Yves Ekoué AMAÏZO, Ph D, MBA

Non-neutral Economic Order and Delays in Promoting Productive capacities in Africa

Oslo, 25 November 2010 © afrology.com

1

Africa’s economic Development in the context of “Learning from Sweden” after Dag Hammarskjöld’s Death


Conference organized by The Other Canon Foundation and the Dag Hammarskjöld Foundation in Norway

The Voksenåsen Hotel

Oslo, 25 November 2010

Yves Ekoué AMAÏZO, Ph D, MBADirector of the Afrology Think Thank and International Consultant

Email : [email protected] Internet: www.afrology.com and www.amaizo.info


Oslo, 25 November 2010 © afrology.comContent :

1. The Margin of Freedom2. Gain Control over Resources and

Budget3. The Process of Change: State as a

Regulator4. An Alternative Development is

Possible5. “Afrocentricity” as an alternative

paradigm?

2

AFRICA’S NEW OPPORTUNITIES



1. Development needs a margin of freedom

3

AFRICA’S NEW OPPORTUNITIES



1.21.2

5

2.7

0

1

2

3

4

5

Diaspora's Remittances Foreign DirectInvestment

Official DevelopmentAssistance (Aid)

Portofolio Investment

Subsaharan Africa:Capital Flows

Sub-Saharan Africa: Capital flows, 2009(in % of GDP)

Aid for ever ? Between dependency,

sovereignty and influence

Source : IMF World Economic Outlook, April 2009



0.8

0.580.53

0.470.43 0.43 0.43 0.42 0.41 0.39 0.38

0.34 0.32 0.3 0.3

0.2 0.2 0.18 0.18

0.82

0.98

0.880.92

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Net Official Development Assistance, 2008(in % of GDP, per country)

Only 5 countries are really committed to 0.7 % of GDP, the UN minimum solidarity target !

Tony Addison, Channing Arndt, and Finn Tarp (2010).The Triple Crisis and the Global Aid Architecture, Working Paper No. 2010/01, UNU-WIDER, January 2010 .

0.47 % of GDP on average for High income countries!



2. GAINING CONTROL OVER RESOURCES AND BUDGET

6

AFRICA’s NEW OPPORTUNITIES



4.9

5.45.5

5

2.6

5.5

76.46.3

7.2

5

7.4

2.8

5.1

4.1

2

5

65.8

5.3

5.8

6.9

3.8

3.44.6

4.2

4.8

-0.6

2.8

5.35.2

4.64.9

3.63.2

2.9

1.81.5

2.1

-3.8

-0.5

22.3

1.92.5

1.3

2.1

1.1

-4

-3

-2

-1

0

1

2

3

4

5

6

7

8

1992-2001

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2015

Subsaharan Africa

North Africa and Middle East

World

High income countries

7

AFRICA AND ECONOMIC RESILIENCE:Real GDP growth, 2004-2011, en %

Source IMF, WEO October 2010: Recovery, Risk and Rebalancing, p.177.



7.7

5.7

3.3

1.2

6.1

3.8

6.4

5.4

0

1

2

3

4

5

6

7

8

2004-08 2009 2010 2011

Resource Intensive CountriesNon-Resource-Intensive Countries

8

Subsaharan Africa:Real GDP Growth, 2004-2011, en %

Source IMF, REO, SSA, April 2010, p.66.



25.5

13.9

19.1

19.3

-5.9

-6.3

-6.8

-7

-15 -10 -5 0 5 10 15 20 25 30

Resource IntensiveCountries

Non-Resource-IntensiveCountries

2011201020092004-08

9

Subsaharan Africa: Trade Balance, 2004-2011, in % of GDP

Source IMF, REO, SSA, April 2010, p.82.

TWO AFRICAS ?



21.6

21

25.1

24.1

24.8

24.1

19.9

22.3

22.9

20.9

22.3

20.8

21.2

19.5

23.3

25.3

23.8

26.3

27.2

23.5

24.5

25

23.6

18

19

20

21

22

23

24

25

26

27

28

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Revenues (Excl. Grants)

Expenditures (Excl. Grants)

SUBSAHARAN AFRICA: PUBLIC EXPENDITURES AND REVENUES,Excluding Grants, (1997-2010, in % of GDP)

10Source: FMI, Perspectives économiques régionales, Afrique subsaharienne, avril 2009, p. 80 et Tony Addison, Channing Arndt, and Finn Tarp (2010).The Triple Crisis and the Global Aid Architecture, Working Paper No. 2010/01, UNU-WIDER, January 2010 .

