^{Page 140 note 1} Unweighted average annual increase in gross national product, calculated by the author. Source of data: World Bank, World Tables. The Third Edition, I, Economic Data (Baltimore, 1983), and unpublished World Bank tables. Growth in the low-income countries of sub-Saharan Africa was 3.0 per cent per annum during the 1950s, 3.8 percent during the 1960s, 3.3 per cent from 1970 to 1978, and 1.2 per cent from 1978 to 1981, with even lower rates in the next several years.Google Scholar

^{Page 140 note 2} In the mid-income countries, the growth rate was 4·9 per cent in the 1950s and 1960s, 6·4 per cent from 1970 to 1976, and 3·0 per cent from 1976 to 1981, with lower rates in subsequent years.

^{Page 140 note 3} For sub-Saharan Africa as a whole, the annual growth rate was 3·7 per cent in the 1950s, 4·3 per cent in the 1960s, 9·2 per cent from 1970 to 1977, and 1·8 percent during 1977–1984.

^{Page 140 note 4} International Monetary Fund, World Economic Outlook, April 1986 (Washington, D.C., 1986), pp. 179 and 184–5. The average growth rates are weighted by size of G.D.P. The I.M.F. definition of Africa excludes Egypt and Libya, and its sub-Saharan Africa category excludes Nigeria.Google Scholar

^{Page 140 note 5} Ibid. The conversion from aggregate to per capita figures has been obtained by using population data from World Bank. World Development Report, 1987 (New York, 1987).Google Scholar

^{Page 140 note 6} World Economic Outlook, April 1986, p. 184. On an aggregate basis, real G.D.P. growth for all developing countries fell from 6·2 per cent annum (1968–1977) to 3·2 per cent (1978–1984).

^{Page 141 note 1} Maddison, Angus, ‘Growth and Slowdown in Advanced Capitalist Economies: techniques of quantitative assessment’, in Journal of Economic Literature (Nashville), xxv, 06 1987, p. 649. The conjunctural elements mentioned include two important recessions, two oil shocks, the acceleration of inflation, and the collapse of the World War II international-payments system.Google Scholar

^{Page 141 note 2} Krueger, Anne O., ‘Developing Countries’ Debts and Growth Prospects', Frank M. Engle Lecture, The American College, Bryn Mawr, Pennsylvania, 20 March 19860. The seriousness of the recession caught the World Bank, of which Krueger was a Vice-President, completely by surprise, and the Bank's misjudgement caused it to give bad advice to many African countries.Google Scholar

^{Page 141 note 3} Tanzi, Vito, ‘Fiscal Policy Responses to Exogenous Shocks in Developing Countries’, in American Economic Review (Nashville), 76, 2, 05 1986, pp. 88–91.Google Scholar

^{Page 141 note 4} Moshin S. Khan, ‘Developing Country Exchange Rate Policy Responses to Exogenous Shocks’, in Ibid. p. 84.

^{Page 141 note 5} On the ‘resurgence of protection in the form of nontariff barriers… which affect developing countries’ exports in particular’, see World Development Report, 1987, pp. 10 and 133–53.

^{Page 141 note 6} Tanzi, loc. cit. p. 88.

^{Page 142 note 1} Incidentally, even in the production of foods, there is room for doubt about the general negative perception that African output per capita has been manifesting a continuing decline. See Schatz, Sayre P., ‘African Food Imports and Food Production: an erroneous interpretation’, in The Journal of Modern African Studies (Cambridge), 24, 1, 03 1986, pp. 177–8.Google Scholar

^{Page 143 note 1} Except to the degree that governments interfere with the free functioning of the world economy, e.g. by protectionism. The removal of such interferences is considered an appropriate area for action.

^{Page 144 note 1} For the reasoning underlying this judgement, see Schatz, Sayre P., ‘Socializing Adaptation: a perspective on world capitalism’, in Becker, David G., Frieden, Jeff, Schatz, , and Sklar, Richard L., Postimperialism: international capitalism and development in the late twentieth century (Boulder, 1987),Google Scholar a book that presents a new paradigm of the political, social, and economic organisation of international capitalism. (My article was originally published in World Development (Oxford), 11, 01 1983, pp. 1–10.)Google Scholar

^{Page 144 note 2} See, e.g. World Bank, Financing Adjustment with Growth in Sub-Saharan Africa, 1986–90 (Washington, D.C., 1986);Google ScholarOrganisation of African Unity, ‘Africa's Submission to the Special Session of the United Nations General Assembly on African's Economic and Social Crisis’, Addis Ababa, 1986, OAU/ECM/2XV/Rev.2; Schatz, ‘Financing…Economic Recovery and Development’; and discussions at the U.N. before and after the passage of the Programme of Action on 1 June 1986.Google Scholar

^{Page 145 note 1} Some donor countries expressed misgivings about the U.N. African Programme of Action because it is unclear how the figures were calculated. The New York Times, 27 May 1986, p. A12.

