Still, the flow of aid to Africa can be seen as a response to the small volume of private
capital flows and, of course, it is also a response to the state of poverty in the region. Africa
receives more aid per capita than any other major region. There are a few countries with extremely high aid dependency ratios, mainly those countries that have emerged from civil war
and internal conflict and are in a rebuilding phase. Other countries have high ratios because
of debt write-offs, while others have gradually done better economically and have become
‘donor-darlings’.
Has aid to Africa been effective in terms of its impact on economic growth? The most
recent studies find that there is a significantly positive effect of aid on growth, although
they are less positive in the tropics (and many African countries fall into this category). This
result is not generally conditional on good policies, although good policies of course make
outcomes better.
Private remittances to Africa have shown an increasing trend, according to official statistics,
and the official flows are estimated to be about 2.5% of GDP, which is considerably
less than flows to other developing countries. One important positive feature of remittance
incomes is that the flow has been rather stable, while both aid and FDI have fluctuated considerably.
Remittance incomes provide an opportunity for low-income households to access
formal financial services.
At the Millennium Summit of 2000, world leaders agreed on a set of common development
targets, the Millennium Development Goals, for development efforts until 2015. In
2005, proposals for massive increases in aid to Africa in particular were presented by the UN
and the Commission for Africa. In terms of the promises made by the Western countries,
for example at the G8 meeting at Gleneagles in 2005, the aid flow to Africa should increase
rapidly during the next few years. There is also agreement within the EU that all (the old)
members will give at least 0.56% of GNI as aid by 2010 and 0.7% by 2015. Sweden already
surpasses this figure, while the average for the whole of (old) EU was 0.35% in 2004. Whether
the member countries will live up to these promises remains to be seen.
One of the most notable aspects of the current process of globalisation is the increase
in trade between sub-Saharan Africa and Asia, particularly China and India. African exports
to Asia grew by over 10% per year from the early 1990s to 2003. In parallel with increasing
trade, Chinese FDIs have risen rapidly but from a low level. Chinese companies have invested
in various sectors, including oil, mining, fishing, telecommunications, construction and
power generation. Moreover, Chinese companies have been setting up plants to circumvent
quota regimes in the West for textiles and clothing.
The increase in trade with China and India implies both threats and opportunities. First,
the effects of a natural resource boom are difficult to handle for countries with weak institutions,
and there is a risk of domestic conflict, or at least gross misallocation of government
income resources. Second, imports of cheap manufactured goods are a threat to Africa’s
manufacturing sector and might lead to de-industrialisation. There are also threats related to
FDI. Chinese firms tend to invest in extractive industries with few links to local firms. They
also use their own labour to a high degree and do not invest much in African workers.
On the other hand, China’s trade and investment in sub-Saharan Africa is an opportunity
for economic growth and integration into the world economy. Growth rates are higher than
for decades, which no doubt is related to the commodity boom induced by China and India.
Moreover, the increase in trade has made cheap consumer goods available to many Africans,
thus raising living standards. And investments in production and infrastructure are bound
to have many beneficial effects. Furthermore, China and India have huge and expanding
consumer markets.

After a period of falling per capita incomes that started in the 1970s, Africa finally saw a turn around
from about 1995, with initially modest increases in per capita incomes. However, the
last few years have actually seen average per capita incomes in Africa grow by above 3% on
average, partly due to the resource boom, but also due to improved economic policies.
Sub-Saharan Africa is a very small player in the global economy. At current exchange
rates, sub-Saharan Africa produced only 1.4% of global GDP in 2005 and had an average per
capita income that was 1/41 of that of the high income countries. Adjusting for differences
in purchasing power, the gap shrinks to 1/16, which is still enormous. In PPP terms, Africa
is clearly the poorest region in the world.
The growth experiences vary considerably across countries and over time. The countries
that receive much Swedish aid today generally did badly in the 1980s, somewhat better in the
1990s and many have been doing very well since the turn of the century. The average for
the main recipients of Swedish aid in 2001–05 is 2.2% growth in per capita income per year,
which is slightly better than the sub-Saharan African average of 2.0%. Civil war has been
an important cause of bad economic performance in several countries in Africa, and the
elimination of remaining conflicts as well as the maintenance of peace is very important for
progress in poverty reduction.
