Democratic Republic of the Congo: Selected Issues and Statistical Appendix

This Selected Issues paper and Statistical Appendix investigates the sources of growth in the Democratic Republic of the Congo (DRC) and evaluates the relative importance of productivity growth and factor accumulation. The analysis is extended to the key sectors of the economy: agriculture, mining, and transport. The paper assesses the DRC’s medium-term growth prospects and compares them with both the post-conflict growth experience to date and the growth objectives of the Poverty Reduction and Growth Facility-supported program. The paper also suggests a simple, yet powerful, methodology for projecting the real GDP growth rate.

Abstract

This Selected Issues paper and Statistical Appendix investigates the sources of growth in the Democratic Republic of the Congo (DRC) and evaluates the relative importance of productivity growth and factor accumulation. The analysis is extended to the key sectors of the economy: agriculture, mining, and transport. The paper assesses the DRC’s medium-term growth prospects and compares them with both the post-conflict growth experience to date and the growth objectives of the Poverty Reduction and Growth Facility-supported program. The paper also suggests a simple, yet powerful, methodology for projecting the real GDP growth rate.

I. Sources of Growth in the Democratic Republic of the Congo: A Retrospective and Prospects1

A. Introduction

1. The Democratic Republic of the Congo (DRC) is endowed with vast natural resources, and a large and dynamic population and enjoys the most extensive network of navigable waterways in Africa. It also has a vast hydroelectric potential that remains largely untapped. Despite its economic potential, the DRC’s economic performance was dismal during 1960–2000. Per capita GDP declined steadily from US$380 in 1960 to US$240 in 1990 and further to US$85 (or 23 cents a day) in 2000, placing the country among the poorest in the world (see figure below). The dramatic decline in output and income has been the result of misdirected economic and financial policies, pervasive corruption, and, especially in the past decade, political turmoil, civil strife, and outright war (since 1998).

A01ufig02

Real GDP per Capita

(Index, 1960 = 100)

Citation: IMF Staff Country Reports 2003, 175; 10.5089/9781451841152.002.A001

2. However, since early 2001, the authorities have started addressing the alarming economic and social situation by stabilizing the macroeconomic situation, liberalizing the Congolese economy, and opening it up to the rest of the world. With its critical mass of macroeconomic policies and far-reaching structural reforms, the IMF staff-monitored program (SMP), covering June 2001–March 2002, was a crucial first step toward stabilizing the country’s economic situation and laying the foundations for reconstruction and the restoration of growth. The SMP has produced significant results, particularly the breaking of hyperinflation, the restoration of stable macroeconomic conditions, and the beginning of a creation of an enabling environment for the resumption of growth. In 2002, for the first time in 13 years, real GDP growth is estimated to be positive, at about 3 percent. Building on these achievements, a program (covering April 2002–July 2005) supported by an arrangement under the IMF’s Poverty Reduction and Growth Facility (PRGF) is being put in place, with the aim of reconstructing the country and reviving economic growth.

3. The objectives of this study are threefold. First, it econometrically investigates the sources of growth in the DRC and evaluates the relative importance of productivity growth and factor accumulation. Unlike most studies on sources of growth, the analysis is extended to the key sectors of the economy: agriculture, mining, and transport. In estimating the production functions, the approach adopted, namely, the cointegration technique, preserves the long-run information in the data, while taking into account the short-run dynamics. Second, the paper assesses the DRC’s medium-term growth prospects and compares them with both the post-conflict growth experience to date and the growth objectives of the PRGF-supported program. Third, based on the econometric findings, the paper suggests a simple, and yet powerful, methodology for projecting the real GDP growth rate.

4. The paper is organized as follows: Subsection B provides a brief background on the Congolese economy, focusing on economic growth performance during 1960–2000; Subsection C analyzes the long-run production function and sources of growth; Subsection D assesses the medium-term growth prospects; and the last subsection highlights the main conclusions and their policy implications.

