Article Writing Homework Help

You will prepare and submit a term paper on Savings Rate in the African Countries. Your paper should be a minimum of 1500 words in length. Growth performance of African countries of the 1970s and 1990s had been unimpressive. The empirical literature is still inconclusive. Importance of measuring the output per worker growth that is connected with per worker physical and human capital lies in assessing political changes, technology improvement, and social upheavals. It also shows at times, that even in countries with higher economic growth, trends could be reversing. The main factor that affects all levels of the economy is the targeted level of development.

Financial liberalization is supposed to stimulate higher savings rate and higher interest rates on those savings, leading to higher capital growth. The level of real income plays the most important part of savings, especially in poor countries. Naturally as income increases, savings rate to increases, with comfortable spending power. Empirical research done in the field shows that for sub-Saharan Africa to achieve 5.3 percent GDP growth, to reach the point where savings rate could be comfortable, it would require 18 years. Though a lot is done in this field, further empirical research has to be done on a priority basis. Current research stops after showing that African savings and interest rates are linked with low-income rate and very few government policies exist to encourage savings.

In the last two decades, Nigeria, Rwanda, Kenya, and Sudan suffered a capital flight of 60%, while other African countries suffered a lesser 40%. Many African top officials were presumed to have huge foreign currency accounts in other continents and chances are remote of its being reinvested in Africa. “A difficult question is what African governments can do to obtain the repatriation of those funds, and how the countries in which the accounts are held can be persuaded to be of assistance.”

Foreign direct investment flow to Africa is not stupendous and to create a higher savings rate this has to be increased. Migration of skilled labor out of Africa had been another deterrent. Migration is motivated usually because of low investment in transport, infrastructure, energy, and communication. Africa has to expand its investment, growth, and productivity to stimulate savings rate. African countries are politically and socially unstable and this does not create an atmosphere conducive to attract investments. But it is heartening to note that from 1994 to 1998, Africa showed positive GDP growth in spite of unfavorable global conditions.

“To test whether or not Africa has built a critical mass of momentum towards sustained, poverty-reducing growth requires the use of multiple evaluation criteria. Unfortunately, comprehensive, Africa-specific composite indices needed for this purpose are not available,”

Savings rate usually depends on capabilities, aspirations, functions and peculiar constraints of the region and might be helped with a policy evaluation by the Governments. African Governments, most of the time, are fighting for their own survival and this leaves with insufficient elbow space for economic measures. This failure leads to non-accumulation of future growth, and hence, future welfare. This might result in a lack of education, unemployment, and low worker output. People’s choices get highly curtailed with very few future opportunities, leaving generations to come in comparative poverty. This applies not only to people’s level but also to the national level.