Presentation on theme: "Africa Euphoria: Who’s responsible for Africa’s new boom? And who can make it equitable and sustainable? Elliott Green LSE."— Presentation transcript:
Africa Euphoria: Who’s responsible for Africa’s new boom? And who can make it equitable and sustainable? Elliott Green LSE
How do we make sure that growth is equitable in Africa? Growth has been driven to a large degree by mineral wealth – Capital intensive rather than labour intensive African countries with mineral wealth have long had high levels of inequality – Highest levels of income inequality in the world are in southern Africa (Namibia, South Africa and Botswana with Angola close behind) Does this mean that the rest of Africa will increasingly resemble southern Africa?
How can countries manage inequality? 1.Attack it directly through redistribution – Example: Conditional Cash Transfers in Brazil 2.Attack it indirectly through spending on public goods Example #1: Brazil has seen declining inequality since the early 2000s – Use of conditional cash transfers, higher minimum wages, declining fertility, better quality education, university quotas for state school and black and indigenous students Example #2: Botswana – Income inequality doesn’t fall but state control over diamonds permits high levels of spending on public goods
What can other African countries do? Focus on continuing to create economic growth Proactive role by governments Focus on formal sector job creation – Either directly through greater public sector hiring or indirectly by improving education quality Continue to focus on lowering fertility levels Target disadvantaged groups Focus on redistribution of wealth rather than income – Land reform – Inheritance tax to stop inter-generational transmission of inequalities
What not to do Ignore growing inequalities Suppress demands for redistribution by distracting voters, especially through an emphasis on social divisions Cut top marginal tax rates too much