Rational Asymmetric Development: Transfer Mispricing and Sub-Saharan Africa's Extreme Poverty Tragedy

1. Introduction

A recent publication by the World Bank on Millennium Development Goals (MDGs) has established that extreme poverty has been decreasing in all regions of the world with the exception of sub-Saharan Africa (SSA) (Caulderwood, 2015; World Bank, 2015). Consistent with Asongu and Kodila-Tedika (2015), about 45% of nations in the sub-region are substantially off-track from attaining the MDGs extreme poverty target. From the evidence provided by Figure 1, it can be noticed that, but for SSA, extreme poverty has been decreasing in all other regions of the world. This is an unfortunate tendency, despite about two decades of growth resurgence that began in the mid 1990s (Alan & Carlyn, 2015, p. 598). In the light of these observations optimistic narratives about African rising should be treated with extreme caution, notably: (i) Pinkivskiy & Sala-i-Martin (2014) on all African countries attaining the MDGs extreme poverty target by 2014, with the exception of the Democratic Republic of Congo; (ii) Leautier (2012) on Africa’s growing leadership role in the World and (iii) the continent witnessing considerable poverty decline compared to other world regions (Fosu, 2015a). It should be noted that the cautious position of Fosu is much more articulated in Chapter 1 (Fosu, 2015b) of his recent book on ‘growth and institutions in Africa’(Fosu, 2015c). Nonetheless, such overly optimistic positions may have been motivated by a stream of the literature on ‘the African growth miracle’ (Young, 2012): a motivational current in the literature which is likely to be more concerned about promoting the interest of neoliberal ideology and capital accumulation. Therefore, neglecting fundamental ethical concerns like: ecological crisis, inequality and sustainability in job creation (Obeng-Odoom, 2013, 2014).

Figure 1.

Comparative regional poverty levels

Source: World Bank PovcalNet