Root Causes of African Underdevelopment

What are the root causes of Africa’s current state of under-development? Is it the long history of slave trade, or the legacy of extractive colonial institutions, or the fallout of malaria? We investigate the relative contributions of these factors using an instrumental variable approach. The results show that malaria matters the most and all other factors are statistically insignificant. Malaria also negatively affects savings. Using a two period overlapping generation model we show that malaria impacts economic performance by increasing both mortality and morbidity. Increased mortality increases current household consumption and discourages savings. Increased morbidity adversely affects labour productivity. The combined impact is a slowdown of capital accumulation and economic growth.