[quote=nairobby]I urge everyone to read this article by the Good Dr. on why all this Jubilee mega-project hyped growth has done NOTHING to grow the income in our pockets.
https://www.theeastafric...ng-like-an-asian-tiger/[/quote]
Dr. Ndii is a very highly qualified economist. However, he is often economical with his admirable economic knowledge:
1. "GDP is short for Gross Domestic Product, which means the
quantity (not value) of all goods and services produced in an economy"....No, GDP is expressed in Local currency and converted at prevailing exchange rates, say for expression in USD. How can services (transportation, banking, tourism) be expressed as a quantity as opposed to a value?
2. "..The GDP accountants will capture the 25 per cent increase in production, as well as the economic activities created by the imported sugar,
No they won't. Unless all the transporters are listed as sugar-only transporters, distributors, etc. their activities will be captured in the other respective categories and will not feature in the sugar category.
3. "...The recovery of the agricultural sector from drought is in fact the story behind the 6.3 per cent growth figure. Agricultural sector GDP grew 6.4 per cent, just about the same rate as the economy."
Nope. Agri is approx. 21% of gdp. (services circa 60%) ALL other sectors would need to have grown at similar rates on average to achieve the 6.3% overall figure.
4. "....Only maize production is well above the 2016 harvest (see table). Moreover, while production increased, prices for most products were lower in 2018. Maize led the way with prices down 56 per cent, from Sh4,000 to Sh2,260 per bag." Again a clear admission that GDP is measured in prices, even for commodities (see my point 1).
5. He does a decent job of explaining TFP. My version will be an increase in lending activity by digital lenders without a commensurate increase in physical & human resources. That portion of GDP growth that is not accounted for by increased use of tangible resources (labour and capital inputs). While this is a measure often cited by economists for economic efficiency, its predictive capability remains in question as many of the inputs into the calculations are made on the basis of estimates and rules of thumb.
6. "....I do not have growth accounting analysis of Kenyan GDP readily available but as it happens, the most recent edition of the IMF’s Africa Regional Economic Outlook published this past April has just what we need.
really, dude? Prolific economic analysis writer (PHD Oxford) not having EVER interrogated TFP for Kenya? Sloppy/ lazy?
7. The chart cited does NOT have just what we need! The chart on the right actually shows that 2015-2017 TFP contribution to growth using ACTUAL figures (the pink bar) INCREASED compared to the 2000-2014 period. The 2018-2022 is an ESTIMATE / PROJECTION. However, the projection is indeed cautionary and means that countries in Africa need to enhance their focus on supporting innovation / knowledge to change our growth mix.
8. He is on track to give the answer, and I have my own hypothesis on the cause of the disconnect between macro economic growth and micro economic pain.
Dr. Ndii is however, a great mind, very engaging author and can hold his own very well in debates (have seen him in action). I only wish he would stick to genuine economic analysis, rather than twist his vast and impressive economic knowledge to support thematic (whether political, donor-driven, or otherwise) arguments.