The Africa Rising Narrative - Whither development?

Over the last ten years the mainstream press have put together an Africa Rising narrative which tells us that because of a series of “good” governance reforms and more responsible economic management (by technocratic and not ideological leaders), African countries have managed to transform their economies into growing vibrant engines of growth. Robust growth rates that averaged 5.8% a year between 2002 and 2012 formed the basis of expectations that there was more to come. In 2011 The Economist (Dec 3rd) reported that, after decades of slow growth ‘Africa now has the real chance to follow Asia in embarking on fast growth in a very short period.’ After years of repose - Africa was rising. Basing its predictions on data from the IMF, The Economist (ibid) declared that Ghana, Mozambique, Nigeria and Zambia would be among this decade’s star performers. Recent events (like Ghana’s 2015 IMF bailout) may have dented the narrative but it persists because although Africa’s 2015 GDP declined 1.2% to 3.4% from 4.6% in 2014, it is still among the fastest growing regions in world. There is clearly a huge disconnect between the narrative and the images of African migrants risking life and limb to get away from Africa and into Europe. This article explores the sources of the disconnect and evaluates the narrative. How and why did The Economist (and others in the media and the economics profession) manage to put forward the bold claim that the 21st Century belonged to Africa

Monetary transmission in Africa: a review of official sources

This paper focuses on the subject of monetary transmission in Africa. It begins with a report on the effects of the financial crisis of 2008 in Africa. In the countries with more developed financial systems the financial channel proved to be the most important in transmitting the crisis. In the more peripheral countries the trade channel proved to be the most important. Where countries were able to withstand the global shock coming from the financial crisis they did so with a diversified group of trading partners in fast growing economies. The paper then turns to examine three post crisis institutional developments and asks, how are: a) an increased momentum towards regional integration, b) the rise of Pan African banking and, c) an increase in cross border flows, affecting the monetary transmission mechanism (MTM) in Africa. It is clear from the literature that the rise of Pan African banking and the regionalization thrust of the authorities are deepening the financial channels between countries. But with respect to cross border flows, the huge size of deposits maintained by Africa’s BIS reporting banks suggest relatively low levels of bank intermediation and competition. Thus the benefits that are assumed to accrue as a result of increased cross border flows are withdrawn from the local economy and stored up in the BIS banks. We know large deposits reflect the expectations of the deposit holders. But beyond that very little is known about the role of expectations and the workings of the expectations channel in monetary transmission in Africa. Even less is known about how such expectations would interact with those formed as a result of operations in the large informal sectors which characterise African macro economies. Until research can bridge this gap, the increasing cross border flows with the large deposits held in BIS banks form the basis yet another explanation for the historical weakness of the MTM in Africa

Financial and Corporate Structure in South Africa

Concentration in the South African financial sector has its origins in three main influences that are all historical (i) the legacy of domination by a small number of large imperial banks, (ii) the struggle between English and Afrikaner capital and (iii) the statutory legislation that framed the operation of banks. In this paper we describe the part played by these three historical influences in the formation and development of the corporate sector in South Africa. One recurrent theme throughout the history is the relative position of the foreign bank and domestic bank in the local market place. We take up this theme and argue that the scale and extent of foreign bank operations in South Africa is far greater than estimates provided by the local authorities. We have found that the main vehicle in deepening the concentration of the sector has been the merger. In later sections of the paper we lay out how the amalgamation by absorption approach to expansion that has been a constant feature of the country’s business life comes together with a merger frenzy in the late 1980’s and 1990s that succeeds in further deepening concentration within banking, finance and industry. Last, we end with an analysis of industry structure by Johannesburg Stock Exchange (JSE) capitalisation between 1994 and 2011

The Atmosphere above Ny-Ålesund – Climate and global warming, ozone and surface UV radiation

The Arctic region is considered to be most sensitive to climate change, with warming in the Arctic occurring considerably faster than the global average due to several positive feedback mechanisms contributing to the “Arctic amplification”. Also the maritime and mountainous climate of Svalbard has undergone changes during the last decades. Here, the focus is set on the current atmospheric boundary conditions for the marine ecosystem in the Kongsfjorden area, discussed in the frame of long-term climatic observations in the larger regional and hemispheric context. During the last century, a general warming is found with temperature increases and precipitation changes varying in strength. During the last decades, a strong seasonality of the warming is observed in the Kongsfjorden area, with the strongest temperature increase occurring during the winter season. The winter warming is related to observed changes in the net longwave radiation. Moreover, changes in the net shortwave are observed during the summer period, attributed to the decrease in reflected radiation caused by the retreating snow cover. Another related aspect of radiation is the intensity of solar ultra-violet radiation that is closely coupled to the abundance of ozone in the column of air overhead. The long term evolution of ozone losses in the Arctic and their connection to climate change are discussed

