Back
Are African numbers still poor? (1)
Jul 7, 2020
Many observers perceive the accuracy and reliability of African economic statistics as far less than ideal. Morten Jerven’s 2013 book “Poor Numbers: How We Are Misled by African Development Statistics and What to Do about It” asserted that the statistical capacity of most African countries was weak and that a significant portion of the official data churned out involved “a great deal of guesswork”. This judgement was not entirely a surprise to well-informed stakeholders.
Statistics can, like any powerful tool, be used or misused. American author Mark Twain observed that “There are three kinds of lies: lies, damned lies, and statistics.”  The selection of a base year for economic analysis can be an opportunity for statistical manipulation. A base year is the first of a series of years in an economic index that reflects the value of specific activity, such as foreign direct investment (FDI) or gross domestic product (GDP). It is typically set to an arbitrary level of 100. Variations in the index are expressed relative to the base year.
Base years may be replaced from time to time so data in a particular index reflects current trends. Ideally, the new base year reflects a recent yet reasonably stable period. The 2008-2010 financial crisis reveals why a base-year that reflects structural change is problematic. In response to sharp declines in housing values, many U.S. banks accepted government support and changed accounting methods (for example, suspension of market-to-market accounting) during that period. The significant market disruptions and other changes during that era will distort fiscal analysis using 2009 as a base-year.
2Shares
0Comments
0Favorites
1Likes
Say something to impress...
Loading...
Comments
Hot

No content at this moment.

Relevant people
Mind Business
8216 Followers
business
Mind your Business
Related