B. Economic Growth Performance During 1960–2000

5. Focusing on the key constraints and policies that have hampered economic growth, this subsection analyzes both overall and sectoral growth performance. The factors constraining economic growth in the DRC include bad governance and administrative bottlenecks, ill-conceived economic policies, transportation difficulties, lack of basic infrastructure, and insufficient confidence among potential local and foreign investors.

Overall growth performance

6. The DRC’s overall growth performance has been dismal, notwithstanding the country’s rich endowments of natural and human resources. Four decades have been lost; real GDP in 2000 is below its 1960 level (see figure below). The evolution in real GDP since 1960 is best explained by dividing it into five subperiods: (a) 1960–65: political chaos and economic disruption; (b) 1966–74: stability and growth; (c) 1975–82: economic recession and debt crisis; (d) 1983–89: adjustment under the IMF and stop-and-go policies; and (e) 1990–2000: hyperinflation and collapse of the economic and political system.

A01ufig03

Real GDP

(Index, 1960 = 100)

Citation: IMF Staff Country Reports 2003, 175; 10.5089/9781451841152.002.A001

1960–65: political chaos and economic disruption

7. This period witnessed a decline in output because of disruption in the transport network and the hasty departure of many foreign entrepreneurs following political turmoil, civil strife, and the failed secession of Katanga. Real GDP declined by about 4 percent between 1960 and 1965.

1966–74: stability and growth

8. This period was characterized by increased involvement of the state in the productive sectors of the economy. Thanks to La Politique des Grands Travaux,2 public investment quadrupled. In 1971, the first Mobutu plan (Plan Décennal 1971–80) was launched, which aimed to raise real GDP growth to about 7 percent per year. Against this backdrop, the government took, during 1973–74, steps toward the nationalization of all small, medium-sized, and large foreign enterprises.

9. Increasing state control of the economy was accompanied by an impressive economic expansion, with real GDP growing at an average annual rate of 5.1 percent during 1966–74. However, following the adverse terms of trade shocks caused by both a reversal in copper prices and the oil crisis of 1973, the centralized economy, unable to adjust, soon revealed its hidden weaknesses.

1975–82: economic recession and debt crisis

10. The ill-advised economic policies and public investments of the early 1970s precipitated a debt crisis with a damaging impact on economic activity. In 1975, the country stopped servicing its debt and requested for the first time an IMF-supported program. Because of the debt crisis, the public investment program was grounded, capital invested in “white elephants” was lost, and the maintenance of infrastructure and productive capital was neglected or postponed indefinitely. As a result, economic activity experienced a severe downturn, compounded by the invasions of the Shaba Province (the heart of mining activities) in 1977 and 1978. Altogether, during 1975–82, real GDP shrank by 12 percent.

1983–89: adjustment under the IMF and stop-and-go policies

11. To improve the economic and financial situation, and eliminate the significant distortions that had grown in the preceding period, the government started to implement in September 1983 a strong stabilization and liberalization program. This strategy had a positive impact as real GDP, which had declined by 2.2 percent in 1982, recovered with an average annual growth rate of 2.6 percent during the period 1984–86. The growth during these three years was primarily due to high and increasing levels of production in the mining and agricultural sectors.

12. In 1987, with the support of the IMF and the World Bank, the government launched a structural adjustment program aimed at laying the basis for long-term economic growth and a sustainable external financial position. The program also benefited from improved terms of trade, mostly reflecting a strong upturn in copper prices beginning in early 1987. However, with the more favorable external environment, the government all but stopped its adjustment efforts. As a result, the country’s financial performance deteriorated markedly. Annual real GDP growth decelerated to 0.5 percent on average during 1987–89.

1990–2000: hyperinflation and collapse of the economic and political system

13. In the midst of failed attempts at political liberalization, control over economic policies was lost, and the country fell into the grips of an unprecedented circle of hyperinflation, currency depreciation, increasing dollarization and financial disintermediation, declining savings, deteriorating economic infrastructure, and broad-based output decline. The alarming economic and social situation was compounded by outright war, which broke out on August 2, 1998.

