Post-HIPC growth dynamics in Sub-Saharan Africa

Access to debt relief under the Highly Indebted Poor Country Initiative enhanced the growth performance across Sub-Saharan Africa, especially in the subset of debt-ridden low-income countries. Over the past few years, these Completion Point countries have enjoyed significantly higher investments and growth rates, primarily fueled by the expanding fiscal space of the post-Highly Indebted Poor Country Initiative era. They are also weathering the adverse effects of the global crisis much better than their non-Highly Indebted Poor Country Initiative counterparts. Despite these growth rebounds, the region is not likely to meet the Millennium Development Goals, however. Long-term growth projections from a simple macroeconomic model, which is applied to Ethiopia, suggest that prospects for reversing the widening income gaps with other regions of the developing world are limited. Under the baseline scenario, assuming current growth trends, the estimates show that it could take more than five decades for per capita real income to double in Ethiopia. However, even these gloomy prospects are likely to be undermined by the looming risk of another sovereign debt crisis. In effect, the experiments show that lowering interest rates on external debt would not bridge the widening income gap with other regions of the world, unless it is accompanied by a rapid expansion of capital accumulation financed by sustained inflows of foreign aid.

Bibliographic Details

Main Authors:	Bayraktar, Nihal, Fofack, Hippolyte
Language:	English
Published:	2011-12-01
Subjects:	ADVANCED ECONOMIES, ADVANCED TECHNOLOGY, ADVERSE EFFECTS, ADVERSE SHOCKS, AGGREGATE DEMAND, AID EFFECTIVENESS, ARREARS, BALANCE OF PAYMENT, BALANCE OF PAYMENTS, BALANCE OF PAYMENTS CRISES, BALANCE OF PAYMENTS DEFICITS, BANK POLICY, BASE YEAR, BORROWING COUNTRIES, BRIDGE FINANCING, BUDGET CONSTRAINT, BUDGET DEFICIT, BUSINESS CYCLES, CAPITAL ACCOUNT, CAPITAL ACCUMULATION, CAPITAL FLOWS, CAPITAL INFLOWS, CAPITAL STOCK, COMMODITY, COMMODITY EXPORTS, COMPARATIVE ANALYSIS, CONSTANT SHARE, CONSTANT SHARES, COUNTRY INITIATIVE, CREDITORS, CURRENT ACCOUNT, CURRENT ACCOUNT BALANCE, CURRENT ACCOUNT SURPLUSES, DEBT, DEBT BURDEN, DEBT CRISIS, DEBT OVERHANG, DEBT RELIEF, DEBT STOCK, DEBT STOCKS, DEBT STRUCTURE, DEBTS, DEFICIT FINANCING, DEFICITS, DEPRECIATION, DEPRECIATION RATE, DEPRECIATION RATES, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DISPOSABLE INCOME, DIVERSIFICATION, DIVIDENDS, DOMESTIC BORROWING, DOMESTIC CAPITAL, DOMESTIC CAPITAL MARKETS, DOMESTIC DEBT, DOMESTIC FINANCIAL MARKETS, DOMESTIC GOOD, DOMESTIC GOODS, DOMESTIC MARKET, DOMESTIC MARKETS, DOMESTIC PRICE, ECONOMIC CONDITIONS, ECONOMIC COOPERATION, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC