Contemporary Issues in Development Economics

More than five years after the eruption of the global financial crisis, the world economy has not recovered to running at full capacity According to the latest update of the World Economic Situation and Prospects by the United Nations (United Nations, 2014a), the world output is expected to grow in 2014 and 2015 at the rates of 2.8 per cent and 3.2 per cent respectively. These rates are far from sufficient to close the output gap and recuperate the job losses caused by the financial crisis.

Are there cultural underpinnings for differences in types of collective action? One may think that countries that have been successful in establishing democracies earlier than other countries had stronger historical traditions of collective action. If this were true, countries that have not yet established democracies are simply lagging in having their population stage a successful revolution to establish democracy. Looking back in human history, things seem, however, quite different from such a simple scheme. Some countries may have had a stronger tradition of collective action than established democracies, but the aims of that collective action may not necessarily have been to establish democracy. In a recent paper, Gorodnichenko and Roland (2013) presented a model and empirical evidence showing that countries with individualist culture would adopt democracy earlier than countries with collectivist culture, even if the latter possibly had better traditions of collective action. In this chapter, we would like to take a closer look at this question and look for micro-foundations of different types of collective action in different cultures. We focus on the comparison between individualism and collectivism, so it is useful in such an endeavor to compare Chinese and European history, which are relatively well documented.

Africa’s GDP growth rates in the last decade have been averaging about 5 per cent per year, making it second only to East Asia as the fastest growing region. Seven of the 10 fastest growing economies in the last decade are in Africa. Trade with the rest of the world has increased by 200 per cent since 2000, although from a low base. In addition, Africa appears to have recovered from the recent global economic slowdown better than anyone predicted and the region is expected to resume its recent growth trajectory much earlier than envisaged. Further, projections by the World Bank and IMF indicate that on average Africa will have the world’s fastest growing economy over the next five years. All of these have led to an upbeat buzz about the future of Africa (see The Economist, 2011, 2013; Sachs, 2012; African Development Bank, 2011). Non-income indicators of the Millennium Development Goals (MDGs) such as primary school enrollment, child mortality, gender parity in schooling, and access to water and sanitation services are also improving (Demombynes and Trommlerová, 2012).