CHRISTOPHER S. ADAM, PAUL COLLIER and NJUGUNA S. NDUNG'U. Kenya—Policies for Prosperity. (Oxford/New York: Oxford University Press, 2010, ISBN 978-0-19-960237-7, £ 55.00 (h/b), pp. 428).

✍ Scribed by Mats Harsmar

• Book ID: 102349811
• Publisher: John Wiley and Sons
• Year: 2012
• Tongue: English
• Weight: 44 KB
• Volume: 24
• Category: Article
• ISSN: 0954-1748
• DOI: 10.1002/jid.1840

✦ Synopsis

How to build a middle income country? What are today's possibilities for a poor country to shift its economic structure into one where manufacturing and services increasingly replace subsistence agriculture? What policy areas are key for reaching sustained growth and poverty reduction?

Against the backdrop of such a challenge, a comprehensive study and analysis of the current Kenyan economy is undertaken by some 40 economists, both academics and practitioners. The idea is to contribute knowledge to policy dialogues. By including policymakers as authors, and by trying to avoid academic jargon, an attempt is made to bridge the research-policy divide. This is indeed a praiseworthy ambition for this new series of books on African economies. Unfortunately, the communication objective is not completely achieved in this first study. The strength of including many voices also becomes a weakness. Similar or even the same arguments get repeated over and over again in the various contributions. At points, different authors provide contradictory messages, for instance, concerning the roles of taxes or corruption. A much tougher editing, including getting rid of some 100 pages (and a few equations), would have done the project good.

Nevertheless, the issue at hand is of utmost importance. The approach of discussing economic sectors and functions specifically, within a comprehensive macro framework, makes this a study that goes well beyond the usual 40-page to 50-page country economic reports that policymakers so often base their decisions on. This study appears at a point when sustained economic growth has been achieved in many African countries for the first time in a generation but when further growth might be threatened both by global economic turmoil and internal forces.

The analysis builds on the influential Hausmann et al. (2005) approach of identifying binding constraints to growth in specific country contexts. In the case of Kenya, it is concluded that the low level of investment is key and that the main reasons behind this have to do with economic agents facing difficulties in appropriating profits because the level and quality of infrastructure is too low, and corruption, crime and political instability are too high. These are urgent matters to deal with if Kenya is to continue moving along the path that the government described in its Vision 2030 strategy. The analysis is influenced by recent years' experiences, when political violence severely slowed the strong economic growth down.

In their discussion of the fragility of Kenyan growth, the authors touch upon the issue of ethnical ("horizontal") inequality. However, this analysis could have been taken further into the direction of the role of taxation, social protection and asset distribution.

The book covers really vast areas. Rich and insightful analysis of, among others, agriculture, manufacturing, financial sectors, as well as land, labour and capital markets are provided, alongside analysis of fiscal, trade and monetary policies. In its richness, this is a book that may well be used as a reference work on the Kenyan economy. Its discussions have moved some healthy distance away from the 'Washington consensus'. For instance, industrial development is seen as essential, and industrial policies seem (almost) possible to promote again.

The future for this resource-scarce economy, where land access per person is only half the African average, and where 43 per cent of the population is under the age of 15, is seen to differ between regions. Agriculture-based exports around Nairobi, e-services in more distant areas and labour-intensive manufacturing industries along the coast are proposed.