14. In this context, a large part of the country’s capital stock was destroyed, and investment was discouraged. As a result, real GDP contracted cumulatively by some 43 percent during the decade, and per capita real GDP plummeted from US$224 in 1990 to US$85 (23 cents a day) in 2000. Over the same period, consumer prices rose at an annual average rate of 684 percent. Government revenue fell by fourth-fifths, and external debt rose to about 300 percent of GDP (or almost US$13 billion).

Sectoral growth performance

15. Agriculture, mining, and transport are by far the most important sources of growth in the DRC.

Agriculture

16. Combined with forestry, animal husbandry, and fishing, agriculture provides direct employment to more than three-fourths of the labor force and accounts on average for about 45 percent of real GDP. Agriculture has great potential as a source of economic growth, export diversification, and gainful employment. Nevertheless, agricultural output has not recorded substantial growth (see figure below), and its contribution to exports declined continuously from about 40 percent of exports in 1960 to less than 10 percent in 2000, with some traditional export products virtually not being grown any more.3 With regard to food crops, Maton, Schoors, and Van Bauwel, (1998) have shown that food surplus per head increased between 1965 and 1974; thereafter, a steep declining trend started, partly owing to the Zaireanisation4 process, which has sapped productivity growth.

17. Overall, agricultural development has been constrained by several factors. These include the deterioration of the network of rural feeder roads; the dislocation caused by the Zaireanisation measures of 1973–74; inadequate credit for small-scale producers; lack of foreign exchange for essential imports; insufficient storage and other marketing facilities; and the uncertainties created by the government’s pricing policies.

A01ufig04

Agricultural Real Value Added per Worker

(Index, 1960 = 100)

Citation: IMF Staff Country Reports 2003, 175; 10.5089/9781451841152.002.A001

Mining sector

18. The DRC is extremely rich in mineral resources, and its mining potential remains largely untapped. Its mineral resources include copper, cobalt, diamonds, gold, zinc, uranium, tin, silver, coal, manganese, tungsten, cadmium, and crude oil. Most mining is carried out by the largest state-owned company, the Générale des Carrières et des Mines du Congo (GECAMINES), which accounts for over 90 percent of total copper production, and the entire cobalt and zinc output. In the diamond sector, while the Société Minière de Bakwanga (MIBA), partly owned by the government, is responsible for the industrial mining of diamonds, individual prospectors account for some 60 percent of total diamond production.

19. Starting in the mid-1980s, the mining industry of the DRC entered a phase of steep decline (see figure below):

  • By the late 1990s, copper production by GECAMINES had declined to 5 percent of the peak mid-1980s output level of more than 500,000 tons, while cobalt production had fallen by 70 percent from pre-conflict levels.

  • Production of zinc has virtually ceased, compared with a capacity of 200,000 tons.

  • Gold production has practically ceased, compared with 6 tons per year of capacity.

  • Manganese production was discontinued at the Kisenge Mining Enterprise (EMK-MN), where capacity was 360,000 tons per year during the early 1980s.

  • With the sharp fall in GECAMINES output, diamonds became the single largest source of export earnings for the country. Because of frequent changes in marketing policies (including nationalization and the banning of foreigners from diamond-producing areas), large amounts of diamonds were exported through the parallel market. A monopoly to export artisanal diamonds granted in 2000 to a foreign company was rescinded in early 2001.

20. Reflecting its steep output slump, the mining sector’s contributions to GDP and export earnings have been declining continuously. In the mid-1980s, mining accounted for about 20 percent of real GDP and provided over 70 percent of export receipts; in 2000, while the mining sector remained the main source of export earnings (owing to diamond exports), it accounted for only about 6 percent of real GDP.

21. The mining sector has been facing a number of problems that have constrained its development. These include (a) a legal and regulatory framework not conducive to the development of the private sector; (b) serious transportation problems; and (c) chronic lack of investment.

