Nov 14, 2012

The African Growth Miracle

. . . [R]eal household consumption in sub-Saharan Africa is growing between 3.4 and 3.7 percent per annum, i.e. three and a half to four times the 0.9 to 1.1 percent reported in international data sources. I find that the growth of consumption in non sub-Saharan economies is also higher than reported in international sources, but the difference here is much less pronounced, with growth of 3.4 to 3.8 percent, as opposed to the 2.0 to 2.2 percent indicated by international sources. While international data sources indicate that sub-Saharan Africa is progressing at less than half the rate of other developing countries, the DHS [see below] suggest that African growth is easily on par with that being experienced by other economies.
That is Alwyn Young in the new paper "The African Growth Miracle" (October 2012). The author uses the Demographic and Health Survey (DHS). He explains:
In this paper I use the DHS data to construct estimates of the level and growth of real consumption in 29 sub-Saharan and 27 other developing countries. These estimates have the virtue of being based upon a methodologically consistent source of information for a large sample of poor economies. Rather than attempting to measure total nominal consumption and marry it to independently collected price indices, they employ direct physical measures of real consumption that, by their simplicity and patent obviousness (the ownership of a car or bicycle, the material of a floor, the birth, death or illness of a child), minimize the technical demands of the survey. While the items they cover provide little information on comparative living standards in developed countries, in the poorest regions of the world they are clear indicators of material well being, varying dramatically by socioeconomic status and covering, through durables, health & nutrition and family time, the majority of household expenditure.
HT: Gis.  

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