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Matthias Cinyabuguma was a summer intern in the African Department and a PhD candidate at Brown University. We would like to thank Jean A.P. Clément, Arend Kouwenaar, Dhaneshwar Ghura, Luca Ricci, Brett House, Jacob Gons, William S. Rogers, Eric Nelson, Brendan Horton, and Tobias Roy for helpful comments. We are grateful to Henri-Bernard Solignac Lecomte for kindly providing us with useful references. A later version of this paper will be published in a forthcoming book on the Democratic Republic of the Congo.
The DRC gained its independence in June 1960.
La Politique des Grands Travaux was an ambitious plan for economic development aimed at implementing prestigious and large-scale projects.
Exports mainly consist of oil products, cotton, cocoa, coffee, tea, and forestry products.
The Zaireanisation process was characterized by the nationalization of a number of foreign enterprises.
For simplicity, the time subscripts are excluded.
The use of the economically active population as labor inputs is common in most studies on developing countries.
Those values for the capital-output ratio have been widely used in the literature (see, for example, Sacerdoti, Brunschwig, and Tang (1998); Beddies (1999); Vera-Martin (1999)). Mankiw, Romer and Weil (1992) found that the total capital-output ratio in developing countries is close to 1. Given the relatively high rate of depreciation, the impact of the initial stock of capital decreases rapidly and vanishes in less than seven years. The high rate of depreciation mainly reflects the widespread lack of maintenance and accelerated depreciation due to several conflicts. Beddies (1999) also chose a 15 percent rate for capital depreciation, while Vera-Martin (1999) pointed out that a depreciation rate of 10 to 15 percent does not significantly alter the econometric results.
Our measure of capital stock in the agricultural sector is largely underestimated, primarily because of lack of data on most investments undertaken by farmers. Therefore, the econometric results for the agricultural sector should be interpreted with caution.
The mining sectoral value added was found to have a unit root in the test with a deterministic linear time trend, but the presence of unit root was rejected at 5 percent in the test with a nonzero constant. As the graph of this variable clearly shows the presence of a linear trend, we go by the result of the first test.
Since models with different lag length must be nested and estimated over the same period for the likelihood ratio test to be performed and valid, all the VARs were estimated during the period, 1968–2000, the longest time span possible for eight lags.
For the mining sector, while the presence of cointegration cannot be rejected, the estimated elements of the vector are statistically insignificant (see Table 6). Therefore, no long-run production function was found for the mining sector
The elasticities used for agriculture and mining are 0.28 and 0.60. These values are taken from another study (Sarel, 1997), since the available data do not allow meaningful estimates of elasticity for both sectors. Therefore, the results for the mining and agriculture sectors should be interpreted with caution.
Owing to data constraints, several variables found in the growth literature to have a strong influence on economic growth have not been included.
More details on the DRC’s policy reform can be found in IMF country reports and the authorities’ memorandum of economic and financial policy posted on the IMF’s external web site (www.imf.org).
As pointed out in Section I, in 2002, for the first time in 13 years, real GDP growth is estimated to have been positive, at about 3 percent.
It is expected that with the return of peace and the normal functioning of the economy, the capital depreciation rate will decline to 5 percent, beginning in 2002, from the 15 percent assumed earlier. With a 10 percent depreciation rate, the Solow residual growth will be about 1.5 percentage points higher.
The Solow residual is the part of output growth that is not explained by changes in inputs.
The annual economic growth rate in post-conflict countries has averaged 5 percent in the five years immediately after conflict, and 3 percent in per capita terms. However, the lack of data on productivity growth in post-conflict countries precludes any assessment of our estimates of the Solow residual and productivity growth from a post-conflict country standpoint.
A significant part of the catch-up factor is due to intensified capacity utilization in the postconflict period.