The industrial sector, including manufacturing, has not been able to expand as hoped for
at independence or as it has done in Asia. The import-substitution policy that was pursued to
support manufacturing growth in Africa achieved some results in the 1960s, but the policies
did not lead to the creation of a manufacturing sector that could compete internationally. In
1960, sub-Saharan Africa supplied 4.2% of world exports, but by the turn of the century this
had shrunk to only 1.4%. By 2005, however, Africa had increased its global market share somewhat
due to the boom in natural resources such as oil, and this is, of course, also one of the
reasons for the growth acceleration. The bulk of African exports are raw materials, agricultural
products and also tourism services. There is still no breakthrough in terms of manufacturing
exports. Even if Africa is of marginal importance in world trade, African economies are more
dependent on the world market than are those of high income countries.
Africa is not only the poorest region in the world, but it also has an increasing share of
the world’s population. The population growth rate is declining in Africa as in other regions,
but since the region is lagging economically, it has not come as far as the other regions in the
demographic transition process. The result of this is that the sub-Saharan African share of
the world population has increased from 7.4% to 11.5% over a 45 year period.
Economic growth requires investments, and investments are financed by savings. They
can be domestic savings or international savings transferred to the country. The African
region saved 17.6% of GDP in 2005, which is low compared to the fast growers in Asia.
Official financial flows or aid were US$ 30.5 bn in 2005, foreign direct investments US$ 16.6
bn and other private transfers, which include various forms of private remittances, were US$
9.8 bn. Foreign direct investments in particular have increased in recent years, mainly in the
natural resource sector.

Public policy is another important indicator of the future of the clean energy economy.
Policies intended to advance the clean energy economy—from comprehensive energy plans, renewable energy standards and energy efficiency measures to the development of alternative fuels, job retraining and waste reduction efforts—have been adopted or are being actively considered by both the federal government and states. It is too early to tell to what degree these efforts will succeed in stimulating U.S. job growth, strengthening America’s competitiveness, curbing pollution and conserving resources. But Pew’s analysis indicates such policies have great potential
because they create significant incentives for both the private and public sectors to develop new technologies, infrastructure and processes for clean energy, efficiency and conservation. Now that we have baseline data in hand, Pew will conduct follow-up research to assess which approaches are particularly effective in generating jobs, businesses and investments in the clean energy economy.
State policies. Governors and legislators across the country are seeking to get to the double bottom line of economic growth and environmental sustainability by adopting policies to advance the clean energy economy.
l Financial incentives. Forty-six states offer some form of tax incentive to encourage corporations and residents to use renewable energy or adopt energy efficiency systems and equipment. Thirty-three states provide residential, commercial and industrial loan financing for the purchase of renewable energy or energy efficiency systems or equipment. And 22 states and the District of Columbia offer rebate programs to promote the installation of solar water heating or solar panels for electricity generation.
l Renewable portfolio standards. Twenty-nine states and the District of Columbia have adopted renewable portfolio standards, which require electricity providers to supply a minimum amount of power from renewable energy sources.
l Energy efficiency standards. Nineteen states have established energy efficiency standards for energy generation, transmission and use.
l Regional clean energy initiatives. Twenty-three states are participating in three major regional initiatives seeking to increase renewable energy generation and reduce carbon pollution from power plants that causes global warming.
l Vehicle emissions standards. Fourteen states and the District of Columbia have adopted (and three more states are poised to adopt) California’s vehicle emissions standards, which allow states the right to require automakers to reduce carbon emissions from new cars and light trucks more aggressively than federal standards mandate. On May 19, 2009, President Barack Obama established national limits on vehicle emissions by adopting fuel efficiency standards that match California’s.
Federal policies. The federal government also has played a critical role, adopting policies and making investments that have spurred economic growth and environmental protection from coast to coast. Laws enacted in the 1960s and 1970s helped develop the recycling, waste reduction and waste management industries. The EPA’s Energy Star and Water Sense certification and labeling initiatives long have helped consumers choose and use products that conserve energy and water. And for almost two decades, the U.S. Department of Commerce has helped manufacturers improve efficiency, reduce waste and develop clean technologies and products.
