September 15, 2006 7:36am CST
Why is it that the continent of africa is not developing amid many incentives from the western world to help her???
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@nextgen (1888)
• India
25 Sep 06
Africa's current poverty is rooted, in part, in its history. The transition from colonialism has been shaky and uncertain. The Cold War and increased corruption and despotism have contributed to Africa's poor economy. While China and India have grown rapidly and South America has experienced moderate growth, lifting millions above subsistence living, Africa has stagnated and even regressed in terms of foreign trade, investment, and per capita income. This poverty has widespread effects, including low life expectancy, violence, and instability, which in turn perpetuate the continent's poverty. Over the decades, attempts to improve the economy of Africa have met with little success. The relative economic failure of Africa has long been an important issue both in Africa and abroad. Many attempts at solving Africa's poverty have been attempted, but few have had any great degree of success. [edit] Socialism In the years immediately after independence many nations saw the rapid industrialisations of the Soviet Union and China under communism as models to follow. This led to command economies and major investment in heavy industries such as coal and steel production to stimulate growth, but this approach had little success. Only a handful of states formally adopted socialism and even fewer turned to outright Marxism. Everywhere government intervention in the economy was seen as necessary for growth, especially since private companies and investors were unlikely to invest in the region. Often the approach of governments in Africa was to borrow heavily from abroad and use this aid to grow the economy to a level that the loans could be paid off. Sporadic growth during the years after independence continued. The countries focused on exports to pay for these development efforts. The 1973 energy crisis hit sub-Saharan Africa as hard as anywhere in the world. While some nations were net exporters, most were heavily reliant on imported fuels. Economies quickly began to falter and events such as famines hit Africa in the 1980s. The collapse of the Soviet Union, which had supported socialist and collectivist projects throughout the continent, undermined the legitimacy of such an approach, while it also meant that there were no longer any sources of international aid to help pursue this approach. Liberalism Average annual growth in per capita GDP from 1990 to 2002.Thus in the 1980s, socialist ideas were discarded throughout almost the entire continent as "capitalism" became seen as the route to salvation in what became known as the Washington Consensus. By 1990, forty of the nations of Sub-Saharan Africa had agreed to follow rigorous IMF restructuring plans. IMF recommendations saw the continent's currencies drop by an average of 50%, the selling off of government-owned industries, and the slashing of government spending. After twenty years, however, these methods have seen as little success as the socialist approaches of the previous era. Average growth increased from 2.3% per annum to 2.8%. Only a handful of African states reached new levels of wealth, and many others became poorer over the course of the 1990s. Today there is a great deal of controversy on why this failed. One school of thought is that the reforms failed because they were only economic in nature and without democracy and the rule of law development cannot occur. However, another school of thought is that this (moderately) liberal capitalism represented by the "Washington Consensus" was fundamentally flawed Autarky The pursuit of self-sufficiency as advocated by dependency theory has been given limited trials in several African countries. In the 1980s, Nigeria banned the importation of many foodstuffs to stimulate domestic production. The Lagos Plan of Action of 1982 called for Africa as a whole to block imports from the rest of the world, but few countries followed through on the idea. Eventually even Nigeria agreed to limited liberalization. [edit] Foreign aid Since independence there has been a constant flow of foreign aid into Africa. The benefits of this aid have been mixed. In many cases much of this aid was misappropriated by unscrupulous leaders. During the Cold War the main goal of much of the aid money was to win the allegiance of these rulers, and so their misappropriation of the aid was at the very least overlooked. Since the end of the Cold War almost all developed countries have slashed foreign aid spending. Many also allege that the aid that was not stolen was long misdirected. For many decades the leading notion of development was government supervised mega-projects; today many believe that small grants to local businesses would be more effective. One example of foreign aid which has come under considerable criticism is food aid. In some circles, it is believed that food aid does not solve any fundamental problems and can also lead to a dependency on outside assistance, as well as hindering the development of indigenous industries. 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. Debt relief Advocacy for debt relief has become widespread. Each year Africa sends more money to Western bankers in interest on its debts than it receives in foreign aid from these countries. Debt relief is not a panacea, but relieving some of the burden, especially of debts that were run up by regimes for their own benefit, may help the economies of Africa grow and prosper. However, arguments against full and unconditional debt relief exist. First, debt relief punishes nations which have managed borrowing well and do not need debt relief. Second, unconditional debt relief will not necessarily cause nations to spend more in social programs and services, on the one hand, or to solve their financial problems without stifling the economy with the need for more taxes, on the other hand. Finally, debt relief may make it more difficult for nations to receive credit in the future. It has been suggested that any debt relief policy be conditional upon a commensurate reduction in aid. The Heavily Indebted Poor Countries initiative was launched in 1996; if implemented, it would greatly affect Africa's economy