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Good and bad times: volatility and growth in Africa.

Article Excerpt
During the last three decades growth in Sub-Saharan Africa has been both low and highly volatile. Between 1975 and 2005 per capita income PPP grew by 0.7 per cent per year, by far the lowest among developing regions. At the same time growth rates were more volatile than in any other part of the world. Interestingly, however, there is no evidence of a direct correlation between growth volatility and Africa's long term economic performance. This result is unexpected and turns out to be misleading. Africa's poor long run growth was in fact a product of good and bad times for its economies that featured surprisingly high rates of growth and decline that occurred with almost equal frequency.

To explore the relationship between volatility and growth in Africa we extend the work of Hausmann, Pritchett and Rodrik (2005) to identify growth accelerations and decelerations--medium term deviations from African economies' long run trends (see our working papers under further reading below). Our method features two main novelties. First, it identifies both growth accelerations and decelerations, and second, it defines growth accelerations and decelerations relative to each country's economic performance. We believe that this method is well suited to understanding the underlying dynamics of Africa's slowly growing but volatile...

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