International Commodity Prices, Macroeconomic Performance, and Politics in Sub-Saharan Africa

This study examines the experience of sub-Saharan Africa in dealing with the variability and difficulty of forecasting commodity prices and asks whether the region's much-criticized financial policies are a response to the price fluctuations or to internal political and fiscal arrangements. It reviews the pan-African econometric evidence regarding the effects of international commodity-price fluctuations on output and considers the effects of these fluctuations on the political survival of African leaders. It examines the economics and political economy of taxation and government expenditure in the context of African exporters of primary commodities and discusses arguments that African fiscal and political arrangements compromise the countries' abilities to react to external shocks. The study weighs the relative value of case studies and generalized econometric models in determining the economic effects of commodity-price variations and concludes that it is appropriate to use case studies as a vehicle to generate hypotheses about the causes and consequences of policymaking in Africa, but that the econometric evidence is useful in testing those generalizations when data can be pooled from many countries.