Introduction

African countries often have weak formal institutions, which affect the working of their economies. Their fiscal administration, for example, is often powerless, and this results in an excessive taxation of foreign trade, the easiest flows to exploit, creating significant distortion. The latter gives rise to some rents that can be captured by various forms of rent-seeking, with competition between the agents of the government and others from the private sector. Corruption, fraud, and smuggling, are thus part of everyday life in African, as in so many other economies (e.g. the transition economies of Central and Eastern Europe, CEE). These are not mentioned here for the sake of attracting the attention of the reader with some exotic anecdotes; they shape the functioning of these economies in ways that a serious macroeconomic analysis should take into account. Failure to do so explains, for example, why we read some papers showing how international trade is inexplicably low between African countries whereas any fieldwork, either in warehouses or near the borders, would convince the observer that a lot of trade was going on. In this field, as in many others, statistics can be extremely deceptive, when they are not put in the right perspective by direct observation. I have seen bags of subsidized Nigerian fertilizers as far west as Senegal, and any traveler in West Africa will be familiar with the seemingly ubiquitous bottles of Nigerian petrol for sale at the roadside.