In the last three years, federal policy makers have taken major steps to drive the clean energy economy forward. President Obama’s recent efforts to enact stronger fuel efficiency standards built on earlier legislation. In 2007, President George W. Bush signed into law the first congressionally mandated increase in fuel efficiency standards for cars and light trucks in more than 30 years. The Energy Independence and Security Act of 2007 is projected to save consumers $25 billion at the gas pump, save 1.1 million barrels of oil a day and reduce greenhouse gas emissions.
Enacted in February 2009, ARRA—the federal stimulus bill—includes an array of provisions to spur clean energy generation and energy efficiency businesses, jobs and investments. Among the almost $85 billion the package allocates to energy- and transportation-related spending, about $21 billion is dedicated to extending tax incentives for wind, solar and other renewable energy manufacturers. ARRA also provides more than $30 billion for direct spending on clean energy programs, including $11 billion to modernize the nation’s electricity grid; $2 billion for advanced battery technology; more than $6 billion for state and local efforts to achieve energy efficiency; $5 billion for weatherization of low-income homes; $500 million for job training to help workers participate in the clean energy economy; and $300 million to purchase thousands of new, fuel-efficient vehicles for the federal fleet from American auto companies.
Moving forward. Given America’s need to create enduring jobs and industries while conserving natural resources and reducing carbon emissions, federal leaders are deliberating additional measures to spur the clean energy economy.
President Obama has signaled his support for a federal clean energy plan to reduce greenhouse gas emissions by at least 80 percent by 2050, and a national renewable

Pew’s framework takes into account that technology, scientific research, market forces and public policy will continue to drive innovation and competition, so the largest segments of today’s clean energy economy may not be its driving forces tomorrow.
Our data base show that 63 percent of today’s clean energy economy jobs are in the category of Pollution Mitigation and Conservation sector that reflects the growing recognition among the public, policy makers and business leaders of the need to recycle waste, conserve water and mitigate emissions of greenhouse gases and other pollutants. But three other categories Clean Energy, Energy Efficiency and Environmentally Friendly Production are growing at a far faster clip. And about 77 % of venture capital investments in 2010 were in the sectors of Clean Energy and Energy Efficiency: businesses and jobs working to develop clean, renewable energy
Sources such as wind and solar and products and services that reduce our overall energy consumption all of which will help meet the demands of a carbon-constrained economy.
The flow of venture capital indicates which sectors are most attractive to investors and have the greatest growth potential. The number of jobs and businesses in Clean Energy and Energy Efficiency will grow over time—and as the country increases the amount of power it draws from renewable sources, we will generate less waste, reduce our reliance on foreign oil and produce fewer carbon emissions that cause global warming. That does not mean that jobs in the Conservation and Pollution Mitigation category will disappear. As other countries seek to follow America’s lead, they increasingly will need help managing their finite natural resources and addressing the adverse effects of their use of fossil-fuel energy sources—creating a new market for our products, technology and know-how.

Pew partnered with Collaborative Economics, Inc., a public policy research firm based
in California, on the research. While organizations on both sides of the political spectrum have weighed in with forecasts and economic modeling to estimate the size of the clean energy economy, Pew’s analysis is the first of its kind to count actual jobs, businesses and investments for each of the 50 states and the District of Columbia. Our numbers are conservative and may be lower than some other reports for three reasons: First, we developed a stringent definition of the clean energy economy; second, we used a new, labor-intensive methodology that counted only companies that we could verify online
as being actively engaged in the clean energy economy; and third, we counted businesses and jobs supplying products and services generated by the clean energy economy,
not the companies using these products and services to make themselves “greener” (i.e.,
we counted only companies and jobs on the supply side, not the demand side, of the
clean energy economy).
Policy makers, business leaders and the
public need credible, reliable data to ground their policy deliberations and choices, and
to understand where emerging economic opportunities lie. They also need a clear, concrete and common definition of what constitutes the clean energy economy so they can track jobs and businesses and gauge the effectiveness of public policy choices and investments.

