Description:
Sub-Saharan Africa's dismal
development outcomes -- growth collapse and declining real
income -- are often used to highlight its sharp development
contrast with other regions of the developing world. Drawing
on a large cross-section analysis, this paper shows that
Africa's underlying dismal records can also be largely
accounted for by the skewed distribution of growth in the
post-independence era. In particular, structurally low
investment rates in a context of high political risk and
uncertainty undermined growth prospects in the region.
However, counterfactual simulations based on a variation of
neoclassical growth models and under the hypothetical
equalization of political risk profile alternative result in
large economic returns, reflected in the significantly
higher level of aggregate output and income in the subset of
conflict-affected countries. Income gets even higher when
the hypothetical reduction of political risks alternative is
accompanied by sustained increases in capital accumulation.