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Maladjusted African economies and globalisation1

Thandika Mkandawire

Director, United Nations Research Institute for Social Development (UNRISD) Geneva.

This work-in-progress paper was presented at the conference: Conference on 'The Agrarian Constraint and Poverty Reduction: Macroeconomic Lessons for Africa', Addis Ababa, 17-18 December, 2004.
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Introduction

Globalisation is a multifaceted process that defies unique definition. Different authors emphasise different things about the causes and effects of globalisation, partly because of differences in the definition of the process; partly because of differences in focus; and partly because of different ideological predispositions about the process itself. In this paper, I will treat globalisation as a process whereby national and international policy-makers proactively or reactively promote domestic and external liberalisation. Africa illustrates, perhaps better than elsewhere, that globalisation is very much a policy driven process. While in other parts of the world, it may be credible to view globalisation as driven by technology and the “invisible hand” of the market, in Africa, most of the features of globalisation and the forces associated with it have been shaped by the BWIs (Bretton Woods institutions) and Africa’s adherence to a number of conventions such as the WTO, which have insisted on opening up markets. African governments have voluntarily, or under duress, reshaped domestic policies to make their economies more open. The issue therefore is not whether or not Africa is being globalised, but under what conditions the process is taking place, and why, despite such relatively high levels of integration into the world economy, growth has faltered.

Whenever globalisation and Africa are mentioned together, the word that often comes to mind is “marginalisation”. The threat of marginalisation has hung over Africa’s head like Damocles’ sword, and has been used, in minatory fashion, to prod Africans to adopt appropriate policies2. In most writing, globalisation is portrayed as a train on which African nations must choose to get on board or be left behind. As Stanley Fischer, then Deputy Managing Director of the IMF, and associates put it, “globalisation is proceeding apace and SSA must decide whether to open up and compete, or lag behind” (Fischer, et al. 1998: 5). The Economist, commenting on the fact that per capita incomes between the United States and Africa have widened states “it would be odd to blame globalisation for holding Africa back. Africa has been left out of the global economy, partly because its governments used to prefer it that way” (The Economist 2001: 12).

Globalisation, from the developmental perspective, will be judged by its effects on economic development and the eradication of poverty. Indeed, in developing countries, the litmus test for any international order remains whether it facilitates economic development, which entails both economic growth and structural transformation. I shall argue that in the case of Africa, this promise has yet to be realised. The policies designed to “integrate” Africa into the global economy have thus far failed because they have completely sidestepped the developmental needs of the continent and the strategic questions on the form of integration appropriate to addressing these needs. They consequently have, thus far, not led to higher rates of growth and, their labelling notwithstanding, have not induced structural transformation. Indeed, the combined effect of internal political disarray, the weakening of domestic capacities, deflationary policies and slow world economic growth have placed African economies on a “low equilibrium growth path” from which the anaemic GDP growth rates of 3-4 per cent appear as “successful” performance. I will illustrate this point by looking at two channels through which the benefits of globalisation are supposed to be transmitted to developing countries—trade and investment.

The paper is divided into three sections. The first section deals with what globalisation and the accompanying adjustment policies promised, what has been delivered and what has happened to African economies during the “era of globalisation”. The second deals critically with some explanations of Africa’s failure. And the last part advances an alternative explanation of the failure with respect to trade and access to foreign finance.



Footnotes:

  1. The author would like to thank Virginia Rodriquez and Nina Torm for research assistance.


  2. There is something illogical about juxtaposing globalisation and marginalisation. Either the process is “global” and encompasses all spaces on the globe or is only partial, marginalizing certain sections of the planet. Globalisation does not necessarily mean that everyone gains; it entails gains and losers, core and periphery, top and bottom etc. African economies are encompassed by and subordinate to the global economy. Indeed it leaves open the possibility of adverse globalisation and as Stanley Fischer, discussing capital flight, states: “”…in spite of capital controls, African capital has de facto been globalised – albeit in the wrong direction” the poor performance at the level of macroeconomic outcomes), and high levels of connectivity at the levels of policy and institutional reform. In other words, if one focuses on policy and institutional reforms, Africa is a highly integrated into, and not marginal within, the world system (Bangura 2001).


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