Ten Principles of Economics - Part 54. Economics is the study of how society manages its scarce resources. In most societies, resources are allocated not by a single central planner but through the combined actions of millions of households and firms. Economists therefore study how people make decisions: how much they work, what they buy, how much they save, and how they invest their savings. Economists also study how people interact with one another. | CHAPTER 24 PRODUCTION AND GROWTH 549 higher trade barriers excessive tax rates lower saving rates and adverse structural conditions including an unusually high incidence of inaccessibility to the sea 15 of 53 countries are landlocked . . . . If the policies are largely to blame why then were they adopted The historical origins of Africa s antimarket orientation are not hard to discern. After almost a century of colonial depredations African nations understandably if erroneously viewed open trade and foreign capital as a threat to national sovereignty. As in Sukarno s Indonesia Nehru s India and Peron s Argentina self sufficiency and state leadership including state ownership of much of industry became the guideposts of the economy. As a result most of Africa went into a largely self-imposed economic exile. Adam Smith in 1755 famously remarked that little else is requisite to carry a state to the highest degrees of opulence from the lowest barbarism but peace easy taxes and tolerable administration of justice. A growth agenda need not be long and complex. Take his points in turn. Peace of course is not so easily guaranteed but the conditions for peace on the continent are better than today s ghastly headlines would suggest. Several of the large-scale conflicts that have ravaged the continent are over or nearly so. The ongoing disasters such as in Liberia Rwanda and Somalia would be better contained if the West were willing to provide modest support to Africanbased peacekeeping efforts. Easy taxes are well within the ambit of the IMF and World Bank. But here the IMF stands guilty of neglect if not malfeasance. African nations need simple low taxes with modest revenue targets as a share of GDP. Easy taxes are most essential in international trade since successful growth will depend more than anything else on economic integration with the rest of the world. Africa s largely self-imposed exile from world markets can end quickly by cutting import tariffs and ending .
