Africa's relative poverty predates colonialism. Jared Diamond argues in Guns, Germs, and Steel that Africa has always been poor due to a number of ecological factors affecting historical development. These factors include low population density, lack of domesticated livestock and plants and the North-South orientation of Africa's geography.
Thornton argues that sub-Saharan Africa was relatively wealthy and technologically advanced until at least the seventeenth century. Acemoglue and Robinson, for example, argue that most of Africa has always been relatively poor, but "Aksum, Ghana, Songhay, Mali, [and] Great Zimbabwe Inikori have argued that the poverty of Africa at the onset of the colonial period was principally due to the demographic loss associated with the slave trade as well as other related societal shifts.
Fage and David Eltis have rejected this view. African countries suffer from communication difficulties caused by language diversity. Greenberg's diversity index is the chance that two randomly selected people would have different mother tongues.
Africa's greatest economic opportunity: trading with itself
However, the primary language of government, political debate, academic discourse, and administration is often the language of the former colonial powers; English , French , or Portuguese. Dependency theory asserts that the wealth and prosperity of the superpowers and their allies in Europe , North America and East Asia is dependent upon the poverty of the rest of the world, including Africa. Economists who subscribe to this theory believe that poorer regions must break their trading ties with the developed world in order to prosper.
Less radical theories suggest that economic protectionism in developed countries hampers Africa's growth. When developing countries have harvested agricultural produce at low cost, they generally do not export as much as would be expected. Abundant farm subsidies and high import tariffs in the developed world, most notably those set by Japan, the European Union's Common Agricultural Policy , and the United States Department of Agriculture , are thought to be the cause.
Although these subsidies and tariffs have been gradually reduced, they remain high. Local conditions also affect exports; state over-regulation in several African nations can prevent their own exports from becoming competitive. Research in Public Choice economics such as that of Jane Shaw suggest that protectionism operates in tandem with heavy State intervention combining to depress economic development.
Farmers subject to import and export restrictions cater to localized markets, exposing them to higher market volatility and fewer opportunities. When subject to uncertain market conditions, farmers press for governmental intervention to suppress competition in their markets, resulting in competition being driven out of the market. As competition is driven out of the market, farmers innovate less and grow less food further undermining economic performance.
Although Africa and Asia had similar levels of income in the s, Asia has since outpaced Africa, with the exception of a few extremely poor and war-torn countries like Afghanistan and Yemen. One school of economists argues that Asia's superior economic development lies in local investment. Corruption in Africa consists primarily of extracting economic rent and moving the resulting financial capital overseas instead of investing at home; the stereotype of African dictators with Swiss bank accounts is often accurate.
Because governments were politically unstable and new governments often confiscated their predecessors' assets, officials would stash their wealth abroad, out of reach of any future expropriation. For example, the regime of Robert Mugabe in Zimbabwe , particularly the land seizures from white farmers, led to the collapse of the country's agricultural economy, which had formerly been one of Africa's strongest;  Mugabe had been previously supported by the USSR and China during the Zimbabwe War of Liberation.
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In Tanzania , socialist President Julius Nyerere resigned in after his policies of agricultural collectivisation in led to economic collapse, with famine only being averted by generous aid from the IMF and other foreign entities. Food shipments in case of dire local shortage are generally uncontroversial; but as Amartya Sen has shown, most famines involve a local lack of income rather than of food. In such situations, food aid—as opposed to financial aid—has the effect of destroying local agriculture and serves mainly to benefit Western agribusiness which are vastly overproducing food as a result of agricultural subsidies.
Historically, food aid is more highly correlated with excess supply in Western countries than with the needs of developing countries. Foreign aid has been an integral part of African economic development since the s. The aid model has been criticized for supplanting trade initiatives.
Today, Africa faces the problem of attracting foreign aid in areas where there is potential for high income from demand. It is in need of more economic policies and active participation in the world economy. As globalization has heightened the competition for foreign aid among developing countries, Africa has been trying to improve its struggle to receive foreign aid by taking more responsibility at the regional and international level.
The African Union is the largest international economic grouping on the continent. The confederation's goals include the creation of a free trade area , a customs union , a single market , a central bank , and a common currency see African Monetary Union , thereby establishing economic and monetary union. The current plan is to establish an African Economic Community with a single currency by Some parties support development of an even more unified United States of Africa. During With the recovery of North African economies and sustained improvement in other regions, growth across the continent is expected to accelerate to 4.
Short-term problems for the world economy remain as Europe confronts its debt crisis. Commodity prices—crucial for Africa—have declined from their peak due to weaker demand and increased supply, and some could fall further. But prices are expected to remain at levels favourable for African exporter. Economic activity has rebounded across Africa.