^{Page 145 note 2} The concept of a correct, and limited, amount of external financing is closely related to the view, developed some three decades ago, that poor countries have a limited absorptive capacity for capital. The latter notion may be compared to the earlier hypothesis of the backward-bending supply curve of labour. Both have some plausibility. Some theoretical level of wages would be high enough to cause the labour supply to diminish, so that the curve would bend backwards; similarly, some theoretical level of E.R.I.s would be high enough to cause the productivity of further capital inflows to become negative or to drop sharply. However, in the general neighbourhood of wages actually available in the real world, the labour-supply curve seldom bent backwards. And in the range of E.R.I.s actually available in the real world, there is no evidence to support the implausible hypothesis of a sharply discontinuous drop in productivity. The backward-bending supply notion provided a rationale for low wages; by way of contrast, the limited-absorptive capacity and correct-amount notions provide a rationale for low aid flows.

^{Page 146 note 1} The figures in this section are derived from O.A.U., ‘Africa's Submission’; World Bank, Financing Adjustment; and Schatz, ‘Financing… Economic Recovery and Development’, a copy of which will be sent by the author to readers, if requested. Although changing economic conditions will always outrun such figures, this does not affect the major points made in this section.

^{Page 146 note 1} Apparently excluded from these figures are short-term debts of less than one-year duration, large amounts owed to the I.M.F. and other multilateral institutions, and repayments due but not actually made.

^{Page 146 note 1} Schatz, ‘Financing… Economic Recovery and Development’.

^{Page 147 note 1} O.A.U., op. cit.

^{Page 147 note 2} Schatz, ‘Financing…Economic Recovery and Development’.Google Scholar

^{Page 147 note 3} The Overseas Development Council and the Council on Foreign Relations, both of the United States, have stated that Africa requires twice as much aid as it received in 1986, and that it will continue to need $16–20 thousand million annually through the rest of this century. New York Times, 27 May 1986, p. A12. See also ‘Compact for African Development: report of the Committee on African Development Strategies’, in Berg, Robert J. and Whitaker, Jennifer Seymour (eds.), Strategies for African Development (Berkeley, 1986), pp. 557–85.Google Scholar

^{Page 147 note 4} Schatz, ‘Financing…Economic Recovery and Development’.

^{Page 148 note 1} Ibid.

^{Page 148 note 2} Berg and Whitaker (eds.), op. cit. p. 581.

^{Page 148 note 3} The multiplier effect of an injection of E.R.I.s under current crisis conditions in Africa is quite different from the Keynesian multiplier, and applies in varying degrees to other L.D.C.s facing severe foreign-exchange shortages.

^{Page 149 note 1} Faber, Mike and Green, Reginald H., ‘Sub-Saharan Africa's Economic Malaise: some questions and answers’, in Rose, Tore (ed.), Crisis and Recovery in Sub-Saharan Africa (Paris, 1985), pp. 16–18.Google Scholar

^{Page 149 note 2} Devaluation may also gradually increase exports and thus foreign-exchange earnings.

^{Page 149 note 3} Thus, the World Bank pleaded in Financing Adjustment, p. 7, for ‘substantially higher donor assistance’ to Africa in order to achieve ‘adjustment with growth’.

^{Page 150 note 1} The human consequences and the potentially severe political effects of multiplied reductions in real income in poor countries have been discussed elsewhere. See, for example, Schatz, Sayre P., ‘Laissez-Faireism for Africa?’ in The Journal of Modern African Studies, 25, 1, 03 1987, pp. 129–38. Still, it might be worth making special mention here of the capital-formation costs. A country's capital stock is doubly impaired: first, by the low rate of investment associated with low income – according to World Bank, Financing Adjustment, p. 35, investment rates in Africa are now lower than in any other region of the Third World; second, by reductions in resources devoted to already neglected maintenance, repair, and rehabilitation of existing capital stock.CrossRefGoogle Scholar