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F and D logo
A quarterly magazine of the IMF
  December 2006
Volume 43, Number 4

Africa: Making Its Move

Right Time for Africa

Abdoulaye Bio-Tchané and Benedicte Vibe Christensen
After decades of macroeconomic instability and high inflation in Africa, things seem to be changing for the better. This issue of F&D examines current trends and discusses how African countries can build on the growth opportunities afforded by the current global environment, recent debt relief, and the prospect of stepped-up aid flows to invest in human and capital development and thereby promote sustainable growth.

Making Aid Work
Mark Sundberg and Alan Gelb
Sub-Saharan Africa has received almost $650 billion in aid since 1960, but much of it has not been used effectively. This picture is evolving in ways that augur well for better-quality and more effective aid in the future.

Bankable Assets
Jakob Christensen, Anne-Marie Gulde, and Catherine Pattillo
Lacking sound, deep, and efficient financial sectors, sub-Saharan Africa is unable to meet its populations' large needs for financial services. This environment is slowly improving, but more and faster reform is required to enable countries to benefit from the changes that have already taken place.

Unblocking Trade
Sanjeev Gupta and Yongzheng Yang
In 2005 and 2006, Africa registered its strongest growth performance in decades. But growth still falls short of the 7 percent needed for Africa to halve the 1990 level of poverty by 2015. To raise living standards, the continent could better exploit its trade potential, which will require reform on many fronts.

Beyond the Ballot Box
Robert H. Bates
It was once thought that Asia's economic growth performance since the end of colonialism was better than Africa's because of differences in economic policies. However, despite political reforms in Africa, economic policies did not always improve. This article explores the link between democratic institutions and economic performance.

spacer Taking Care of Business
Michael Klein
Analysts believe that African economies have a good chance of achieving growth rates of almost 10 percent and, by 2050, of reaching the income level of recent entrants to the European Union. To do so, Africa should improve its business climate, strengthen education, and develop infrastructure.

Enticing Investors
Calvin McDonald, Volker Treichel, and Hans Weisfeld
African countries have taken steps to lure investors, which they desperately need to create jobs and raise living standards. But more can be done to attract foreign capital, especially to sectors that have a large employment impact.

Point of View
Out of the Trap
Ambroise Fayolle
An official of the French Treasury Department offers his perspective on how the international community can better help African countries recovering from conflict or plagued by weak institutions and policies. He discusses the need for a special development approach for these fragile countries, including, for example, better donor coordination, a new financing instrument, and a different approach to debt relief.

Spend Now or Save?
Paul Toungui
Africa's oil-producing countries, including Gabon, are enjoying windfall oil revenues. Gabon's Minister of State discusses the mistakes his country made with revenues from a past oil boom and suggests that a combination of spending and saving is a better way for oil producers to manage the current oil windfall.

Also in This Issue

Getting Real on Health Financing
George Schieber, Lisa Fleisher, and Pablo Gottret
Although bountiful attention and money have been devoted to improving the health of the world's poor, the situation remains dire. This article looks at the motivations and constraints that govern both donors and recipients and suggests that the global community needs to reconcile national interests with global public needs.


Letter from the Editor

Letters to the Editor
Corruption taking its toll on growth; Financial sector is key to African growth; A missed opportunity

In Brief

Paying a high price for polluted water
Teachers wanted
Remittance flows top $268 billion

People in Economics

Navigating Uncharted Waters
Camilla Andersen
Otmar Issing, the first chief economist of the European Central Bank (ECB), was instrumental in the implementation of monetary union in Europe. He speaks to F&D about the euro, the ECB's inflation strategy, and Europe's current disappointing growth performance.

Picture This

The Slowdown in Global Housing Markets
Tim Callen, Marco Terrones, and Angela Espiritu
After a period of sharp price rises and strong activity, housing markets in some industrial countries have slowed. Although this downturn has led to slower growth in these countries, the impact to date has been manageable. It's too soon to say how U.S. growth will be affected.

Back to Basics

Do Current Account Deficits Matter?
Atish Ghosh and Uma Ramakrishnan
Not surprisingly, the answer to the title question is that "it depends." Economic theory tells us that whether a deficit is good or bad depends on the factors that give rise to the deficit but also tells us what to look for in assessing the desirability of a deficit. But a deficit can be a warning signal of overconsumption.

Book Reviews

Globalization and Its Enemies, Daniel Cohen

Capital and Collusion: The Political Logic of Global Economic Development, Hilton Root

Conversations on Russia: Reform from Yeltsin to Putin, Padma Desai

The Accidental President of Brazil: A Memoir, Fernando Cardoso

Straight Talk

The Great Game Again?
Raghuram Rajan
Countries' current attempts to acquire commodity-producing firms as a way of ensuring their economic security in the face of declining commodities seem to mirror the 19th-century struggle among powerful countries to acquire influence in the Middle East and Central Asia. These attempts also violate good business sense.

Country Focus

Central African Economic and Monetary Community (CEMAC)
The recent oil boom has boosted growth in the eight CEMAC countries and improved their macroeconomic balances. But they now need to liberalize trade and improve their business climates.

List of Articles in 2006