in almost all cases—manufacturing exports.
  - Africa need not follow the same route exactly, but "a stronger and more dynamic manufacturing export sector would surely help sustain growth."
- Essential policy measures highlighted:
  - Reduce direct regulatory costs for exporters.
  - Improve trade facilitation to lower time and procedures for exports and imports.
  - Avoid real exchange rate overvaluation; monitor and limit prolonged spells of overvaluation.
  - Be cautious about reliance on commodity booms and large aid inflows (risks to institutional development and exchange rate management).
  - Institutional improvement remains important; some institutional weaknesses can be overcome alongside export-led strategies.
- Net assessment: "Sub-Saharan Africa’s escape from poverty, while certainly possible, may be more challenging than it was for east Asia. Clearly, fatalism is unwarranted but the means of escape need to be found."

### Selected quantitative highlights (preserve source values)
- Group 1: Sub-Saharan African Countries with Growth >= 2.0% — sample averages (1996-2005 unless noted):
  - Average Real Per Capita GDP Growth: 4.8
  - Average Real Per Worker GDP Growth: 4.9
  - Average Real GDP Growth: 7.3
  - Average PPP Real GDP Per Capita (Constant 2000 $): 2,810
  - Average GDP (Current US$ Millions): 5,435
  - Average Population Growth: 2.5
  - Average Population (Millions): 14.9
  - P-value for T-test: mean for Group 1 equals mean for SGs: 0.98 and 0.77
- Sustained Growth Countries (SGs) — sample averages (period T to 2005):
  - Average Real Per Capita GDP Growth: 4.8
  - Average Real GDP Growth: 6.7
  - Average PPP Real GDP Per Capita at Time T: 3,021.5
  - Average Latest PPP Real GDP Per Capita (Constant 2000 $): 9,564.7
  - Average Latest GDP (Current US$ Millions): 366,181.8
  - Average Population Growth: 1.8
  - Average Latest Population (Millions): 169.0
  - Average Real Per Worker GDP Growth: 4.5
- Institutions and costs (averages):
  - Group 1: Constraint on the Executive 3.8; Economic Risk 31.7; Investment Risk 1.7; Control of Corruption 3.0; Gini 44.5; Time for Paying Taxes (hours/year) 228.9; Total Amount of Tax Payable (% of gross profits) 45.0; Costs of Entry (% per capita income) 122.9
  - SGs: Constraint on the Executive 2.2; Economic Risk 31.7; Investment Risk 7.1; Control of Corruption 3.4; Gini 39.5; Time for Paying Taxes 347.6; Total Amount of Tax Payable 44.2; Costs of Entry 25.4
- Trade and overvaluation:
  - Group 1 Average Total Exports to GDP: 31.0; Manufacturing Exports to GDP: 8.2; Apparel, Footwear and Textiles to GDP: 4.3; Fuel & Ore Exports to GDP: 3.2; Agriculture & Food Exports to GDP: 6.5
  - SGs initial: Total Exports to GDP 19.1; Manufacturing Exports to GDP 2.2
  - Group 1 Average Currency Overvaluation: 13.3 (table-reported aggregate); SGs Average (at start T) Average Currency Overvaluation -17.7
  - Sustained Growth cases: average amount of overvaluation during the spell = 11 percent; average African country = 37 percent.
- Costs of trading (Group 1 averages and SGs):
  - Group 1: No. of Documents Required to Export 7.6; No. of Signatures Needed to Export 18.9; Time for Export Procedures 44.8 days; No. of Documents Required to Import 12.1; No. of Signatures Needed to Import 28.3; Time for Import Procedures 56.7 days.
  - SGs (at T): Documents to export 6.6; Signatures 6.5; Time export 19.1 days; Documents to import 9.4; Signatures 8.0; Time import 21.3 days.
- Social and physical infrastructure (selected):
  - Group 1 Primary Education: 91.4; Secondary Education: 31.8; Physicians per million (average): 150 (falls to 88 excluding starred cases); Telephone Mainlines (per 1,000 people) and Total Roads per Surface Area reported in tables.

*Source: _wp0752 (excerpts provided from the PDF content unit).*

### References........................................

### _wp0752 - References........................................

### Text tables and appendix inventory
- Text Tables listed include indicators for Selected sub-Saharan African Countries and Sustained Growth Countries (SGs) covering themes: Income, Growth, and Population; Institutions and Costs of Doing Business; Conflicts; Social Fractionalization; Trade Outcomes; Macroeconomic and Trade Policies and Outcomes; Costs of Trading; Social and Physical Infrastructure.
- Appendix Data and Sources and Appendix Tables (9–16) provide country-level indicator detail corresponding to the text tables, with explicit cross-references to table numbers and page locations.

### Key observations on African growth (Introduction)
- Historical context:
  - Sub-Saharan Africa has performed poorly on average since the nineteenth century, but parts of the region have recently improved: "growth in total GDP will likely have exceeded 5 percent in 2006 for the third straight year" and "per capita growth is running in the range of 3.5-4 percent in recent years."
  - IMF growth forecasts for 2007 are "6.3 percent for GDP and 4.4 percent for GDP per capita."
- Central research question:
  - Is current growth in parts of Africa "sustain[able]" for 10, 15, or more years, i.e., sufficient to lift entire countries out of poverty as East Asia did after 1960?
- Three plausible drivers of growth derailment:
  - Weak economic and political institutions are associated with severe crises and derailment of growth (references: Acemoglu et. al., 2003; Satyanath and Subramanian, 2007; Jones and Olken, 2005a).
  - Greater propensity for conflict or civil strife can curtail growth accelerations; this may be linked to weak institutions or deep social divisions.
  - Bad macroeconomic policies (particularly inflation), protectionism, and/or overvalued exchange rates may choke off growth in the tradable goods sector; overvaluation is "robustly correlated with crises" across methodologies.
- Additional relevant constraints:
  - Inadequate education and poor health (symptoms of insufficient physical and human capital) could limit returns on private investment and impede the development of manufacturing and productivity-enhancing sectors.
- Benchmarking approach:
  - Use of post-1945 countries that started with weak institutions and low income but sustained rapid growth as benchmarks; "Relatively few (we count no more than 12–see below) initially poor countries have managed to sustain rapid growth (and improve their institutions) to an extent described below in the past 50 years."
  - Most benchmark countries experienced rapid growth in exports, frequently in manufactures; the paper examines whether any African countries show signs of similar structural change.

