Africa, PIIGS, GDP and Haiti

October 11, 2010

Lately the economic troubles facing the PIIGS, (Portugal, Italy, Ireland, Greece, and Spain) has roiled financial markets and further muffled credit markets. What is far from apparent is that the standard of living in these areas is much higher than most areas in Sub Saharan Africa, Haiti, and Cuba and yet the poverty of these areas continue to be neglected by the mainstream media. The closest analogy would be to sensationalize Warren Buffet having to change a tire on his car while ignoring the fact that in some countries children have to walk miles to get to school.[1]

The Gross Domestic Product (GDP)[2], is a measure of a country’s output. Where it becomes interesting is when one looks at the GDP per capita, which can be used as a proxy for the average salary in a country, (see income approach).[3]

What the grid shows is that the per capita values between the African countries and their European counterparts show embarrassingly high disparities. The fact is that while a strike (civil unrest) in Europe more likely represents being able to afford a backyard pool or better retirement benefits, a strike in Tanzania represents basic items concerning food, education, and shelter.

To add insult to injury the general consensus is that the problems faced by many African countries stems from greed, mismanagement, and ineptitude of governance.

The following chart shows the colonization of the continent in 1914.[4]

African history shows the manipulation of various tribes by colonial powers, (Chowke vs Lunda)[5] , and the exploitation of the arts and resources of the continent have resulted in long term weaknesses in the African economic framework.

It should come as no surprise however that several of the colonial powers which invested in the unsustainable exploitation (Portugal, Italy, and Spain), now find themselves losing ground on the economic front without surplus capital provisions from the African continent.