External Imbalances, Economic Growth and Conver-gence: The Case of Sub-Saharan Africa
External Imbalances, Economic Growth and Conver-gence: The Case of Sub-Saharan Africa

Summary/Abstract: External imbalance is one of the cardinal problems of developing countries in the contemporary world. This problem became particularly the burning issue of the world community in general and developing countries in particular since the early 1980s. This was mainly associated with the two oil – price shocks of the 1973–1974 and 1979–1980 together with other factors including the changes in the global macroeconomic policy on the part of the industrialised world and mis-management and other forms of distortions on the part of developing countries. In the process of this crisis, Sub-Saharan Africa has been the most affected among the developing regions, where 77 per cent of the severely indebted low- -income countries, in 1994, belong to this region. As though it was not enough, this has also been accompanied by huge capital flight, widening the gap between sav-ings and investment, hence hindering economic growth and accelerating diver-gence. For illustration: „It has been estimated that 70 per cent of privately owned wealth (except land) was held abroad in 1992, and that Africa’s private capital stock would be about three times higher than it currently is if the wealth had sim-ply been retained at home„ (Trade and Development Report, 1998). More-over, according to the World Bank estimates, between 1986–1990, capital flight from Sub-Saharan Africa reached USD 30 billion, and in 1993 alone, the total capital flight from this region was estimated to be 80 per cent of the region’s Gross Do-mestic Product (GDP) (Grey and Beggs, 1995). Mainly as a result of external imbalance problems, Sub-Saharan has been marginalized and diverging.

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