### Empirical data contribution and caveats
- Data contribution:
  - The authors assemble a detailed dataset from standard international sources to allow comparisons across countries and periods; they note limitations and document years covered and data weaknesses.
- Positive signs:
  - Broad institutional improvements in Africa, sometimes dramatic (reflecting end of civil wars and strengthening of democracy).
  - Widespread macroeconomic stability and extensive trade liberalization ("opening to imports").
  - Recent debt reductions have helped (reference: IMF and World Bank, 2005b).
- Three important caveats from benchmarking:
  - Specific economic institutions: World Bank’s Doing Business indicators show a wide gap between Africa and most other developing countries; "the regulatory costs of exporting are high in much of Africa."
  - Real exchange rate overvaluation: Some African countries have experienced significant real exchange rate overvaluation and face pressures for further appreciation (e.g., due to higher commodity prices or aid inflows); almost all East Asian and other success stories "avoided any episode of significant overvaluation during the entire period of sustained growth."
  - Health indicators: Health indicators in Africa are "much less robust today than they were in most of the benchmark countries were when they started to grow," with diseases such as malaria an intense problem; "Improving health is a first order issue for its own sake; the impact on growth, however, remains unclear."

### Analytical emphasis and structure of the paper
- Sections summarized:
  - Section II: Reviews constraints on sustained growth and explains benchmark country choice.
  - Section III: Compares recent African growth with benchmark experience.
  - Section IV: Compares institutions in Africa today with benchmark countries early in their growth process, including measures of inequality and conflict.
  - Section V: Compares trade outcomes and policies.
  - Section VI: Reviews available measures of education and health.
- Methodological cautions:
  - No unified theory of sustained growth exists; associations found (e.g., between exports and growth) are not claimed to be causal.
  - Limitations of institutional indicators: lack of historical time series for many measures and possible measurement issues (Lucas Critique; Goodhart Effect).

*Source: _wp0752 - References........................................ (IMF PDF content provided)*

### Section VII concludes.

### _wp0752 - Section VII concludes.

### Institutions
- Broad economic institutions: laws, rules, and practices governing property rights, provision of law and order, and efficient bureaucracies.
- Good institutions create effective property rights for most people, including protection against expropriation by the state (or powerful elites) and enforceable contracts between private parties.
- Bad institutions produce insecure property rights through expropriation, corruption, political instability, failed states, conflict, serious crime, or collapse of public order.
- Perceptions of protection matter initially, but must be underpinned by actual protections and fair, transparent dispute resolution.
- Institutional strength affects:
  - Incentives for entrepreneurs to invest in capital goods and for people to invest in human capital.
  - Likelihood that economic/financial crises will curtail growth accelerations.
  - Ability to smooth adjustment to adverse shocks.
- Empirical example: an improvement in sub-Saharan Africa’s level of institutional development from its current average to the mean of developing Asia could be associated with as much as an 80 percent increase in its per capita income (from $800 to over $1400).
- Institutions influence the duration and volatility of growth spells.

### A Benchmarking Approach
- Goal: quantify constraints by benchmarking against countries that (a) had weak institutions in 1960, and (b) sustained high rates of growth after 1960.
- Benchmark sample selection:
  - 12 countries characterized as having weak institutions at take-off.
  - On Polity IV measure of constraint on the executive (range 1-7), their average score was 2.2 (compared with 7 for most advanced industrial economies).
- Alternative historical proxy: Adelman and Morris (1958–63) "degree of administrative efficiency of public administration" — average for sustained growth countries circa 1960 is about the average for all developing countries (nine SGs available; average 51.1 vs sample of 74 developing countries average 47.7, standard deviation 30).
- Advantages of benchmarking:
  - Transparent criteria.
  - Assessment of Africa driven by numbers rather than preconceptions.
- Disadvantage:
  - Does not incorporate tradeoffs across dimensions (no compensation across weaknesses).
- Benchmarking reveals common drivers and common hurdles for African countries relative to past success-from-initial-weakness stories.

### Cases of Sustained Growth Accelerations
- Criteria adopted (Hausmann, Pritchett and Rodrik, 2004):
  - Improvement in growth rates of at least 2 percentage points per capita (acceleration).
  - Sustained growth of at least 3½ percent per capita for seven years.
  - Higher post-acceleration income level than the pre-acceleration peak.
  - Growth per capita must remain above 3 percent after seven years.
- Interpretations:
  - Criteria yield a doubling of income in 20-35 years.
- Sample selection notes:
  - Exclude industrial and transition countries.
  - Exclude countries with strong initial institutions around 1960 (e.g., Botswana, India, Mauritius, Sri Lanka) from benchmark.
- Resulting sustained growth (SG) set: 12 countries.
  - Ten are manufacturing export-based models; all but two are East Asian: China, Indonesia, Malaysia, Singapore, South Korea, Taiwan Province of China, Thailand, and Vietnam.
  - Tunisia and the Dominican Republic are the other manufacturing export successes.
  - Chile is an exception (non-manufacturing-export case) but had strong economic institutions by 1960 per Adelman and Morris.
  - China and Vietnam began accelerations around 1980 rather than around 1960 but meet criteria.
- Notes on specific countries:
  - Dominican Republic experienced a major banking crisis; GDP per capita averaged 0.2 percent between 2000 and 2004, but bounced back to 7.3 percent in 2005.
  - If growth threshold set slightly higher (e.g., 4 percent), Dominican Republic, Egypt, and Tunisia would not qualify.
  - Data quality concerns limit assessment of Egypt.
  - Some oil-rich small states (e.g., Brunei, Saudi Arabia) did well since 1960 but lack data for inclusion.

### Why Did Manufacturing Exports Matter So Much (after 1960)?
- Hypothesis: manufacturing exports helped create a middle class that favored strengthening institutions.
- Mechanism: interaction of economic and political power produces or changes institutions; expansion of trade can alter distribution of economic power and thereby political power and institutions.
- Caveat: trade per se does not guarantee better institutions if returns concentrate with monarchs or a small elite.
- Observed pattern: Sustained Growth cases began with weak political institutions but often experienced a virtuous circle of improving economic and political institutions over time.
  - Examples of political-institution improvements on Polity IV (1–7 scale): Indonesia and Taiwan Province of China improved by four points; Korea by five points; Thailand by six points.
- Natural resource export surges often did not lead to institutional improvement; increased rents to governments can reduce incentives to improve institutions — the essence of the natural resource curse.

### Recent Literature on Accelerations and Sustained Growth
- Focus on turning points in growth performance avoids pitfalls of cross-country average growth regressions.
- Key references: Rodrik (1999), Hausmann, Pritchett and Rodrik (2004), Jermanowski (2005), Jones and Olken (2005b).
- Distinction: correlates of accelerations may differ from correlates of terminations of growth spells.
  - Crises, conflict, and macroeconomic instability are strongly correlated with the end of growth spells.
- Growth duration approach:
  - Berg, Ostry, and Zettelmeyer (2006) use survival analysis to relate probability that a growth spell will end to variables including democratic institutions, income inequality, health and education, external competitiveness, and macroeconomic stability.
  - Their conclusions broadly align with the benchmarking exercise.
  - Specific quantitative findings cited:
    - Reducing inflation from 50 to 10 percent halves the risk of a downbreak in growth in any given year.
    - Sharp currency depreciations (currency crises) following significant overvaluation are significant predictors of the end of growth spells.
  - Inequality appears to limit the duration of growth spells.

