African Keynesianism

Canada, UK and others (but not impoverished and victimized USA, which
suffers so much) are championing a "New Development Plan for Africa", to
be taken up at the next G-8 meeting this year in Canada. In this context
a note on:

African Keynesianism

The African continent is so poor that a Marshall Plan for Africa would
be relatively inexpensive. Gross Domestic Investment for all of Africa
was 89 billion U.S. dollars (year 1995, based on World Bank data). If
one wanted to *****double**** African gross domestic investment in plant
and infrastructure, about 89 billion dollars per year would be required.

For comparison:
(a) Europe -- annual equalization payments within the EU are about 70
billion US dollars [approx. 40 for agricultural fund + 30 bln for other]

(b) foreign aid (actual)- world total of ODA (year 2000) = USD 53
billion
(c) foreign aid (UN target of 0.7% of GDP) :
world total (approx.) = $30 trillion * 0.7% = USD 210 billion

Theory - from a perspective of global Keynesianism, money given to
Africa for investment in plant and infrastructure would constitute
global stimulus. That would add jobs and growth to the rich countries as
well, as such a measure increase global effective demand. An African
Marshall Plan is an act of enlightened self-interest by rich countries,
especially, in recession times and, especially, if the money does not
come out of their pockets, but out of new global money (SDRs or
similar).

If the US does not participate, the other rich countries could specify a
string attached to the African Marshall Plan - "buy anywhere, except in
USA".

Gernot Köhler




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