Macroeconomic Policies And Private Saving And Investment In Sadc Countries

This paper assesses empirically the role of public policies in stimulating private savings and investment in sub-Saharan African countries, based on data for the period 1986-92. The main findings of the analysis are as follows: (i) policies effective in stimulating private savings and investment include those that keep the rate of inflation low, reduce macroeconomic uncertainty, promote financial deepening, and lower the external debt burden; (ii) measures that promote structural reforms and reduce the budget deficit (without lowering government investment) help to raise private investment; and (iii) declines in government savings are only partially offset by increases in private savings.

This paper assesses empirically the role of public policies in stimulating private savings and investment in sub-Saharan African countries, based on data for the period 1986-92. The main findings of the analysis are as follows: (i) policies effective in stimulating private savings and investment include those that keep the rate of inflation low, reduce macroeconomic uncertainty, promote financial deepening, and lower the external debt burden; (ii) measures that promote structural reforms and reduce the budget deficit (without lowering government investment) help to raise private investment; and (iii) declines in government savings are only partially offset by increases in private savings.

Many analysts decry the level of investment in Africa, saying it is too low. But there is no evidence, in cross-country data or in microeconomic data from Tanzania, that private and public capital is productive in Africa. In that sense, investment in Africa may be viewed as too high.

This book offers an in-depth analysis of the current state of the African economy and makes constructive suggestions about its future direction. The contributors argue that despite enduring challenges such as food security and employment creation, Africa faces a brighter future in sustainable growth provided that governance and policy- making are effectively employed to maintain peace, achieve greater regional collaboration and encourage private sector competitiveness.

Policy-makers in Southern Africa are increasingly convinced that regional trade liberalization can improve growth performance and stimulate development throughout the region. To succeed where previous attempts have failed, however, governments must address two key issues. The first of these is policy coordination - the broad range of domestic policies must be made compatible with the proposed trade reforms. The second is institution building - concerted attention must be devoted to strengthening weak institutions and infrastructure. The contributors are among the leading authorities on regional integration in Africa.

Publisher description