A01ufig05

Mining Real Value Added

(Index, 1960 = 100)

Citation: IMF Staff Country Reports 2003, 175; 10.5089/9781451841152.002.A001

Transport sector

22. At independence, the DRC inherited a comprehensive transport system, including strategically interconnecting roads, rivers, and railways. Given the large size of the country, its limited access to the sea, and the remoteness of its mineral deposits, the transport network is of vital importance to present and future economic activity. However, the sector’s performance remains unsatisfactory (see figure below), and difficulties in transportation constitute a major obstacle to the realization of the DRC’s immense agro-industrial and mining potential.

23. Three public agencies—the Société National des Chemins de Fer du Congo (SNCC), the Office National des Transports (ONATRA), and the Office des Routes—play a critical role as they are respectively responsible for operating rail and river transport, and for building and maintaining the main highway network.

24. Since 1985, the financial situation of both ONATRA and SNCC has deteriorated sharply. Moreover, the services that they provide on the Voie Nationale, which combines the rail and water route from the Shaba mining area to the port of Matadi, have progressively declined. The poor performance of these two key agencies stems from a number of factors: the delay in adjusting tariffs in a highly inflationary environment; a decrease, or at best, stagnation in traffic; high operating costs; and chronic lack of maintenance.

25. In the late 1990s, the civil war took a toll on the transport sector and infrastructure collapsed. As a result, farmers have great difficulty in selling any surplus, while food prices in urban centers are high. Interregional connections are often limited to minimal air transport; as a result the country has essentially broken down into a set of economic enclaves.

A01ufig06

Transport Real Value Added

(Index, 1960 = 100)

Citation: IMF Staff Country Reports 2003, 175; 10.5089/9781451841152.002.A001

C. Long-Run Production Function and Sources of Growth

Long-run production function5

26. The theoretical framework is a production function that relates output per worker (Y) to physical capital per worker (K)6:

Y=AebtKα,(1)

where t is a time index; A is the fixed component of the total factor productivity (TFP), which is assumed to improve at a rate b; and α is the long-run contribution of capital per worker to output per worker.

27. Using the Johansen and Juselius (1990) and Johansen (1988 and 1991) methodology of cointegration, we estimate the long-run production function for the economy as a whole and for the key productive sectors (agriculture, mining, and transport) respectively, and analyze the sources of growth between the contributions of production factors and total factor productivity. The results yield the following long-run production functions:

  • Overall production function

    • y=2.430.03t+0.34k;and(2)
  • Transport sector production function

    • yr=0.650.05t+0.33kr(3)

28. For the agricultural and mining sectors, we find no long-run production functions. As expected, the overall and transport production functions exhibit decreasing returns to scale. Capital per worker is found to be a key determinant of long-term output per worker. The estimated coefficients for capital (0.34 for the overall function and 0.33 for the transport sector) have the right sign and are in line with the share of this factor in GDP (about 0.35 percent in developing countries). They are also consistent with the values (0.30 to 0.40) used in most growth studies. By comparison, Bosworth, Collins, and Chen (1995) obtained a coefficient of 0.4 on the capital term in the growth regression for developing countries, while Sacerdoti, Brunschwig, and Tang (1998) estimate the coefficient on physical capital at about 0.35 for West African countries.

29. The deterministic component of TFP growth is found to be negative (−3 percent for the overall function and −5 percent for the transport sector). This result is hardly surprising, as it clearly shows how inappropriate economic policies implemented during 1960–2000 have negatively affected TFP. By comparison, Fischer (1993) estimates that productivity growth during 1961–88 is about −5 percent a year for Haiti and Madagascar.

Growth-accounting exercise

30. Having estimated the elasticity of output with respect to physical capital,7 we now analyze the sources of growth.

Factor sources of growth

31. Table I.2 and Figure I.1 summarize the decomposition of the overall and sectoral outputs per worker into TFP growth and the contribution of physical capital per worker (defined as its share in output per worker multiplied by its growth rate). At the macroeconomic level, annual output per worker posted a negative average annual growth rate of 3.3 percent during 1960–2000. Negative TFP growth contributed to 60 percent of this decline, while the decline in physical capital per worker accounted for 40 percent.

