The global setting and African economic growth

This paper reviews the evidence on the importance of the global setting for the economic growth of African economies, particularly in the light of the increasing salience of globalisation. Although export promotion strategies are found to be growth enhancing for African economies, available evidence suggests that it is the manufacturing component that really seems to matter. The global-related factors with adverse effects include terms of trade deterioration, economic instabilities of capital (investment) and imports, high world interest rates, real exchange rate misalignment, diminishing external aid flows into countries with sound policies, large external debt and high export taxes. The World Trade Organisation framework also matters for the growth prospects of African countries. The current time-bound exemptions accorded most African countries under the framework are steps in the right direction.