### Recent African Growth Experience
- Grouping rule: countries divided based on whether they attain a minimum threshold of per capita growth over the past decade (>2 percent).
  - Nineteen African countries had per capita growth over the last decade above 2 percent.
  - Thirty-one African countries were below this threshold (31 countries for which data are available).
- Aggregate statistics (Table 1a and Appendix Table 9 references in source):
  - Average GDP growth over the last decade: 4.5 percent unweighted and 4.1 percent weighted by population.
  - Average GDP per capita growth: 2 percent unweighted and 1.4 percent weighted.
  - Population growth remains high with less cross-country variation than income growth.
  - Per capita GDP growth slightly larger than per worker GDP growth due to faster labor force growth relative to population (demographic dividend).
- Recent trends and forecasts:
  - World Economic Outlook growth for Africa: 3.6 percent in 2004 and 3.5 percent in 2005.
  - IMF expectations: growth of 3.9 percent in 2006 and 3.7 percent in 2007.
  - Per capita growth rates in excess of 2 percent per annum are expected for most regions, except the CFA Franc Zone.
- Cross-country variation:
  - Several countries with per capita growth over 3 percent per annum; some were recovering from civil war (Liberia), others discovered oil (Angola, Cape Verde, Equatorial Guinea).
  - Examples of countries with growth above or close to 3 percent: Botswana, Lesotho, Mauritius, Mozambique, Rwanda, Tanzania, and Uganda.
  - Some countries continue to decline, with Zimbabwe the most notable outlier.
- Group 1 specifics:
  - Average growth in Group 1 was 4.8 percent per annum over 1996–2005.
  - If excluding Botswana (diamonds and good institutions), Angola, Chad, and Equatorial Guinea (oil), Liberia and Rwanda (rebound from civil conflict) and Mauritius (manufacturing export story and arguably good institutions), average growth was [text ends here].

*Source: _wp0752 - Section VII concludes.*

### 3.1 percent. (We adopt the terms Group 1 and Group 2 for convenience; we are not passing

### _wp0752 - 3.1 percent. (We adopt the terms Group 1 and Group 2 for convenience; we are not passing

### Growth comparisons and statistical tests
- A t-test was used where the null hypothesis is that there is no difference in means between the Group 1 African countries and the 12 Sustained Growth (SG) cases.
- The sample for the t-test includes the countries in Group 1 and the 12 SG countries.
- When the entirety of Group 1 is included, the test fails to reject the null hypothesis that average growth is the same as the SG cases.
- Outliers (the asterisked countries in Table 1a) drive this finding; after dropping those countries, average per capita growth was 3.1 percent.
- After dropping outliers, the 3.1 percent average per capita growth is significantly below what was experienced in the Sustained Growth benchmark countries.

### Are institutions likely to be a constraint?
- Table 2a focuses on Group 1 sub-Saharan African countries with relatively high recent growth; comparable data for Group 2 are in Appendix Table 10; Table 2b reports comparable data for Sustained Growth cases.
- Broad/general institutions (Polity dataset):
  - For SG cases at the time of acceleration (time T), average constraint on the executive score was 2.2.
  - 4 of the 12 SG cases had the lowest possible score—Chile, Korea, Thailand and Tunisia.
  - In Group 1 African countries today, the average Polity score is 3.8 and only one (Sudan) has the lowest possible score.
  - In terms of political institutions, most Group 1 African countries already have a higher score than did the SG cases when their accelerations began.
  - Conclusion: institutions are not today very strong, but potentially good enough in much of Africa so as not to be an obvious constraint on sustained growth.
- Inequality:
  - Levels of inequality today in Group 1 are close to the average for the Sustained Growth countries when the latter started their growth spurt.
  - This is promising in light of Berg, Ostry and Zettelmeyer (2006) regarding the importance of inequality for sustaining growth spurts.
- Historical measures of economic institutions (Adelman and Morris (1971) and mid-1980s data):
  - For countries that accelerated in the 1960s, by the mid-1980s the average score for Economic Risk was 31.7 (out of 50).
  - Investment Risk average was 7.1 (out of 12).
  - Vietnam had an Investment Risk score of 5.0 at the time of acceleration; China had 8.6.
  - Remarkably, Group 1 African countries have an average Economic Risk indicator of 31.7 and an Investment Risk just above 8.
  - Implication: broad economic institutions in much of Africa today are not worse than in many Sustained Growth cases 20 years earlier.
- Control of corruption (Kaufmann-Kraay index, transformed to range 1–6):
  - Data available only from the mid-1990s.
  - Half of the Sustained Growth countries had corruption scores of 3 or below in the mid-1990s.
  - This is not very different from the preponderance of Group 1 African countries as of 2005.
  - Testing differences in means: no difference in adjusted broad measures, but Group 1 has significantly higher corruption than was the case for Sustained Growth countries (data are for a later point in the SGs growth experience).

### Costs of doing business (micro-institutions)
- Data source: World Bank Doing Business database; units include hours of time and fraction of income per capita per annum.
- Tax compliance:
  - Average time for paying taxes: 229 hours in Group 1 African countries vs. 348 hours in Sustained Growth cases.
  - Total amount of tax payable: 45 percent of gross profits on average in Group 1; about the same as SG cases.
- Costs of entry (registering a new business), measured as percent of per capita income:
  - Average Group 1: 123 percent of per capita income.
  - SGs: 25 percent of per capita income.
  - Average developing country: 78 percent of per capita income.
  - T-test for differences in means confirms Africa has a disadvantage in costs of entry.
- Interpretation and implications:
  - Macro and micro institutional indicators may not co-move; they can measure distinct institutional functions.
  - Effective enforcement of laws (micro-level) may lag changes in laws/regulations (macro-level).
  - Measurement of micro-institutions requires further development; policy levers to reduce high costs of trading and doing business need further study.

