The ‘Minsky Moment,’ Millennium Development Goals, and Wither Africa?
Summary of Lecture
This lecture locates the challenge of development for Africa in the context of an unprecedented global economic crisis. During five years of the last decade, the continent achieved its highest rate of growth in 30 years (6.5% annually), which has declined to 1% in 2009. Projections of future growth are guesstimates. Ironically, the low-income country (LIC) and ‘fragile state (FS)’ groupings of Sub-Saharan Africa (SSA) have been less affected by the crisis because they have not fully embraced the current tripartite ‘development consensus’ articulated by Larry Summers: openness, contract and prudent public financial management. The LICs and FSs have ‘weathered the storm,’ depending on how you define ‘weathered,’ precisely because they were not fully open nor did they embrace the orthodoxy of Western ‘best practice’ of public financial management. Neither the banking systems nor the state were excessively leveraged, and the state limited the adoption of private sector financial management. The four-cell Thompson/Tuden decision matrix which arrays agreement/disagreement along the dimensions of facts/values, is presented as a framework for thinking through the options SSA countries face at both the macro level (crafting a development strategy) and the middle level (approaches to public financial management). The development of SSA countries is located at both levels but emphasizes the fiscal constraint of development strategies. The presentation concludes with possible pathways countries may pursue going forward. While most observers of the continent’s growth prospects focus on opportunities and constraints of the global economy, I argue that an equal if not greater constraint is the rigidity of development thinking which assumes agreement on facts and values (Quadrant I of the Thompson/Tuden matrix). SSA development as Quadrant I is held by disparate individuals (Sachs vs Moyo), Institutions (Bretton Woods, bilateral/multilaterals, academe), and is enshrined in the Millennium Development Goals. The uncertainty of uncertainty, which defines our age, calls for flexibility not rigidity in development thinking and implementation.