External shocks can have devastating consequences for development, as the recent earthquake in Haiti, the Asian Tsunami of 2004 and other natural disasters in recent times have made clear. But man-made disasters also occur with regular frequency, the most recent financial crisis which broke out in the USA in September 2008 a case in point. There have been more than one hundred financial crises world-wide since the 1970s. Some even think that the stage is being set for another financial bubble to burst in the near future.
There may be little, at least over the short-term, that developing countries, particularly the poorest such as those in Africa can do to reduce their vulnerability to such external shocks. Climate change and a more closely integrated global economy may result in African countries becoming more, not less, vulnerable to external shocks.
But this does not necessarily mean that African economies are more at risk of shocks. Countries and their populations are not passive recipients of what humans and nature may throw at them. Being vulnerable does not consign a country inevitably to the hardships of hazards turned into disasters. The risks from being more vulnerable to external shocks can be reduced--through fostering resilience.
Indeed, the recent global financial crisis have been remarkably, and perhaps unexpectedly well-weathered by African economies in general. Most African countries are now well on their way to recovery, the financial crisis now seemingly a thing of the past. In this article I reflect on the apparent better resilience of African economies, appreciating that it may mark a potentially important historical milestone in Africa's recovery from the 'lost' decades of the 1980s and early 1990s. I will illustrate the nature of vulnerability to external shocks and of resilience drawing on the conceptual frameworks set out in the recent UNU-WIDER book Vulnerability in Developing Countries', which was launched in London last month, as well UNU-WIDER's contribution to the 2009 European Report on Development.
Soon after the crisis erupted in USA's financial markets in September 2008, justifiable concern was expressed that poorer countries, such as those in sub-Saharan Africa (SSA) could eventually be hardest hit. The IMF for instance, kept revising SSA's expected growth rate for 2009 downwards, from 5 per cent in October 2008, to 3.5 per cent in January 2009, to 1.7 per cent in April 2009 and 1.3 per cent by October.
Why was SSA seen as vulnerable? Four reasons, or threats, in particular stand out. First, Africa's good growth in recent years has been to a large extent driven by exports, particularly of commodities demanded by fast growing emerging economies like China and India. Trade was one of the first casualties of the financial crisis: already by the end of 2008 global trade started to contract...