### Conflict and societal fractionalization
- Conflict (Uppsala Armed Conflict Dataset):
  - In terms of “all conflicts,” Group 1 African countries are not significantly worse than SG countries at the start of their growth.
  - Interstate conflicts in the window T-9 to T: less conflict in Group 1 than in SGs.
  - Internal conflict: more in Africa; concentrated in a few countries but has spilled into wider regions (e.g., Sudan-Chad, Liberia-Sierra Leone, Democratic Republic of Congo and neighbors).
  - The potential for more intense and disruptive conflict in Africa should not be discounted.
- Fractionalization:
  - Measures of ethnic, religious, and linguistic fractionalization indicate all African countries (Groups 1 and 2) fare significantly worse than SG cases.
  - Recent reductions in internal African conflicts offer some optimism, but societal division tempers that optimism.

### Trade outcomes and policies
- Export performance:
  - SG cases: average increase in the ratio of manufacturing exports to GDP over their growth episode was 36 percentage points.
  - Example early increases (within first five years): Singapore +7.3 percentage points; Korea and Malaysia + about 2.5 percentage points.
  - Group 1 African countries: average export-GDP ratio 31 percent vs. 19 percent for SGs at time of accelerations.
  - Group 1 average remains 25 percent even after dropping asterisked countries.
  - Manufactured exports to GDP in Group 1 are generally close to SGs, after excluding Botswana, Lesotho, and Mauritius.
  - Apparel, footwear, textile exports are small (< 0.5 percent of GDP) in most Group 1 countries, similar to SGs at start.
  - Over the last ten years, no significant improvement in manufacturing or textiles exports from Africa is evident.
  - External environment: increased competition from Asian exporters (China, India, Vietnam) but SSA exporters benefit from virtually duty-free access in EU (Everything But Arms) and US (Africa Growth and Opportunity Act).
- Trade liberalization:
  - Aggregate evidence: countries tend to become more open as they grow.
  - Average percent of years a country has been open (since growth acceleration began) for SG cases: 58 percent.
  - Augmented Sachs-Warner measure:
    - Group 1 countries: 0.6 (out of 1).
    - SGs at comparable stage: 0.4.
    - Average developing country today: 0.5.
  - Interpretation: many African countries are quite liberal on trade by this measure.
- Exchange rate overvaluation (Frankel-inspired proxy using Penn World Tables and cross-section Balassa-Samuelson regression):
  - Metrics examined: average currency overvaluation (last 5 years for African countries; entire growth episode for SGs), longest consecutive spell of overvaluation, extent of overvaluation during that spell.
  - Sustained Growth cases: almost all avoided overvaluation during the growth period; average degree of overvaluation was minus 18 percent (i.e., substantially undervalued).
  - Group 1 average overvaluation: 7 percent.
  - Group 2 average overvaluation: 18 percent.
  - On average in Group 1, there either is now or has been substantial overvaluation in almost all cases, though today the problem is less marked on average.
  - Group 2 shows even greater degree and extent of overvaluation (on average 20 percent or so in recent years).
  - Spells of overvaluation (duration and magnitude) are important because of potential hysteresis effects and fixed costs of adjustment.

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2007/_wp0752.pdf*

### 6.4 years, while for Group 1 countries it is 13 years and for the Group 2 countries is 15 years.

### _wp0752 - 6.4 years, while for Group 1 countries it is 13 years and for the Group 2 countries is 15 years.

### Overvaluation: measurement, magnitudes, and persistence
- Overvaluation measure estimated from cross-section equation: log log iiipyαβε=++ where p is the log of the price level for country i in terms of the United States, and y the level of per capita PPP GDP. Overvaluation measure: log(log    ).iiiovervalpyαβ=−+
- The PPP relationship is estimated over the very long run; implicitly, the timeframe for estimating the PPP relationship is 300-400 years.
- Definition: Spells of overvaluation are consecutive periods for which the measure of overvaluation is positive.
- Average amounts and durations reported:
  - Average amount of overvaluation during the spell was 11 percent for the average SG country.
  - Average amount of overvaluation was 37 percent for the average African country.
  - The average African country is likely to have persistent overvaluation that is twice as long as for the average SG country and that is almost three times as large in magnitude.
  - Group comparisons: SSA countries and Group 1 countries are significantly worse off than the SGs on nearly all measures of overvaluation—average, duration and persistence (the statistical tests reject the hypothesis that the overvaluation measures for Group 1 countries and SGs are similar).
- Example: Sustained Growth countries avoided overvaluation even with substantial aid inflows; e.g., Indonesia, in the 10 year window around its acceleration, had aid-to-GDP of 24 percent.

### Exchange rate policy: constraints and political economy
- Two key constraints on sustaining a competitive real exchange rate:
  - Changes in the real exchange rate have serious distributional consequences, especially in Africa, implying deeper political economy constraints on exchange rate choices.
  - Ability to sustain a competitive exchange rate aided by caution in opening to capital flows (e.g., East Asia, China, India, Tunisia); Latin America has experienced periodic currency appreciation driven by surges in capital flows.
- Aid inflows have put upward pressure on the exchange rate in Africa even without large private capital flows.
- Reconciling the need for a competitive exchange rate with constrained ability to achieve it (given political economy and aid factors) is identified as a major challenge for African countries.

### Costs of importing and exporting: macro vs micro discrepancy
- Broad measures vs micro measures:
  - Group 1 countries in SSA are comparable to—or even better than—other developing countries on broad measures of trade policy (trade restrictiveness rankings and Sachs-Warner openness measures).
  - On micro measures of trading costs, Group 1 countries do worse.
- Import/export document and duration measures:
  - Average Group 1 country: about 12 documents and 57 days to undertake imports.
  - Sustained Growth (SG) countries: 9 documents and 21 days for imports.
  - Average developing country: 11 documents and 37 days for imports.
  - The average developing country’s import duration is about 25 percent better than for the average Group 1 country (comparison of 37 days versus 57 days).
- Similar discrepancies exist on the export side.
- Interpretation:
  - Macro measures may be too coarse and less informative than micro measures, or implementation lags behind broad policy reform.
  - Figures suggest scope for remedial action to improve the micro-environment for importing and exporting.

### Other potential constraints — Education
- Educational attainment measures are gross primary and secondary enrollment ratios at the time of the growth spurt.
- Reported averages:
  - Average enrollment ratio in primary education for the Group 1 countries was 91 compared with 95 for the SGs.
  - Comparable figures for secondary education: 32 and 36 percent, respectively.
- Caveat: These measures do not adjust for the quality of education.

