An African Growth Miracle? Or: What Do Asset Indices Tell Us About Trends in Economic Performance?

25 Pages Posted: 5 Sep 2013

See all articles by Kenneth Harttgen

Kenneth Harttgen

University of Zurich

Stephan Klasen

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Date Written: October 2013

Abstract

Using changes in the possession of household assets over the past 20 years, several recent papers have argued that economic growth and poverty reduction in Africa was substantially better than suggested by national income data and income poverty statistics, which suffer from well‐known weaknesses. We scrutinize these claims and first argue that trends in assets provide biased proxies for trends in incomes or consumption. In particular we show that the relationship between growth in assets and growth in incomes or consumption is extremely weak; instead, we find evidence of asset drift using macro and micro data, which is consistent with the claims we make about possible biases in the use of asset indices. As a result, we find no evidence supporting the claim of an African growth miracle that extends beyond what has been reported in official GDP/capita and consumption figures.

Keywords: Africa, asset index, GDP growth

JEL Classification: O11, O12, O47

Suggested Citation

Harttgen, Kenneth and Klasen, Stephan, An African Growth Miracle? Or: What Do Asset Indices Tell Us About Trends in Economic Performance? (October 2013). Review of Income and Wealth, Vol. 59, pp. S37-S61, 2013. Available at SSRN: https://ssrn.com/abstract=2320851 or http://dx.doi.org/10.1111/roiw.12016

Kenneth Harttgen (Contact Author)

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Stephan Klasen

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany
+49-551-397303 (Phone)
+49-551-397302 (Fax)

HOME PAGE: www.vwl.wiso.uni-goettingen.de/klasen.html

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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