Figure I.1.
Figure I.1.

DRC: Growth Accounting, 1960–2000

Citation: IMF Staff Country Reports 2003, 175; 10.5089/9781451841152.002.A001

Sources: Congolese authorities; and staff estimates.

32. At the sectoral level: in the agricultural sector, which experienced zero average annual TFP growth during 1960–2000, negative physical capital growth explained the negative growth of output per worker of 1.7 percent over this period. In the transport sector, TFP declines accounted for 92 percent of the negative 6 percent growth of output per worker during 1960–2000. The mining sector recorded some TFP growth gains, but mining output per worker fell by an average 4.1 percent per year, owing to the rapid decline in physical capital per worker.

Sectoral contributions to overall growth

33. The bottom panel of Table I.2 reports the sectoral contributions to GDP. The results indicate that the mining and transport sectors account for the negative real GDP growth of 0.3 percent per year during 1960–2000. Reflecting the negative trend in their outputs, the mining and transport shares in GDP have been completely eroded. The mining sector’s share in GDP fell from 20 percent in 1960 to 6 percent in 2000, while the transport sector’s share declined from 18.5 percent in 1960 to 3.7 percent in 2000.

Growth analysis across subperiods

34. The decomposition of sources of growth across the five subperiods (identified in the background subsection) reveals interesting patterns in the DRC’s growth experience. The subperiod 1966–74 is the only one to experience a positive average growth rate, 2.9 percent, with physical capital per worker and TFP contributing equally. During the subperiod 1975–82, notwithstanding the positive contribution of physical output per worker of 1 percentage point (the second highest of the five subperiods), output per worker still declined by 3.8 percent, reflecting the sharp drop in TFP. The reason is that a series of large-scale prestigious projects (white elephants) implemented during this subperiod had damaging impacts on TFP. As can be seen in Table I.3, physical capital per worker in the key sectors of mining and transport sharply fell at the same time, as these white elephants pulled away resources from both sectors. Finally, the last subperiod (1990–2000) witnesses the largest decline in output per worker and in both physical capital and TFP, reflecting the damaging effects of hyperinflation, as well as of armed conflicts (since 1998).

Policy determinants of growth

35. We investigate the role of policy variables and other variables as determinants of growth, using a modified version of the neoclassical growth model applied by Ghura and Hadjimichael (1996) and Calamitsis, Basu, and Ghura (1999) to sub-Saharan Africa. The growth equation estimated takes the following form:8
Δyt=γ1ln(Ip/Y)l+γ2(Ig/Y)t+γ3INFLt+γ4DEFt+γ5TOTt+γ6Dwart+vt(4)

where Δy is the per capita output growth; Ip/Y and Ig/Y are the ratios of private and government investment to GDP; INFL is the inflation rate; DEF is the ratio of the central government budget deficit to GDP; TOT is the growth rate of the external terms of trade; and Dwar is a dummy variable for war and conflicts.

36. Equation (4) is estimated using annual data for the period 1960–2000. The regression results are summarized in Table I.1. The main results are as follows:

  • The private investment-GDP ratio exerts a large positive effect on economic growth. The estimated coefficients are virtually the same as the ones reported by Calamitsis, Basu, and Ghura (1999) for sub-Saharan Africa. As in the latter study, the impact of private investment weakens when other variables are included in the regression.

  • The effect of government investment is negative and significant in two of the three specifications, supporting the fact that public capital was mostly invested in white elephants and unproductive projects.

  • The policy environment seems to have influenced significantly growth in the DRC. The estimated coefficient on the budget deficit ratio and the rate of inflation are negative and significant, confirming the view that hyperinflation and uncontrolled budget deficits have undermined the DRC’s growth performance.

  • The estimated effect of changes in the terms of trade is positive, though not statistically significant. The coefficient on the dummy variable indicating conflicts and wars has a negative and highly significant effect on growth, supporting the notion that political turmoil and conflicts have played a crucial role in the DRC’s poor growth performance.