Structuralist approaches to social & economic development in the English speaking Caribbean

This is a survey essay surveying the early period of Caribbean Political Economy from WA Lewis’ Industrialization of the British West Indies (1949) to Beckford’s (1972) and, Best & Levitt’s Plantation Economy Models (1975). It emphasizes the structuralist origins of the body of knowledge and reunites it with the new structuralism of Jose Antonio Ocampo and the ECLAC perspective. Along the way the principal problems blocking progress towards growth and development in the English speaking Caribbean are laid out. The paper attempts to close a gap between structuralist theory from the Caribbean and that of the heterodox theory emanating from Europe and North America. Too often, these two heterodox traditions which ought to be informing each other end up talking past each other. The intent is twofold; first, to build a bridge between the two schools of thought and second, laying the building blocks for the generation of a policy capable of stopping the long term tendency towards stagnation. Key words: economic growth; economic development, political economy. JEL classification: 010; O54; P

Casino capitalism with derivatives: fragility and instability in contemporary finance

This is a theoretical article exploring the relationship between financial fragility, derivative trading, and financial crisis. It synthesizes the work of Hyman Minsky (1977, 1985), Jan Toporowski (2001), and Dick Bryan and Michael Rafferty (2006). The decade immediately after 1971 is presented as a key period with key events that shaped a Wall Street revolution that now drives world capitalism. Balance sheet computations of expected profitability emerge as the main driver of a contemporary capitalism that is inherently more competitive than before. Debt, credit, and liquidity, therefore, play crucial parts in a world system where banks and corporations have been joined by new rentier institutions in riskier speculative business activities that now characterize the system. The conclusions are largely Keynesian “. . . when the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.

Determinants of financialisation in South Africa: a balance sheet approach

This paper focuses on the process of finacialisation in South Africa. Financialisation is defined after Krippner (2005) and Arrighi (1994), as a pattern of accumulation in which profits accrue through financial markets and channels rather than through trade or commodity production in the real economy. We examine the financialisation of the South African economy from 1990 to 2012—both before and after major financial market liberalizations. Five key features of the period emerge; first, a precipitous increase in the size of the net acquisition of financial assets (and the net incurrence of financial liabilities) on the balance sheets of all agents. Second the centrality of credit and foreign money capital in the financialisation process. Third a measureable relationship between levels of Johannesburg Stock Exchange (JSE) market capitalisation and levels of portfolio capital inflows.Fourth, credit effects that overwhelm portfolio shift effects to a far greater extent than in the euro-zone area. Fifth, and last an unusually high degree of financial intermediation (when compared with the Euro zone area) that may be explained by the high degree of concentration in South Africa’s Monetary and Financial Institutions Sector (MFI’s). JEL Classifications: E01, F62, 016 Key Words: Financialisation, Monetary and Financial Institutions, Flow of Funds, Balance Sheet

Casino Capitalism with Derivatives: Fragility and Instability in Contemporary Finance

This is a theoretical article exploring the relationship between financial fragility, derivative trading, and financial crisis. It synthesizes the work of Hyman Minsky (1977, 1985), Jan Toporowski (2001), and Dick Bryan and Michael Rafferty (2006). The decade immediately after 1971 is presented as a key period with key events that shaped a Wall Street revolution that now drives world capitalism. Balance sheet computations of expected profitability emerge as the main driver of a contemporary capitalism that is inherently more competitive than before. Debt, credit, and liquidity, therefore, play crucial parts in a world system where banks and corporations have been joined by new rentier institutions in riskier speculative business activities that now characterize the system. The conclusions are largely Keynesian “. . . when the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.†JEL classifications: G12, P1debt; credit; liquidity; derivatives and capital

The party and the garrison

This work is intended to be a scholarly contribution in the area of Caribbean Political Economy. It is premised on the notion that the peculiar history of Jamaica, the slave plantation origin through to the colonial, neocolonial and post colonial forms of economic organization tend to the formation and reproduction of the total institution as a system of social organization