With traditional manufacturing jobs declining during the past decade, states have been working aggressively to develop new industries and create jobs that will endure—and remain within U.S. borders. They also have been working to address the public’s concerns about high energy prices, national security and our dependence on foreign
oil, and global warming—all with an understanding that America is on its way to being a carbon-constrained country. “While our economic engine has for years been powered by relatively inexpensive energy,
there is evidence that this era is coming to a close,” a National Governors Association report noted in 2007. “Meanwhile, we are increasingly aware of the serious impacts of global climate change—and how America’s consumption of fossil fuels is contributing
to a warming Earth.”
Pew’s analysis shows that every state has a piece of America’s clean energy economy. Texas, for instance, generates more electricity from wind than any other state, had more than 55,000 clean energy economy jobs in 2007, and attracted more than $716 million in venture capital funds for clean technology between 2006 and 2008. Tennessee has succeeded in cultivating jobs in recycling, waste treatment and water management, among other conservation industries; jobs in Tennessee’s clean energy economy grew by more than 18 percent between 1998 and 2007, compared with 2.5 percent growth in all jobs in the state. Colorado has raised the amount of power electricity providers must supply from renewable energy sources to stimulate job growth in solar and wind power and other forms of clean energy generation. Ohio ranked among the top five states with the most jobs in clean energy, energy efficiency and environmentally friendly production in 2007. Idaho, Kansas, Mississippi and South Dakota are among more than a dozen states where the number of jobs in the clean energy economy in 2007 was modest, but the average annual growth rate of those jobs was among the highest in the country. All told, in 38 states and the District of Columbia, job growth in the clean energy economy outperformed total jobs growth between 1998 and 2007. In a number of states, job gains in the clean energy economy have helped lessen total job losses.

Research by The Pew Charitable Trusts shows that despite a lack of sustained policy attention and investment, the emerging clean energy economy has grown considerably—extending to all 50 states, engaging a wide variety of workers and generating new industries. Between 1998 and 2007, its jobs grew at a faster rate than overall jobs. Like
all other sectors, the clean energy economy has been hit by the recession, but investments in clean technology have fared far better
in the past year than venture capital overall. Looking forward, the clean energy economy has tremendous potential for growth, as investments continue to flow from both the government and private sector and federal
and state policy makers increasingly push for reforms that will both spur economic renewal and sustain the environment.
By 2007, more than 68,200 businesses across all 50 states and the District of Columbia accounted for about 770,000 jobs that achieve the double bottom line of economic growth and environmental sustainability (Exhibit 1).
In today’s tough financial climate, when millions of jobs have been lost, those numbers may sound modest. Three quarters of a million jobs represent half a percent of all jobs in the United States today. But Pew’s research shows that between 1998 and 2007, clean energy economy jobs—a mix of white- and blue-collar positions, from scientists and engineers to electricians, machinists and teachers—grew by 9.1 percent, while total jobs grew by only 3.7 percent. And although we expect job growth in the clean energy economy to have declined in 2008, experts predict the drop in this sector will be less severe than the drop in U.S. jobs overall.
Pew’s research indicates a strong start for a new economy still very much in its infancy.
To put our clean energy economy numbers
in perspective, consider the following. Biotechnology, which has developed applications for agriculture, consumer products, the environment and health care and has been the focus of significant public policy and government and private investment, employed fewer than 200,000 workers, or about a tenth of a percent of total U.S. jobs in 2007, according to a 2008 Ernst & Young report. And the well-established traditional energy sector—including utilities, coal mining and oil and gas extraction, industries that have received significant government investment—comprised about 1.27 million workers in 2007, or about
1 percent of total employment.
Growing attention and financial support from both the private and public sectors indicate that the clean energy economy is poised to expand significantly. Signaling interest in
new market opportunities, venture capital investment in clean technology crossed the
$1 billion threshold in 2005 and continued to grow substantially, totaling about $12.6 billion during the past three years. Although they have dropped significantly in recent months because of the recession, investments in clean