D. Medium-Term Prospects

37. Sound macroeconomic policies and the ongoing far-reaching structural reforms have started to have a positive effect on growth through improved resource allocation.9 The DRC’s growth prospects are also enhanced by its untapped potential in the mining, agriculture, forestry, and energy sectors. Moreover, growth should rebound strongly and quickly (a pattern observed in other post-conflict cases), as the country is starting from a very low base.

38. Based on the above econometric results, this section analyzes the plausibility of the program’s growth targets during 2002–05, discussing the feasibility of the implicit productivity growth rates underpinning these real GDP growth projections. It also assesses how fast the country can make up for the ground lost during 1960–2000.

Assessing the plausibility of the program’s medium-term growth prospects

39. With the estimated production function derived in Subsection C, growth projections are based on projections of labor force, capital stock (based on investment and the perpetual inventory methodology), and productivity growth rates (reflecting ongoing economic reforms).

40. Using this projection methodology10 and assuming that the labor force will grow at the population growth rate, that is, 3 percent per year, the study finds that a “Solow residual”11 growth rate of 2.5 percent implicitly underpins the program’s real GDP average growth rate of about 5 percent 12 and the average investment-to-GDP ratio of 16 percent during 2002–05. The whole Solow residual should not be ascribed to TFP growth, because it incorporates a “catch-up” factor that is typical for a post-conflict country.13 Unfortunately, it is not easy to estimate the latter. One indirect estimation would be to estimate the TFP growth in a normal period and argue that one would expect at least this TFP growth to be achieved in the forecast period, mainly because of policy implementation. Using this procedure, we estimate TFP growth at 1.3 percent, which implies a catch-up factor of 1.2 percent. While the 1.3 percent TFP growth is higher than those experienced in industrial, Latin American, and African countries, it is well below East Asian TFP growth rates (Table I.4). In sum, if the actual investment rate were to fall below 16 percent of GDP over 2002–05, the average economic growth rate of 5 percent would be difficult to achieve, because it would imply unrealistic TFP growth rates.

Assessing the time required to recoup the ground lost

41. As indicated in Section II, output per capita and real GDP have followed a steep declining trend especially since 1990. Real GDP had risen to 150 percent of its 1960 level by 1990, only to decline to about 80 percent of its 1960 level by 2001. At the same time, with 3 percent annual growth of the population, the real GDP per capita decline has been substantial. Real GDP per capita fell to 60 percent of its 1960 level in 1990, and further to 25 percent of its 1960 level in 2001. An interesting question is how many years, starting in 2002, would it take both aggregates to reach their 1960 and 1990 levels, if the projected 5 percent real GDP growth were to continue beyond 2005 for several decades. We calculate that it would take 4 years for real GDP to reach its 1960 level and 13 years to return to its 1990 level. Assuming that the population continues to grow at an annual rate of 3 percent, reaching the 1960 real GDP per capita level would take 70 years, while the 1990 level would be attained in 45 years. These time frames highlight the DRC’s dismal economic performance during 1960–2000.

E. Conclusions and Policy Implications

42. This paper has examined the sources of growth in the DRC and assessed the medium-term growth prospects for the country. It concludes that poor economic policies and conflicts (through their effects on total factor productivity and the investment rate) significantly hurt the country’s economic growth during 1960–2000. However, it shows that the right policies are being put in place to pave the way for growth restoration by raising the TFP growth and investment rate.

43. In light of the policies being implemented and investment rates envisaged under the government’s economic program, an average growth rate of about 5 percent is estimated to be achievable over the next four years, 2002–05.

44. The main findings of the paper can be summarized as follows:

  • Using the cointegration procedure, the critical technology parameter—the average share of physical capital per worker in output per worker—of the long-run production function is estimated at 0.34 for the whole economy and 0.33 for the transport sector. No cointegration relationship between output and capital was found for the mining and agricultural sectors.