### Other potential constraints — Health and infrastructure
- Health: life expectancy and health-system proxies
  - Life expectancy reported for two years: 1982 and the most recently available data.
  - Group 1 life expectancy: 49.6 years in 1982 and 48.2 years in the most recently available data.
  - Some rapidly growing Group 1 countries had very low life expectancy—for example, 42 years in Ethiopia and Mozambique.
  - Group 2 life expectancy: 50.9 years in 1982 and 48.8 years in the most recently available data.
  - These figures are significantly poorer than those for the SGs at the start of their growth episodes.
  - Example: Indonesia was the only Sustained Growth country with such low life expectancy at the start of its acceleration—46 in 1967.
  - Other SG cases started with life expectancy in the low 50s (e.g., Egypt, Korea, Thailand, and Tunisia); India had a life expectancy of 54 in the early 1980s.
  - Evidence on whether health is a binding constraint on sustained growth is inconclusive; improving health can increase incomes but available evidence suggests the size of the effect is small.
- Health-system capacity (physicians per million)
  - Group 1 countries: on average 150 physicians per million inhabitants.
  - Excluding exceptional starred cases, this falls to 88 per million.
  - Korea had 600 per million at the time of its acceleration.
  - Indonesia had 37.3 doctors per million at the relevant time.
  - Thailand had 129 doctors per million at the relevant time.
  - Some SGs had comparable low physician availability when they started to grow rapidly.
- Infrastructure proxies: telephone mainlines and roads
  - Many SG cases were worse off on these proxies when they started to grow than Africa is today.
  - Example: China, Vietnam and Indonesia had two or fewer mainlines per 1,000 people.
  - Indonesia had 1.5 mainlines per 1,000 at a point when it had already been growing for 10 years.
  - Roads are harder to compare due to terrain and surface quality differences; data availability is limited.

*Source: _wp0752 - 6.4 years, while for Group 1 countries it is 13 years and for the Group 2 countries is 15 years.*

### 1990. Still they indicate that roads per surface area in the Sustained Growth cases were not

### _wp0752 - 1990. Still they indicate that roads per surface area in the Sustained Growth cases were not

### Infrastructure comparisons: roads, public investment, and health
- Roads per surface area in the Sustained Growth (SG) cases were not generally much more developed than in the Group 1 African countries (with the notable exception of Singapore).
- Example: road infrastructure in Indonesia and Thailand (in 1990) was quite comparable to many African countries (today).
- The t-test indicates no significant difference in means for Group 1 African countries and the sustained growth cases in terms of roads.
- Overall assessment:
  - “While more infrastructures are presumably better than less, there is no evidence that the Sustained Growth countries took off after a massive push in terms of public investment (including health).”
  - “They may have been slightly healthier than Africa today, but their overall infrastructure was at comparable levels.”

### Comparisons with historical East Asia and alternative benchmarks
- Comparison with Korea in the 1950s or 1960s may be misleading because of the Korea war and associated U.S. military-related investments (e.g., in roads), which may have given Korea an unusual starting point.
- A comparison with Indonesia in the mid-1960s may be more instructive.
- Conclusion: “At least the Group 1 African countries have no significant disadvantage” relative to some East Asian cases at comparable starting points.

### Conclusions: prospects, deep determinants, and proximate policy levers
- Two broad perspectives on Africa’s prospects:
  - Deep determinants view (geography, institutions, history) — outlook seems bleak.
  - Optimistic view (commodity upturn or effective policy levers such as foreign aid) — outlook rosier.
- The paper’s contribution:
  - Compares Africa today with countries that were similarly weak in the past (in institutional development) yet escaped poverty.
  - Evidence suggests (but does not prove) that deep indicators for a group of “promising” African countries are not much worse today than they were in East Asia in the early 1960s (e.g., Indonesia and Thailand) or in Vietnam and China circa 1980.
  - “Inherited institutional weaknesses in Africa—and internal conflict and societal fractionalization remain concerns—but the East Asian experience definitely demonstrates that some institutional weaknesses can be escaped.”
  - “Breaking away from a country’s institutional legacy is possible because it has been done by others, including some East Asian countries which were not that dissimilar from some promising performers in Africa today.”
- Proximate “how” for escapes from poverty:
  - Since the 1960s, escapes from poverty in the face of weak institutions have generally involved exports and—in almost all cases—manufacturing exports.
  - Africa need not follow exactly the same route, but “a stronger and more dynamic manufacturing export sector would surely help sustain growth.”
  - Essential policy measures:
    - Reducing the direct regulatory costs for exporters.
    - Avoiding real exchange rate overvaluation.
  - Risks for Africa that were less of an issue for East Asian escapees:
    - Commodity-based growth.
    - Sizable aid inflows.
  - These risks “can be pitfalls for institutional development and the avoidance of real exchange rate overvaluation.”
  - Net assessment: “Sub-Saharan Africa’s escape from poverty, while certainly possible, may be more challenging than it was for east Asia. Clearly, fatalism is unwarranted but the means of escape need to be found.”

