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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:The World Bank's Fundamental Misconception in Africa
Author:Schatz, Sayre P.
Periodical:Journal of Modern African Studies
Geographic term:Africa
Subjects:World Bank
economic policy
Economics and Trade
Development and Technology
international relations
Abstract:In an earlier article in the 'Journal of Modern African Studies' (vol. 32, no. 4 (1994), p. 679-692), the author scrutinized the World Bank's attempt to demonstrate the efficacy of its set of programmes known as 'structural adjustment'. He showed that the data in the policy research report 'Adjustment in Africa' (1994) failed to support its conclusions. In the present article he argues that apart from the fact that structural adjustment is failing because of the difficulty of promoting development in sub-Saharan Africa, there is another, more remediable, reason: the mistaken view that the basic cause of Africa's economic stagnation is poor government performance. While government and politics contribute to the malfunctioning of African economies, the fundamental problem lies in the economy itself. The main engine of growth in a capitalist economy is private investment. A high rate of investment requires the continuing and abundant emergence of profitable investment opportunities. However, the least developed economies of the world have not been able to generate anything close to this. On the other hand, ventures that would be privately unprofitable but socially beneficial abound in a free market. The author emphasizes that development would be hastened if such orphan investments could become a reality. Notes, ref.