chapter  4
12 Pages

State–business relationships and economic growth in

Withsub-Saharan Africa KUNAL SEN AND DIRK WILLEM TE VELDE

Introduction There is by now an extensive literature that has studied why African countries have grown so slowly, examining the various determinants of economic growth in sub-Saharan African countries. This literature finds that distorted product and credit markets, high risk in economic transactions, high rates of public expenditure, macroeconomic instability, lack of openness to trade, and inadequate infrastructure along with high ethnic fragmentation, adverse geographical conditions and high incidence of civil wars are important factors in explaining why African countries have tended to grow slowly, especially since the 1980s (Sachs and Warner 1997; Easterly and Levine 1997; Collier and Gunning 1999; Artadi and Sala-i-Martin 2003; Gyimah-Brempong and Corley 2005). One important strand of this literature has focused on governance and institutions – in particular, the risk of expropriation (Hall and Jones 1999: Acemoglu et al. 2001; Rodrik et al. 2004; Mauro 1995) and the high degree of corruption – as being an important ‘deep determinant’ of economic growth in sub-Saharan African countries. In this chapter, we examine a specific set of institutions – the formal institutional relations between states and the business sector – as a possible cause of variations in economic growth amongst sub-Saharan African countries, both across countries and over time.