  • Using a growth-accounting framework over 1960–2000, the findings on the TFP and factor accumulation contributions to output growth are as follows: first, at the macroeconomic level, negative TFP growth contributed to 60 percent of the negative average annual growth rate of 3.3 percent during 1960–2000, while the decline in physical capital per worker accounted for 40 percent. Finally, at the sectoral level, in the agricultural sector, which experienced zero average annual TFP growth during 1960–2000, negative physical capital growth explained the negative growth of output per worker of 1.7 percent over this period. In the transport sector, TFP declines accounted for 92 percent of the negative 6 percent growth of output per worker during 1960–2000. The mining sector recorded some TFP growth gains, but mining output per worker fell by an average 4.1 percent per year, owing to the rapid decline in physical capital per worker.

  • In analyzing the determinants of the DRC’s economic growth during 1960–2000, our regression results show that private investment has a large positive impact, while the effect of government investment has been negative, supporting the view that public capital was mostly invested in unproductive projects. High inflation rates and large budgetary deficits have also exerted a negative impact on growth. Finally, political turmoil, conflicts, and war have contributed significantly to the poor growth performance.

  • In assessing the DRC’s medium-term growth prospects, we note that an economic turnaround is under way, with real GDP projected to be growing by 5 percent a year over the next four years. Assuming that the population continues to grow at an annual rate of 3 percent, reaching the 1960 real GDP per capita level would take 70 years, while the 1990 level would be attained in 45 years. These estimates clearly show that the DRC has a long way to go to recoup the ground lost during 1960–2000. They also illustrate how both the creation of an enabling environment for private investment as well as a coordinated, sustained, and comprehensive foreign aid project are necessary conditions to make a real dent in the DRC’s widespread poverty.

Table I.1

Estimates of the Neoclassical Growth Equation 1/2/

article image

The estimation period is 1960–2000; a, b, and c denote statistical significance at 0.01, 0.05, and 0.10 levels, respectively.

Diagnostic tests for equation (3). Testing for error autocorrelation from lags one to two F (2, 32) = 1.5418 [0.2295]; normality χ2(2) = 7.3771 [0.0250]; autoregressive conditional heteroscedasticity (ARCH) F (1, 32) = 0.0374 [0.8479]; heteroscedasticity errors F (11,22) = 0.3904 [0.9456].

Table I.2.

DRC: Sources of Growth by Factor Accumulation and Sector, 1960–2000

(Annual percentage rate)

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Table I.3.

DRC: Sources of Growth in Agriculture, Mining, and Transport, 1960–2000

(Annual percentage rate)

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Table I.4.

DRC: Sources of Growth in Selected Countries and Regions, 1986–92

article image
Source: Bosworth, Collins, and Chen (1995).

References

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1

This section has been prepared by Bernardin Akitoby.

2

La Polique des Grands Travaux is an ambitious plan for economic development aimed at implementing prestigious and large-scale projects.

3

Exports mainly consist of oil products, cotton, cocoa, coffee, tea, and forestry products.

4

The Zaireanisation process was characterized by the nationalization of a number of foreign enterprises.

5

This subsection is a summary of a forthcoming working paper “Sources of Growth in the DRC” by Bernardin Akitoby and Matthias Cinyabuguma. In the latter, the data issues are discussed in more detail, as well as the econometric approach and results.

6

For simplicity, the time subscripts are excluded.

7

The elasticities used for agriculture and mining are 0.28 and 0.60. These values are taken from another study (Sarel, 1997), since the 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.

8

Owing to data constraints, several variables found in the growth literature to have a strong influence on economic growth have not been included.

9

As pointed out in Subsection A, in 2002, for the first time in 13 years, real GDP growth is estimated to have been positive, at about 3 percent.

10

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, starting in 2002, from the 15 percent assumed earlier. If we assume a 10-percent depreciation rate, the Solow residual growth will be about 1.5 percent higher.

11

The Solow residual is the part of output growth that is not explained by changes in inputs.

12

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.

13

A significant part of the catch-up factor is due to intensified capacity utilization in the post-conflict period.

Democratic Republic of the Congo: Selected Issues and Statistical Appendix
Author: International Monetary Fund