### Selected quantitative highlights from tables (preserve source values)
- Group 1: Sub-Saharan African Countries with Growth >= 2.0% — sample averages (1996-2005 unless noted):
  - Average Real Per Capita GDP Growth: 4.8
  - Average Real Per Worker GDP Growth: 4.9
  - Average Real GDP Growth: 7.3
  - Average PPP Real GDP Per Capita (Constant 2000 $): 2,810
  - Average GDP (Current US$ Millions): 5,435
  - Average Population Growth: 2.5
  - Average Population (Millions): 14.9
  - P-value for T-test: mean for Group 1 equals mean for SGs: 0.98 and 0.77 (two reported figures)
- Sustained Growth Countries (SGs) — sample averages (period T to 2005):
  - Average Real Per Capita GDP Growth: 4.8
  - Average Real GDP Growth: 6.7
  - Average PPP Real GDP Per Capita at Time T: 3,021.5
  - Average Latest PPP Real GDP Per Capita (Constant 2000 $): 9,564.7
  - Average Latest GDP (Current US$ Millions): 366,181.8
  - Average Population Growth: 1.8
  - Average Latest Population (Millions): 169.0
  - Average Real Per Worker GDP Growth: 4.5
- Institutions and costs (Group 1 averages and SGs):
  - Group 1 Average: Constraint on the Executive 3.8; Economic Risk 31.7; Investment Risk 1.7; Control of Corruption 3.0; Gini 44.5; Time for Paying Taxes (hours/year) 228.9; Total Amount of Tax Payable (% of gross profits) 45.0; Costs of Entry (% per capita income) 122.9
  - Sustained Growth Countries (SGs) average: Constraint on the Executive 2.2; Economic Risk 31.7; Investment Risk 7.1; Control of Corruption 3.4; Gini 39.5; Time for Paying Taxes 347.6; Total Amount of Tax Payable 44.2; Costs of Entry 25.4
  - P-values indicating differences: e.g., P-value for T-test: mean for Group 1 (excl. asterisked countries) equals mean for SGs for Constraint on the Executive 0.000, Economic Risk 0.01, Control of Corruption 0.43, Costs of Entry 0.00 (as reported)
- Conflicts (Group 1 averages and SGs):
  - Group 1 Average All Conflicts mean: 0.8; max: 1.4
  - Sustained Growth Countries (SGs) Average All Conflicts mean: 0.5; max: 1.8
  - Various p-values reported for T-tests; examples include 0.42, 0.53, 0.54 etc. for different conflict categories and time windows.
- Social fractionalization:
  - Group 1 averages (various measures): Ethnic (Easterly & Levine) 0.68; Ethnic (Fearon) 0.70; Religious (Fearon) 0.54; Ethnic (Alesina et al.) 0.65; Linguistic (Alesina et al.) 0.71; Religious (Alesina et al.) 0.53
  - SGs averages: Ethnic (Easterly & Levine) 0.30; Ethnic (Fearon) 0.33; Religious (Fearon) 0.30; Ethnic (Alesina et al.) 0.32; Linguistic (Alesina et al.) 0.29; Religious (Alesina et al.) 0.42
  - P-values for T-test: mean for Group 1 equals mean for SGs: multiple reported as 0.00 for many measures.
- Trade outcomes (Group 1 and SGs):
  - Group 1 Average Total Exports to GDP: 31.0; Manufacturing Exports to GDP: 8.2; Apparel, Footwear and Textiles to GDP: 4.3; Fuel & Ore Exports to GDP: 3.2; Agriculture & Food Exports to GDP: 6.5
  - Sustained Growth Countries (SGs) — Initial averages: Total Exports to GDP 19.1; Manufacturing Exports to GDP 2.2; Apparel, Footwear and Textiles to GDP 1.1; Fuel & Ore Exports to GDP 4.2; Agriculture & Food Exports to GDP 7.8
  - Sustained Growth Countries (SGs) — Latest averages: Total Exports to GDP 48.9; Manufacturing Exports to GDP 24.9; Apparel, Footwear and Textiles to GDP 5.0; Fuel & Ore Exports to GDP 5.6; Agriculture & Food Exports to GDP 5.5
- Macroeconomic and trade policies:
  - Group 1 Average Balassa-Samuelson: 6.8; Average Currency Overvaluation: 13.3; Trade Restrictiveness (Sachs-Warner-Welch-Wacziarg): 0.70? (table reports mixed values)
  - SGs Average (at start T): Average Currency Overvaluation -17.7; Largest Consecutive Spell of Overvaluation in Years Since 1970: 6.4; Average Overvaluation during Largest Spell: 11.4; Inflation 14.6; Trade Restrictiveness 0.4; Aid to GDP 4.7
- Costs of trading (Group 1 averages and SGs):
  - Group 1 Average No. of Documents Required to Export: 7.6; No. of Signatures Needed to Export: 18.9; Time for Export Procedures (calendar days): 44.8; No. of Documents Required to Import: 12.1; No. of Signatures Needed to Import: 28.3; Time for Import Procedures: 56.7
  - SGs Average (at T): No. of Documents Required to Export 6.6; No. of Signatures Needed to Export 6.5; Time for Export Procedures 19.1; No. of Documents Required to Import 9.4; No. of Signatures Needed to Import 8.0; Time for Import Procedures 21.3
  - Developing world comparators: e.g., Time for Export Procedures 29.4; Time for Import Procedures 36.6
- Social and physical infrastructure (selected values):
  - Group 1 Average Primary Education: 91.4; Secondary Education: 31.8; Life Expectancy 48.2? (table mixes columns)
  - SGs Average (at T): Primary Education 95.3; Secondary Education 35.9; Physicians (per million people) 59.5; Telephone Mainlines (per 1,000 people) 64.7; Total Roads per Surface Area (km) 522.5; Life Expectancy and other year-specific indicators are reported in Tables 8b and 8c with exact years per country.

### Policy implications and priorities (as reported)
- Prioritize policies that expand manufacturing exports:
  - Reduce direct regulatory costs for exporters.
  - Improve trade facilitation to lower time and procedures for exports and imports (see differences in Doing Business indicators in Tables 7a/7b).
- Maintain avoidance of real exchange rate overvaluation:
  - Monitor currency overvaluation metrics and limit prolonged spells of overvaluation (Tables 6a/6b report averages and largest spells).
- Be cautious about relying on commodity booms and large aid inflows:
  - Recognize risks to institutional development and exchange rate management.
- Institutional improvement remains important but historical comparisons suggest that some institutional weaknesses can be overcome alongside export-led strategies.

*Italicized final attribution: Source: _wp0752 (excerpts provided from the PDF content unit)._

### Appendix Data and Sources

### _wp0752 - Appendix Data and Sources

### Data and Variable Definitions
- Economic growth: Annual average per capita GDP growth — Source: World Development Indicators (WDI).
- Political institutions: Constraint on the executive (assessment of the operational (de facto) independence of the chief executive). Values range from 1-7, with higher score denoting better institutions — Source: Polity IV.
- Manufacturing exports to GDP: Manufacturing exports exclude agricultural raw materials, food, minerals and ores, and fuels — Sources: WDI; World Integrated Trade Solution (WITS).
- Apparel, footwear and textile exports: SITC categories 26, 65, 84, and 85 — Source: WITS.
- Exports of fuel and ore and agricultural products — Source: WDI.
- Trade openness: Dummy taking value of 1 if country is considered open (as defined in Sachs and Warner, 1985) and 0 otherwise — Source: Wacziarg and Welch, 2003 (which updates Sachs and Warner, 1985).
- Exchange rate overvaluation: Measure of deviation of a country’s actual real exchange rate from a benchmark PPP exchange rate. Details described in the text — Source: Staff estimates.
- Aid: Ratio of net overseas development assistance to GDP and includes all multilateral and bilateral assistance, including debt relief — Source: OECD’s DAC database.
- Size of government: Ratio of real government consumption to GDP — Source: PWT.
- Fiscal position: Ratio of general government fiscal balance (after grants) to GDP — Source: World Economic Outlook (WEO).
- Nominal instability: Measured as the logarithm of the annual average percentage change in the nominal parallel market exchange rate — Source: Satyanath and Subramanian (2004).
- Primary education: Gross primary schooling enrollment ratio (definition and variation by country described) — Source: WDI.
- Secondary education: Gross secondary schooling enrollment ratio — Source: WDI.
- Inequality: Gini coefficient of income inequality — Source: WDI.
- Economic institutions: Assessment of factors affecting risk to investment. Sum of three subcomponents (contract viability/expropriation, payments delays, and profits repatriation), each 0–4 points; total ranges 0 (high risk) to 12 (low risk) — Source: International Country Risk Guide Economic Rating (ICRG-ER).
- Business environment/Trading costs: Costs per capita of starting a business; measures of costs of imports and exports — Source: World Bank’s Doing Business Database.
- Measures of social and physical infrastructure — Source: WDI.

