made sure old industrial policy did not hamper information technology •made moves towards privatising electricity and telecommunications •continue to remove license restrictions on imports •Results are decade and half of “Hindu rate of growth” 6% per year real GDP 7.3Conclusion •Still much to be done •Electricity sector •Internal tarrifs •Much red tape in federal government •If growth does continue in face of erratic public sector performance then most important factors were those which changed in 1980s oShift towards international integration: exports and FDI oShift in entrepreneurial attitudes (Rajiv Gahndi and his ministers were ex-businessmen and not politicians) oBelieve that the old Nehru dynasty order came to an end •If reform stagnates oIndian real growth will slow over next decade oReform will have to be institutionalized over generations 8.Critically assess reasons for Africa's poor economic growth after 1970 8.1Distinction between proximate and fundamental sources of growth ❖Proximate sources ogrowth through physical and human capital accumulation; ogrowth through technological change reflecting shifts in the world production ofrontier; ogrowth through technological catch-up involving movement toward the world production frontier.
Page 9 of 39 oand also to variables which influence the productivity of these inputs, such as scale economies ❖Fundamental sources orelate to those variables that have an important influence on a country’s ability and capacity to accumulate factors of production and invest in the production of knowledge. oFor example, Temple (1999) considers the following ‘wider’ influences on growth: ▪population growth, ▪the influence of the financial sector, ▪the general macroeconomic environment, ▪trade regimes, ▪the size of government, ▪income distribution ▪the political and social environment. oGallup et al. add the neglected influence of geography oMove from proximate to fundamental shifts the focus of attention ▪to the institutional framework of an economy, ▪to its ‘social capability’ ▪‘social infrastructure’ or▪‘ancillary variables’ (Baumol et al., 1994). oThere is now widespread acceptance of the idea that ‘good’ governance and institutions and incentive structures are an important precondition for successful growth and development 8.2Background to slow growth ❖After Africa was becoming increasingly de-colonized in the late 1950’s and early 60’s, economic growth was on the on the increase. Outlook was positive. ❖Self determination seemed to be a nexus of economic growth. ❖However, this positive trend was soon reversed in the 1970’s.❖In numerous African countries, colonial powers were replaced by dictators and autocracies. ❖The net result is best displayed in the slow and sometime negative growth of the late 1970’s and the 1980’s. ❖The culmination of which is a culminated net negative GDP growth of - 1.45% in 1983 in Sub Sahara Africa (World Bank Data).
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