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8/6/2019 Globalization and Africa
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GLOBALIZATION AND
AFRICA
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Introduction
The term Globalization means differentthings to different people. It is capable of anynumber of conflicting and sometimes,contradictory interpretations, particularly of aqualitative value-laden nature
It has numerous implications for trade,investment, politics, culture, human rights andother areas
However, our preoccupation in this session isessentially with the economic aspects
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Introduction
It is characterized by an intensification ofcross-border trade and increased foreigndirect investment (FDI) flows, promoted byrapid liberalization and advances ininformation technology
While globalization holds out to someparticipants the promise of growth in tradeand international investments, and therefore,prosperity, it heightens for others the risks ofinstability and marginalization, especially insub-Saharan Africa
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Introduction
This session examines:
Issues of development and Africa,
focusing on Sub-Saharan Africa (SSA);Whether Africa can avoid globalization;
The avenues of globalization as well as
its impact; andThe means for maximizing the benefitsof globalization
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Development and Africa
In conceptualizing development, it isconvenient to adopt a needs approach,
which emphasizes the ability of a country orregion to provide basic needs of food, shelter,clothing, etc to its citizens.
We therefore characterize Africa along the
universally accepted indices of developmentWhat are the characteristics of Sub-SaharanAfrica?
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Development and Africa
Stunted Growth: The region grew atbetween 1.8 2.0 percent only in the period1981-90 and 1991-99 respectively. Judgedagainst the population growth rate, it is lowcompared to other regions of the world (e.g8.0 for East Asia)
While there has been an increase in realoutput growth in recent times (e.g 4.3 and 4.6percent in 2003 and 2004 respectively), thislies below the about 6 to 7 percent needed toreduce poverty.
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Development and Africa
Low Economic Integration: SSA is the leastintegrated sub-continent compared to others.
What obtains is the proliferation of manyeconomic groupings, often with overlappingfunctions e.g in West Africa, there isECOWAS, The Manu River Union (MRU),and The Francophone Union, all oftencompeting rather than cooperating. There arealso about five such groups in East andSouthern Africa
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Development and Africa
Excessive Debt Burden: In 1990, SSAowed a total of $176.8b, which
increased to $230.1b by 1998.Recent debt relief granted to someAfrican countries have reduced the debt
burden, but reports have it that some ofthe countries have started to pile upfresh debts
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Development and Africa
Excessive Debt Burden: In 1990, SSAowed a total of $176.8b, which
increased to $230.1b by 1998.Recent debt relief granted to someAfrican countries have reduced the debt
burden, but reports have it that some ofthe countries have started to pile upfresh debts
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Development and Africa
SSA is a poor region: In 2000, of 34countries indicated by the World Bank to be
poor, 28 were in SSA.In 1999, SSAs GNP at PPP dollars was$929.3b, East Asia and the Pacific $6423.8band MENAs $1337.5b
SSAs per capita GDP was $1450, EastAsias $3500; Europes $3500 and MENAs$4600
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Development and Africa
SSA is a poor region: Even when onelooks at the UNDPs Human
Development Index (HDI), the continentstill does not fare well. It is the poorestcontinent in the world
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Development and Africa
Inadequate Infrastructure: General dearthof infrastructure, both social and economic
The information superhighway relies almostexclusively on telecommunications. AlthoughGSM has brought about improvement, accessto telephone (fixed and mobile), personalcomputers and internet in SSA remains thelowest in the world.
A similar picture obtains for otherinfrastructure
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Development and Africa
Concentration in Primary Products: SSA isessentially a primary producer.
These products are subject to declining termsof trade, price volatility and thus, unstableearnings.
Between 1990 and 99, SSAs domestic valueadded from manufacturing was 17%compared to East Asia and Pacifics 28%
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What Explains Africas
Poor Performance?Adverse geographic and demographicconditions
Terms of trade and other external shocksMacroeconomic policy weaknesses
Structural policy failures
Weaknesses in governance, notably poormanagement of resources
Political instability
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Can Africa Avoid
Globalization?According to Ahassane Quattara, a pastdeputy managing director of the IMF, Africa
cannot escape globalization, and they shouldnot try to avoid it.
Africa needs to join, but in joining, shouldprepare itself for it.
He advises that Africa can proceed to theinternational community via strong regionalcooperation
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Avenues of Globalization
International Trade: Africas share of worldtrade has been declining as a result ofrestrictive trade regimes, slow income growth,high transport costs and distance frominternational markets
Capital Flows: What Africa had beenexperiencing was capital flight. Althoughthere has been some increase in FDI flows inthe late 90s and 2000s, Africa has beenworse off
Net official flows of aid or ODA has also fallensignificantly
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Avenues of Globalization
Human Migration
Advances in Telecommunications and
transportationSpread of knowledge and technology
Economic Integration
International Organizations (IMF, World Bank,
WTO): Africa has often been a passiveparticipant in most of these organizations.They are not adequately represented
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Impacts of Globalization
Increased prosperity and reducedpoverty for some countries, particularly
in East AsiaMarginalization of Africa in sense thataid has reduced rather than increased
Other potential impacts are:
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Impacts of Globalization
More efficient utilization of resources
Greater specialization among nations and,
thus, increased welfareIncrease in output and trade throughliberalization
Higher quality products and lower prices
through competitionExposure to new ideas, technology andculture
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Requirements for
Maximizing the Benefits
of GlobalizationPolicy Reform
Liberalization of trade regimes
Pursuit of programme of integrationInvesting in people and building capacity
Improving infrastructure and spurring agric
developmentPromoting a sound banking and financialdevelopment
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Requirements for
Maximizing the Benefits
of GlobalizationEncouraging private investment throughliberal incentives
Reducing the size of the public sectorthrough privatization
Reform of the regulatory framework
Transparency in governanceSimplicity of procedures
Fight against corruption
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Requirements for
Maximizing the Benefits
of GlobalizationResponsibility of officials and rule of law
Individual freedom and collective expression
Independence of legal systemReduction of dependence on primarycommodities and improvement inmanufacturing value-added
Reducing poverty and increasing savings
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Requirements for
Maximizing the Benefits
of GlobalizationFacilitating market access through activeparticipation and advocacy in WTO
Encouraging private capital flowsSupplementing debt relief with increased newlevel of financial support
Need for a strong international monetary and
financial system patterned to solving theproblems of Africa
More and better debt relief
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Conclusion
Admittedly, some of these are structuralreforms which take time and involve
substantial `learning from experience'.Building institutions is much more difficultthan changing policies, so Nigeria and otherAfrican countries may have to rely more on
the trade channel in the short and mediumterm as their major means of reaping thebenefits of globalization
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Thanks for listening