### Country Indicators and Key Statistics (selected aggregates and examples)
- Table scope and notes:
  - Source: World Development Indicators (WDI, November 2006 download), unless otherwise indicated.
  - All variables are averages for the period 1996-2005, unless otherwise indicated.
  - Weighted averages are by population where noted.

- Group 2 (Sub-Saharan African Countries with Growth < 2.0 percent) — sample country entries (period averages, 1996-2005 unless noted):
  - Benin: Real Per Capita GDP Growth 1.69; Real Per Worker GDP Growth 1.85; Real GDP Growth 4.71; PPP Real GDP Per Capita (Constant 2000 $) 959; GDP (Current US$ Millions) 2,850; Population Growth 3.08; Population (Millions) 7.4.
  - Burundi: Real Per Capita GDP Growth -1.94; Real Per Worker GDP Growth -1.55; Real GDP Growth 0.43; PPP Real GDP Per Capita 607; GDP 760; Population Growth 2.03; Population 6.7.
  - Congo, Dem. Rep.*: Real Per Capita GDP Growth -2.92; Real Per Worker GDP Growth -2.87; Real GDP Growth 0.10; PPP Real GDP Per Capita 702; GDP 5,650; Population Growth 2.46; Population 51.2.
  - Nigeria: Real Per Capita GDP Growth 1.39; Real Per Worker GDP Growth 1.40; Real GDP Growth 4.25; PPP Real GDP Per Capita 916; GDP 50,400; Population Growth 2.36; Population 119.0.
- Averages (Group 2 sample):
  - Average (Group 2): Real Per Capita GDP Growth 0.04; Real Per Worker GDP Growth 0.10; Real GDP Growth 2.7; PPP Real GDP Per Capita 2,533; GDP 10,328; Population Growth 2.4; Population 13.6.
  - Average (excl. * countries in group 2): Real Per Capita GDP Growth 0.24; Real Per Worker GDP Growth 0.34; Real GDP Growth 2.6; PPP Real GDP Per Capita 2,756; GDP 11,182; Population Growth 2.4; Population 12.9.
  - Average Sub-Saharan Africa: Real Per Capita GDP Growth 1.97; Real Per Worker GDP Growth 2.1; Real GDP Growth 4.5; PPP Real GDP Per Capita 2,644; GDP 8,350; Population Growth 2.4; Population 14.1.
  - Weighted Average Sub-Saharan Africa: Real Per Capita GDP Growth 1.44; Real Per Worker GDP Growth 1.51; Real GDP Growth 4.15; PPP Real GDP Per Capita 1,720; Population Growth 2.38 (note: GDP column has "..." for some entries).

### Institutions, Costs of Doing Business, and Risk Indicators (selected entries and averages)
- Variables and data sources for Table 10: WDI; ICRG; Polity IV; World Bank Doing Business website.
- Example country values (Group 2):
  - Uganda (for reference in table): Real Per Capita GDP Growth 4.1; Constraint on the Executive 3.0; Economic Risk 33.5; Investment Risk 9.0; Control of Corruption 2.8; Gini 237.0; Time for Paying Taxes (hours per year) 42.9; Total Amount of Tax Payable (as % of gross profits) 117.8.
  - Benin: Real Per Capita GDP Growth 1.55; Gini 62; Time for Paying Taxes 70 hours; Total Amount of Tax Payable 68.5; Costs of Entry (measured in % per capita income) 173.3.
  - Nigeria: Real Per Capita GDP Growth 1.85; Economic Risk 28.6; Investment Risk 6.5; Control of Corruption 1.3; Gini 44; Time for Paying Taxes 31.4 hours; Total Amount of Tax Payable 54.4; Costs of Entry 31.4.
- Group averages (Group 2):
  - Average: Real Per Capita GDP Growth 0.22; Constraint on the Executive 4.02; Economic Risk 29.9; Investment Risk 7.2; Control of Corruption 2.1; Gini 49.0; Time for Paying Taxes 330.9 hours; Total Amount of Tax Payable 87.0; Costs of Entry 153.5.
  - Average (excl. * countries) and Sustained Growth Countries (SGs) values are reported separately in the table.

### Conflict Indicators (Table 11)
- Source: PRIO / Uppsala Armed Conflict Dataset (Gleditsch et al 2005).
- Coding: 0: No conflict; 1: Minor (at least 25 deaths per year for every year in the period); 2: Intermediate (more than 25 but fewer than 1000 deaths per year); 3: War (at least 1000 deaths per year). T refers to year 2000 for Sub-Saharan African Countries.
- Group 2 summary (selected):
  - Many Group 2 countries show instances of internal and all conflicts with values 1, 2, or 3 across mean and max columns (examples: Burundi, Congo, Dem. Rep., Sierra Leone).
  - Averages (Group 2): Mean values reported as 1.3 (for multiple categories); Max values correspondingly higher; example average row shows 1.3, 1.3, 1.3, 1.3, 0.6, 0.6, 0.5, 0.5, 0.2, 0.2, 0.4, 0.4 across conflict categories.
  - Sustained Growth Countries (SGs) conflict means and maxima reported: 0.5, 1.8, 0.6, 1.9, 0.1, 0.3, 0.1, 0.4, 0.4, 1.6, 0.5, 1.8.

### Social Fractionalization (Table 12)
- Sources: Easterly and Levine (2003); Fearon (2003); Alesina et al. (2003).
- Measures included: Ethnic (Easterly and Levine, 1997), Ethnic (Fearon, 2003), Religious (Fearon, 2003), Ethnic (Alesina et al., 2003), Linguistic (Alesina et al., 2003), Religious (Alesina et al., 2003).
- Group 2 averages:
  - Average Ethnic (Easterly and Levine) 0.65; Ethnic (Fearon) 0.72; Religious (Fearon) 0.46; Ethnic (Alesina et al.) 0.66; Linguistic (Alesina et al.) 0.61; Religious (Alesina et al.) 0.50.
- Selected country examples:
  - Nigeria: Ethnic (Easterly and Levine) 0.87; Ethnic (Fearon) 0.80; Religious (Fearon) 0.58; Ethnic (Alesina et al.) 0.85; Linguistic (Alesina et al.) 0.85; Religious (Alesina et al.) 0.74.
  - Burundi: Ethnic (Easterly and Levine) 0.04; Ethnic (Fearon) 0.33; Religious (Fearon) 0.55; Ethnic (Alesina et al.) 0.30; Linguistic (Alesina et al.) 0.30; Religious (Alesina et al.) 0.52.

