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Department of Economics

African economies 2: applied macroeconomic analysis

Course Code:
15PECC025
Unit value:
0.4
Taught in:
Term 2

This course carries forward the treatment of African economies provided in Part I by aiming to increase students’ capacity to use their growing knowledge of economic theory and development economics in rigorous analysis of a subset of the critical issues facing policy makers in sub-Saharan Africa, this time focusing on macroeconomic issues, in particular international trade.  The course relies both on the best theoretical studies in development economics and the most relevant applied economic literature referring to sub-Saharan African countries.  The heterogeneity of African economies is stressed and students are encouraged to focus their written work on particular sub-regions, countries and sectors.  The course presents the most important debates and critically assesses the determinants of sub-Saharan countries’ economic performance.  Topics covered include: the role of the state; the impacts of international financial institutions (IMF and World Bank) reforms programmes; industrialisation; privatisation; international and intra-regional trade; foreign direct investment; official development assistance, the determinants of growth; and debt.

Objectives and learning outcomes of the course

The course consists in 10 lectures, which present key economic issues in development economics, in a macroeconomic perspective, which are of particular importance for Sub-Saharan Africa (SSA) today. The lecture 1 is a general introduction; it presents the political economy context, which is necessary for the understanding of the economic concepts that will be discussed during the following lectures. In particular, it presents the role of the state in post-independence economic development. The lecture 2 presents the reform programmes of the IMF and the World Bank (stabilisation and adjustment programmes), which became the PRSPs at the end of the 1990s. It is divided in two parts: the first part discusses the conceptual determinants of the stabilisation and adjustment programmes that were recommended in the early 1980s in SSA; the second part discusses the new reform programmes, the PRSPs, and their focus on poverty reduction. The lecture 3 discusses the theoretical justifications for industrialist ion in SSA and the debates on the relationships between industrialisation and growth; it analyses the constraints on industrialisation in the current context (late coming countries, globalisation, services). The lecture 4 presents a category of reform that has been crucial in SSA during the era of adjustment in the 1980s, i.e. privatisation; it discusses the theoretical evolutions of the concept since then, both in academia and the IFIs, and its controversial outcomes in SSA. The lecture 5 presents the current controversies on the determinants of growth in SSA. Besides traditional determinants (e.g., investment), new types of determinants of growth came at the forefront in the academic debate in the early 2000, in order to explain the poor economic performance in SSA, especially geography, institutions, policies. The relevance of these determinants of growth will be discussed in comparison with others, e.g. physical capital, technology, and the like. The lecture 6 discusses a key issue in development economics, particularly in SSA, i.e., international trade. It presents the theoretical arguments and debates regarding the fact that trade openness would be in SSA one of the economic reforms that would be most conducive to growth, as well as the debates regarding the relationships between growth and specific types of exports, in particular commodities. The lecture 7 discusses the theories and facts regarding foreign direct investment in SSA, as well as the debates regarding whether FDI would be efficient instruments in term of growth given SSA current conditions, for example the fiscal constraints or its dependence on natural resources. The lecture 8 focuses on foreign aid; it presents the theories that justify aid (e.g., on the relationships between aid and growth), the current controversies regarding aid effectiveness, aid dependence and the types of instruments that would improve the aid device in general. The lecture 9 discusses the issue of external debt, which has been particularly crucial in SSA over the last decade; it presents the theoretical approaches, the recent debt relief initiatives launched by donors and the current debates on their effectiveness. The lecture 10 concludes with the discussion of the conditions and problems regarding regional integration in SSA today.

Students are provided with detailed outlines of the lectures via the Blackboard, together with a reading list that includes both required readings and additional references, in order to help students for their exams, essays and dissertations. Each lecture is followed by a seminar, where two students make a short presentation based on the most important academic papers, which have been written on the subject of the lecture, for students to be aware of the current theoretical debates regarding SSA. All students are requested to read these papers, for the general discussion to be productive and for students to have a deeper understanding of the issues presented in the lectures. 

Given the above structure, on successful completion of the course, students will be able to identify the macroeconomic issues that are the most important in SSA today. Students will also be able to explain the strengths and weaknesses of SSA economies for each issue, and to recognise and discuss the different schools of thought and stances in a given debate.

As cases studies will be discussed in the lectures and seminars, students will be able to apply their theoretical knowledge to particular countries and settings.

As the lectures present examples from regions outside SSA, e.g., Asia, students will be able to analyse the characteristics that are specific to SSA, if any, and compare them to other economies outside SSA.

Students will also be able to elaborate clear syntheses on a given question, and have the opportunity to develop their own ideas, thanks in particular to the essays and seminar presentations.

As the lectures and seminars strongly emphasize the heterogeneity of the academic literature and findings on a given question, as well as the past and current debates, students will develop their capacity to assess the many studies as well as the (often contradictory) findings regarding SSA economies.

Method of assessment

Assessment weighting: Exam 70% / coursework 30% (1 essay). All coursework is resubmittable.

Suggested reading

Background Reading:
1. Akyüz, Yilmaz and Charles Gore. 2001. African Economic Development in a Comparative Perspective, Cambridge Journal of Economics, vol. 25, n°3, May, pp. 265-288.
2. Maizels, Alfred. 1994. The Continuing Commodity Crisis of Developing Countries, World Development, vol. 22, n°11, pp. 1685-1695.
3. Kaplinsky, Raphael and Mike Morris. 2008. Do the Asian Drivers Undermine Export-Oriented Industrialisation in SSA?, World Development, vol. 36, n°2, pp. 254–273.