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Growth Without Development in West Africa: Is It a Paradox?

Abstract In the last 15 years, countries in West Africa have had reasonable growth rates averaging about 5 %; growth has been propelled by high prices of commodity exports. The paper examined whether growth has resulted in economic development of the sub-region. The lack of consistent data on relevant economic and social variables such as unemployment, primary and secondary school completion rates prevent a robust analysis of the growth—development nexus. Nonetheless, panel regression results show that public investment and democracy are positively related to economic development while lack of access to sanitation and water reveal a negative relationship to development. In addition, stylized facts show that marginal gains were achieved as regards development indicators. It is important that leaders, policy-makers and technocrats implement policies and programmes that stress sustained growth and inclusive development.

Keywords Growth • Inclusive development • West Africa

JEL Classification H11 • 011

1 Introduction

It is recorded in history that no modern economy has developed without growing. However, the drivers of growth though similar in certain aspects had to be adapted to fit the realities of a particular economy; early economies like Britain experienced growth through industrialization propelled by technical progress (technology) with human labour. A country like China is being modernized through technology not necessarily discovered in the country; there are instances where economies have grown and developed by 'stealing' technology. In the neo-classical economic framework, growth is propelled by capital, labour, technology and other resources; other theoretical postulations of growth have only augmented and/or re-interpreted the neo-classical theory of growth (Solow 1956; Mankiw et al. 1992).

The determinants of growth have not been too controversial in economics. However, what is economic development and how it can be realized remains debatable depending on the schools of thought as well as the inherent ideological orientation.

Furthermore, the role of the state (public sector) generates heated debate within the growth—development nexus. In the neo-classical tradition (foundation of the Washington consensus and neo-liberal economic framework) growth would eventually trickle-down resulting in development; direct state intervention is not necessary to stimulate growth, redistribute growth and bring about development. The collapse of the neo-classical framework during and after the great depression saw the emergence of the state an economic agent directly involved in economic activities. Today, the debate among the contending schools of thought in economics (New-classical, monetarist, business cycle, new-classical, Keynesian, neo-Keynesian, new-Keynesian, Marxist, neo-Marxist etc.) still rests on the degree of direct state involvement in economic activities. India, China, Malaysia, Indonesia, Singapore and others have been able to move millions out of poverty by registering not only robust growth rates over a long-period of time but also through systematic economic planning gingered by an 'elite' group committed to positive structural transformation.

Most of the countries in West Africa were at the same level with those in Asia in the 1950s, 1960s and 1970s; Nigeria, Ghana, Cote d'Ivoire, Senegal had similar growth rates with Singapore, Malaysia, Indonesia and Taiwan. During the late 1970s and early 1980s, Nigeria averaged a growth rate of 10 % yet the economy still remained underdeveloped. The economies in West Africa have enormous human and natural resources and at each episode growth has been driven by the rise in the price of export commodities. The West African sub-region is experiencing robust growth rates during and after the on-going sluggish recovery of the global economic crisis. The sub-region grew by almost 7.0 % in 2012 and is projected to grow at the same rate up to 2015. Multilateral institutions like the African Development Bank, World Bank and the International Monetary Fund (IMF) agree that the West African sub-region is experiencing macroeconomic stability derived from implementing reforms based on rules rather than discretion. Yet, countries in the sub-region are not experiencing economic development; almost all the countries have very high and rising rates of unemployment, high incidence of poverty, deteriorating social services, among others.

“It is fundamental that growth must generate employment, reduce poverty and provide a reasonable mix of goods and services to majority of citizens. The growth process ought to guarantee that an economy is transforming or transiting from primary production (reliance on agriculture) to manufacturing (industrialization) and finally to services based activities” (Ekpo 2013a, b, c, p. 18). In recent times and in most countries growth has not translated into development; rather than confronting the seeming paradox, economists, especially those in the Bretonwoods Institutions have coined a new concept known as “inclusive growth”. The concept de-emphasizes economic development and thus reduces the role of the state in the growth and development praxis. All economies that have leap frogged from underdevelopment to developed knowledge-based countries have been guided by well thought and executed economic blue prints. In West Africa, growth has been driven by high prices of commodity exports particularly in the mining/mineral sector. The growth rate of 7 % in the sub-region seems not to have translated unto development.

The objective of this paper is to examine the growth development nexus in the sub-region. Section 2 provides stylized facts on the economies of West Africa while Sect. 3 examines the review of the underlying theoretical issues; Sect. 4 reviews the methodology and empirical results. We conclude in Sect. 5. It is expected that the analysis in the paper would generate further robust debate on the subject matter.

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