### Trade Outcomes (Table 13)
- Sources: WDI (November 2006 download) and WITS database.
- Definitions and notes:
  - Manufacturing corresponds to SITC categories 5, 6, 7, and 8 (excluding category 68). Data for manufacturing and apparel categories generally refer to 1995-2000 unless otherwise specified.
  - Apparel, Footwear and Textiles correspond to SITC categories 26, 65, 85, and 84.
- Group 2 sample values (percent of GDP unless noted):
  - Benin: Total Exports to GDP 13.5; Manufacturing Exports to GDP 0.7; Apparel, Footwear and Textiles to GDP 4.9; Fuel & Ore Exports to GDP 0.0; Agriculture & Food Exports to GDP 7.0.
  - Nigeria: Total Exports to GDP 53.1; Manufacturing Exports to GDP 1.0; Apparel, Footwear and Textiles to GDP 0.1; Fuel & Ore Exports to GDP 38.5; Agriculture & Food Exports to GDP 0.1.
  - South Africa: Total Exports to GDP 26.6; Manufacturing Exports to GDP 11.9; Apparel, Footwear and Textiles to GDP 0.5; Fuel & Ore Exports to GDP 5.3; Agriculture & Food Exports to GDP 2.4.
- Averages (Group 2):
  - Average Total Exports to GDP 43.8; Average Manufacturing Exports to GDP 5.7; Average Apparel, Footwear and Textiles to GDP 1.4; Average Fuel & Ore Exports to GDP 5.8; Average Agriculture & Food Exports to GDP 8.9.
  - Average (excl. Swaziland): Total Exports to GDP 41.9; Manufacturing Exports to GDP 4.2; Apparel, Footwear and Textiles to GDP 0.9; Fuel & Ore Exports to GDP 6.0; Agriculture & Food Exports to GDP 8.4.

### Macroeconomic and Trade Policies and Outcomes (Table 14)
- Variables shown: Average Currency Overvaluation; Largest Consecutive Spell of Overvaluation in Years Since 1970 (Years of Spell); Average Overvaluation during Largest Spell; Inflation; Trade Restrictiveness (Sachs-Warner-Welch-Wacziarg score); Aid to GDP.
- Group 2 highlights (selected entries):
  - Benin: Average Currency Overvaluation 29.2; Largest Consecutive Spell Years 15.0; Years of Spell 1986 to 2000; Average Overvaluation during Largest Spell 30.3; Inflation 5.4; Trade Restrictiveness 1.0; Aid to GDP 9.5.
  - Nigeria: Average Currency Overvaluation 125.6; Largest Consecutive Spell Years 31.0; Years of Spell 1970 to 2000; Average Overvaluation during Largest Spell 94.1; Inflation 13.5; Trade Restrictiveness 0.0; Aid to GDP 0.8.
  - Zambia: Average Currency Overvaluation 64.6; Largest Consecutive Spell Years 16.0; Years of Spell 1970 to 1985; Average Overvaluation during Largest Spell 33.3; Inflation 18.3; Trade Restrictiveness 1.0; Aid to GDP 20.4.
- Averages:
  - Group 2 Average: Average Currency Overvaluation 18.2; Largest Consecutive Spell 15.3 years; Average Overvaluation during Largest Spell 26.6; Inflation 8.7; Trade Restrictiveness 0.4; Aid to GDP 15.0.
  - Sustained Growth Countries (SGs) summary: Average Currency Overvaluation -17.7; Largest Consecutive Spell 6.4; Average Overvaluation during Largest Spell 11.4; Inflation 14.6; Trade Restrictiveness 0.4; Aid to GDP 4.7.
- Notes on computation:
  - Overvaluation computation described in main text.
  - Trade restrictiveness score ranges from 0 to 1, with higher values denoting more open regimes.

### Costs of Trading and Doing Business (Tables 15)
- Source: World Bank Doing Business websites (Trading Across Borders survey of January 2006; some items from January 2005).
- Selected Group 2 metrics (units as in table):
  - Benin: No. of Documents Required to Export 8; No. of Signatures Needed to Export 10; Time for Export Procedures (calendar days) 35; No. of Documents Required to Import 11; No. of Signatures Needed to Import 14; Time for Import Procedures 48.
  - Kenya: No. of Documents Required to Export 11; No. of Signatures Needed to Export 15; Time for Export Procedures 25; No. of Documents Required to Import 9; No. of Signatures Needed to Import 20; Time for Import Procedures 45.
  - Nigeria: No. of Documents Required to Export 11; No. of Signatures Needed to Export 39; Time for Export Procedures 25; No. of Documents Required to Import 13; No. of Signatures Needed to Import 71; Time for Import Procedures 45.
- Averages:
  - Group 2 Average: No. of Documents Required to Export 8.8; No. of Signatures Needed to Export 18.5; Time for Export Procedures 36.2 days; No. of Documents Required to Import 12.4; No. of Signatures Needed to Import 30.9; Time for Import Procedures 47.3 days.
  - Sustained Growth Countries (SGs): 6.6 documents to export; 6.5 signatures; 19.1 days for export procedures; 9.4 documents to import; 8.0 signatures; 21.3 days for import procedures.
  - Developing world comparators listed: 7.5 documents; 12.6 signatures; 29.4 days for export; 10.6 documents; 19.1 signatures; 36.6 days for import.

### Social and Physical Infrastructure (Table 16, selected)
- Variables: Primary Education (gross enrollment ratio), Secondary Education (gross enrollment ratio), Latest life expectancy or related indicator (column heading "Latest 3 1982" in table), Physicians (per million people), Telephone Mainlines (per 1,000 people), Total Roads per Surface Area (in km).
- Group 2 averages (selected):
  - Average Primary Education 88.9; Average Secondary Education 34.6; Latest life/health indicator 48.8; Physicians (per million people) 50.9; Telephone Mainlines (per 1,000 people) 2.1; Total Roads per Surface Area 154.7 (units as in table).
  - Sustained Growth Countries (SGs) comparators: Primary Education 95.3; Secondary Education 35.9; Latest indicator 59.5; Physicians 64.7; Telephone mainlines 22.5; Total Roads per Surface Area 203.9.
- Selected country examples:
  - Benin: Primary Education 92.5; Secondary Education 23.8; Physicians 55; Telephone Mainlines 14; Total Roads per Surface Area 5960.
  - South Africa: Primary Education 105.5; Secondary Education 88.6; Physicians 45; Telephone Mainlines 587; Total Roads per Surface Area 70105302.
- Notes:
  - Primary and secondary education are measured as gross enrollment ratios.
  - Data are for the most recent period available after 2000, except for SGs where indicated.
  - Some country entries contain "n.a." where data are not available.

*Source: Appendix Data and Sources, _wp0752 - Appendix Data and Sources (tables and variable definitions as presented).*

### References

### References

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*Source: _wp0752 - References*

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