OUTCOMES, ECONOMIC OUTLOOK, ECONOMIC PERFORMANCE, ECONOMIC PERFORMANCES, ECONOMIC REGION, ECONOMIC RESEARCH, ECONOMIC TRENDS, ELASTICITY, ELASTICITY OF SUBSTITUTION, EMERGING MARKET, EMERGING MARKET ECONOMIES, EMERGING MARKETS, ENDOGENOUS VARIABLES, EQUILIBRIUM, EQUILIBRIUM CONDITION, EQUILIBRIUM PRICE, EQUILIBRIUM VALUE, EXCHANGE RATE, EXCHANGE RATE MOVEMENTS, EXCHANGE RATES, EXISTING DEBTS, EXOGENOUS VARIABLES, EXPECTED PRESENT VALUE, EXPENDITURE, EXPENDITURES, EXPORTS, EXPOSURE, EXTERNAL BORROWING, EXTERNAL DEBT, EXTERNAL FINANCE, EXTERNAL FINANCING, EXTERNAL INDEBTEDNESS, EXTERNAL SHOCKS, FACE VALUE, FACTORS OF PRODUCTION, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL CRISIS, FINANCIAL RESOURCES, FISCAL DEFICITS, FISCAL POLICY, FOREIGN DEBT, FOREIGN DIRECT INVESTMENT, FOREIGN EXCHANGE, FOREIGN FINANCING, FOREIGN INTEREST, FUTURE RESEARCH, GDP, GDP PER CAPITA, GENDER, GLOBAL ECONOMY, GLOBAL TRADE, GLOBALIZATION, GOVERNMENT BUDGET, GOVERNMENT DEFICIT, GOVERNMENT EXPENDITURE, GOVERNMENT REVENUE, GOVERNMENT REVENUES, GOVERNMENT SPENDING, GROSS DOMESTIC PRODUCT, GROWTH PERFORMANCE, GROWTH PROJECTIONS, GROWTH RATE, GROWTH RATES, GROWTH THEORY, HOMOGENEOUS GOOD, HOUSEHOLDS, HUMAN CAPITAL, IMPORTS, INCOME, INCOME FLOWS, INCOME GROWTH, INFRASTRUCTURE PROJECTS, INTEREST PAYMENT, INTEREST PAYMENTS, INTEREST RATE, INTEREST RATES, INTERNATIONAL BANK, INVESTMENT FUNCTION, INVESTMENT INCOMES, INVESTMENT RATES, INVESTMENT SPENDING, LABOR FORCE, LAFFER CURVE, LOCAL CURRENCY, LONG-TERM COSTS, LONG-TERM DEBT, LOW INTEREST RATE, LOW-INCOME COUNTRIES, MACROECONOMIC MODEL, MACROECONOMIC STABILITY, MARKET EQUILIBRIUM, MONETARY FUND, NATURAL RESOURCE, NATURAL RESOURCES, NET EXPORTS, NEW MARKETS, NOMINAL EXCHANGE RATE, NOMINAL GROSS DOMESTIC PRODUCT, OUTPUT, OUTPUT GAP, PER CAPITA INCOME, POLICY RESPONSES, POPULATION GROWTH, POVERTY REDUCTION, PRICE OF EXPORTS, PRICE OF GOODS, PRIMARY COMMODITY, PRIVATE CAPITAL, PRIVATE CAPITAL STOCK, PRIVATE CAPITAL STOCKS, PRIVATE CONSUMPTION, PRIVATE INVESTMENT, PRIVATE SAVINGS, PRODUCTION FUNCTION, PRODUCTION STRUCTURE, PUBLIC BORROWING, PUBLIC DEBT, PUBLIC EXTERNAL DEBT, PUBLIC INVESTMENT, PUBLIC INVESTMENTS, PUBLIC SAVINGS, PUBLIC SPENDING, RAPID EXPANSION, REAL EXCHANGE RATE, REAL GDP, REAL INCOME, REAL INVESTMENT, RELATIVE PRICES, RESERVES, RETURNS, SAVINGS RATE, SHARE OF WORLD TRADE, SHORTFALLS, SLOW GROWTH, SOVEREIGN DEBT, SPEED OF ADJUSTMENT, STOCK OPTION, TAX, TAX BURDENS, TAX RATE, TAX REVENUES, TRADE BALANCE, TRADE PATTERN, TRADE PATTERNS, TRADE SHOCKS, TRADING, VIRTUOUS CYCLE, VOLATILITY, WELFARE BENEFITS, WORLD ECONOMY, WORLD PRICE,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111229160759 https://hdl.handle.net/10986/3693
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