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However, the pace of recovery was uneven among groups of countries and subregions. Oil-exporting countries generally expanded more strongly than oil-importing countries. West Africa and East Africa were the two best-performing subregions in Intra-African trade has been slowed by protectionist policies among countries and regions. This would reduce countries' tariffs on imports and increase intra-African trade, and it is hoped, the diversification of the economy overall. The situation whereby African nations export crops to the West while millions on the continent starve has been blamed on developed countries including Japan, the European Union and the United States.
These countries protect their own agricultural sectors with high import tariffs and offer subsidies to their farmers,  which many contend leads the overproduction of such commodities as grain, cotton and milk. The result of this is that the global price of such products is continually reduced until Africans are unable to compete, except for cash crops that do not grow easily in a northern climate.
In recent years countries such as Brazil, which has experienced progress in agricultural production, have agreed to share technology with Africa to increase agricultural production in the continent to make it a more viable trade partner. Africa has significant resources for generating energy in several forms hydroelectric, reserves of petroleum and gas, coal production, uranium production, renewable energy such as solar, wind and geothermal. The lack of development and infrastructure means that little of this potential is actually in use today.
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Petroleum and petroleum products are the main export of 14 African countries. Petroleum and petroleum products accounted for a Lack of infrastructure creates barriers for African businesses. Railway projects were important in mining districts from the late 19th century. Large railway and road projects characterize the late 19th century.
Influential political include pre-colonial centralization, ethnic fractionalization, European settlement, natural resource dependence, and democracy.
Many large infrastructure projects are underway across Africa. By far, most of these projects are in the production and transportation of electric power. Many other projects include paved highways, railways, airports, and other construction. Telecommunications infrastructure is also a growth area in Africa.
As of , it was estimated that ,, mobile phones of all types were in use in Africa, including 15,, " smart phones ". The mineral industry of Africa is one of the largest mineral industries in the world. Africa is richly endowed with mineral reserves and ranks first or second in quantity of world reserves of bauxite, cobalt, industrial diamond, phosphate rock, platinum-group metals PGM , vermiculite, and zirconium. Gold mining is Africa's main mining resource. African mineral reserves rank first or second for bauxite, cobalt, diamonds, phosphate rocks, platinum-group metals PGM , vermiculite, and zirconium.
Many other minerals are also present in quantity. Both the African Union and the United Nations have outlined plans in modern years on how Africa can help itself industrialize and develop significant manufacturing sectors to levels proportional to the African economy in the s with 21st-century technology. This hope, coupled with the rise of new leaders in Africa in the future, inspired the term "the African Century ", referring to the 21st century potentially being the century when Africa's vast untapped labor, capital, and resource potentials might become a world player.
This hope in manufacturing and industry is helped by the boom in communications technology   and local mining industry  in much of sub-Saharan Africa. Namibia has attracted industrial investments in recent years  and South Africa has begun offering tax incentives to attract foreign direct investment projects in manufacturing.
Countries such as Mauritius have plans for developing new "green technology" for manufacturing. The manufacturing sector is small but growing in East Africa. China and India  have showed increasing interest in emerging African economies in the 21st century. Reciprocal investment between Africa and China increased dramatically in recent years   amidst the current world financial crisis. The increased investment in Africa by China has attracted the attention of the European Union and has provoked talks of competitive investment by the EU.
Remittances from the African diaspora and rising interest in investment from the West will be especially helpful for Africa's least developed and most devastated economies, such as Burundi, Togo and Comoros. Angola has announced interests in investing in the EU, Portugal in particular. Both use the CFA franc as their legal tender. The idea of a single currency union across Africa has been floated, and plans exist to have it established by , though many issues, such as bringing continental inflation rates below 5 percent, remain hurdles in its finalization.
"Trade Is Key to Africa’s Economic Growth" | United States Trade Representative
As of , Africa has 23 stock exchanges , twice as many as it had 20 years earlier. Between and , a total of 72 companies were launched on the stock exchanges of 13 African countries. During the s, Ghanaian politician Kwame Nkrumah promoted economic and political union of African countries, with the goal of independence.
Recent decades have brought efforts at various degrees of regional economic integration. There are currently eight regional organizations that assist with economic development in Africa: . From Wikipedia, the free encyclopedia. Economy of Africa Statistics Population 1. All values, unless otherwise stated, are in US dollars.
This section does not cite any sources. Please help improve this section by adding citations to reliable sources. Unsourced material may be challenged and removed. July Learn how and when to remove this template message. Further information: Economic history of Africa and Scramble for Africa. Main article: Colonisation of Africa. This box: view talk edit. Further information: Economy of the African Union.
See also: Women and agriculture in Sub-Saharan Africa.