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The world enters the new millennium in the midst of an economic revolution. This revolution could provide both the context and the means for Africa's rejuvenation. While globalisation has increased the cost of Africa's inability to compete, we hold that the advantages of an effectively managed integration present the best prospects for future economic prosperity and poverty reduction.
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The currrent economic revolution has, in part, been made possible by advances in Information and Communications Technologies (ICT), which have reduced the cost and increased the speed of communications across the globe, abolishing pre-existing barriers of time and space, and in consequence affecting all areas of social and economic life. It has made possible the integration of national systems of production and finance, and is reflected in incredible growth in the scale of cross-border flows of goods, services and capital.
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The integration of national systems of production has made it possible to 'slice up the value chain' in many manufacturing and service sector production processes, while at the same time the easier mobility of finance means that borrowers, whether governments or private entities, must compete with each other for capital in global, rather than national, markets. Both these processes have increased the costs to those countries that are unable to compete effectively. To a large extent these costs have been borne disproportionately by Africa.
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While no corner of the world has escaped the effects of globalisation, the contributions of the various regions and nations have differed markedly. The locomotive for these major advances is the highly industrialised nations, in particular the United States, and to a lesser extent Europe and Japan. Outside this domain, only a few countries in the developing world play a substantial role in the global economy. Many developing countries, including those of Africa, contribute passively, in the main on the basis of their environmental and resource endowments.
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It is in the distribution of benefits that the global imbalance is most glaring. On the one hand, opportunities have increased to expand wealth, acquire knowledge and skills, and improve access to goods and services - in brief, to improve the quality of life. In some parts of the world, the pursuit of greater openness to the global economy has created opportunities to lift millions of people out of poverty.
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On the other hand, greater integration has also led to the further marginalisation of those unable to compete effectively. In the absence of fair and just global rules, globalisation has increased the ability of the strong to advance their interests to the detriment of the weak, especially in the area of trade, finance and technology. It has limited the space for developing countries to control their own development. The conditions of those marginalised in this process have worsened in real terms. A fissure between inclusion and exclusion has emerged within and among nations.
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In part, Africa's inability to harness the process of globalisation is a result of structural impediments to growth and development in the form of resource outflows and unfavourable terms of trade. At the same time, we recognise that failures of political and economic leadership in many African countries impede the coherent mobilisation of resources into areas of activity increasingly required to attract and facilitate domestic and foreign investment.
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The low level of economic activity means that the instruments necessary for the real injection of private funds and risk-taking are not available and the result is a further decline. In a self-perpetuating cycle, Africa's capacity to respond to globalisation is weakened, leading to further marginalisation. The increasing polarisation of wealth and poverty is one of a number of processes that have accompanied globalisation, and which threaten its sustainability.
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The closing years of the last century saw a major financial collapse in much of the developing world which threatened the stability of the global financial system, and hence the global economy as a whole. One of the immediate effects of the financial crisis was to exacerbate existing levels of deep, structural poverty in which about half of the world's population live on less than US $2 per day, and a fifth on less than US $1 per day.
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There also exist slower dynamics that pose longer-run risks. These include the rapid increase in the numbers of the socially excluded in different zones of the globe, contributing to political instability, civil war and military conflict on the one hand, and a new pattern of mass migration, on the other. The expansion of industrial production and the growth in poverty contribute to environmental degradation of our oceans, atmosphere and natural vegetation. If unaddressed, these will set into motion processes that will increasingly slip beyond the control of governments, both in developed and developing countries.
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The means to reverse this gloomy scenario are not yet beyond our reach. Improvements in the living standards of the marginalised offer massive potential for growth in the entire international economy, through the creation of new markets and by harnessing increased economic capacity. This will bring with it greater stability on a global scale, accompanied by the social well-being and cultural exuberance that thrives in conditions of certainty.
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The imperative of development, therefore, not only poses a challenge of moral conscience. It is fundamental to the sustainability of the globalisation process. We readily admit that globalisation is a product of scientific and technological advances, many of which have been market-driven. Yet, governments particularly in the developed world have, in partnership with the private sector, played an important role in shaping its form and content.
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The case for the role of national authorities and private institutions in guiding the globalisation agenda along a sustainable path, and therefore one in which its benefits are more equally spread, remains strong. Experience shows that despite the unparalleled opportunities that globalisation has offered to some previously poor countries, there is nothing inherent to the process that automatically reduces poverty and inequality.
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What is needed is a commitment on the part of governments, the private sector and other institutions of civil society, to the genuine integration of all nations into the global economy and body politic. This requires the recognition of global inter-dependence in respect of production and demand, the environmental base that sustains the planet, cross-border migration, a global financial architecture that rewards good socio-economic management, and global governance that recognises partnership among all peoples. We hold that it is within the capacity of the international community to create fair and just conditions in which Africa can effectively participate in the global economy and body politic.
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