Consequences of the 2008 Financial Crisis: Policy space divide (10 years back)



3. THE PROCESS OF CHANGE:STATE AS A REGULATOR

11




3.3

1.3

2.5

1

1.7

0.9

0 1 2 3 4 5 6

1981-1990

1991-2002

2003-2009

EMPLOYMENTGDP

12

GDP contraction = Employment contraction !

Source UNCTAD, Trade and development Report, 2010: Employment Globalization and Development, p. 104.

DEVELOPED (INDUSTRIALIZED) COUNTRIES, 1981-2009Structural change: real GDP and Employment

in annual growth rates



3.6

2.7

4.7

1.9

6.3

2

0 1 2 3 4 5 6 7

1981-1990

1991-2002

2003-2009

EMPLOYMENTGDP

13

STRUCTURAL CHANGE: REAL GDP AND EMPLOYMENTDeveloping Countries, 1981-2009, in annual growth rates

GDP Growth = No direct correlation with

Employment Growth !




1.7

2.9

2.8

2.9

5.1

2.9

0 1 2 3 4 5 6

1981-1990

1991-2002

2003-2009

EMPLOYMENTGDP

14

STRUCTURAL CHANGE: REAL GDP AND EMPLOYMENT, Subsaharan Africa, 1981-2009, in annual growth rates

Policy space does not yet favor Job Creation

in Africa !




4. AN ALTERNATIVE DEVELOPMENT IS POSSIBLE

15



Oslo, 25 November 2010 © afrology.comNon-neutral Economic Order and Power relations

Ending present economic conventional assumptions

1. Industrialized and Weak industrialized countries have the same strategic interests and objectives in Development (All interests of all countries can be pursued simultaneously through a set of “mutually” supporting policy measures commonly accepted by the “International community” without detriment to any interests or countries)

2. All sovereign countries/nations have equal effective rights, the capacity to use them and the power to enforce them

3. Existing international economic order reflects 'natural' economic order (laws and principles) should not be changed , otherwise, it would seriously affect the 'efficiency' of global economic relations (invisible hand)

4. Social function of allocating and distributing resources and economic activities among different countries is best performed by market mechanisms

16



Source : * Goldman Sachs: <http://www2.goldmansachs.com/ideas/long-term/crossing-the-rubicon/index.html >

CONTRACTUAL SOLIDARISM?State Interventionism, Commitment and Regulatory role

1. G7 countries’ public debt increased by 40 % in 10 years (2 times more than emerging countries)

2. Industrialized countries (USA, EU) : 150-200 years to move real GDP from 1,000 to 2,000 $ US ; Japan spent 40 years and China only 10 years*

3. Between 2011-2020, 90 % of the new middle class (1.6 billion of additional consumers) will be outside rich industrialized countries (G7)*

4. Economic Solidarity cannot simply rely on the State (not only on taxes)5. Corporate Social Responsibility of Private enterprises supposes a new regulatory

role of State (including decentralized cooperation)6. Social and environment considerations increasingly important: Influence on

social cohesion and economic performances (Productivity at the expenses of social development must be regulated: institutionalyzing contra-power entitities

7. As of 2006, UN principles on “responsible investment” were signed by 689 enterprises (June 2010) roughly $US 21 trillions of Assets (some enterprises with more than $US 3 trillions of Assets)

8. LINKING PRODUCTIVE CAPACITIES, ENVIRONMENT, ETHICS AND SOCIAL OBJECTIVES

17


Oslo, 25 November 2010 © afrology.comDag Hammarskjöld's Death :

Fixing UN Low Profile in Implementing Economics

1. Structure the non-market economy in Africa2. Regulate the increasing Inequality Divide3. Promote Purchasing Power among the working class (as

opposed to the rent class or speculation class)4. Develop Co-responsibility of States and Private Entities

(PPP)5. Take Advantage of New opportunities with Trilateral and

Triangular South-South Cooperation6. Ensure Democratical Changes and Political Alternatives 7. Let People participate in the Economic Decision-Making

Process8. Leverage on Cumulative and Increasing Returns: Focusing

on Productive capacities and capabilities18



5. AFROCENTRICITY AS AN ALTERNATIVE PARADIGM ?

19



Oslo, 25 November 2010 © afrology.comGRANT OR RETURN ON INVESTMENT IN AFRICA ?

20

Productive Capacities

Absorption capabilities

Participation in Global Decisions:From G20 to G21

Donors’centricity



REVISITING SOLIDARISM AND HUMANITARISM

AFRICA’S FUTURE :STRUCTURING ECONOMIC AFROCENTRICITY

REDUCING INEQUALITY DIVIDE

(Lack of Legitimacy between Decision makers and

the Population)

BUILDING POLICY AND BUDGET

SPACES

INFLUENCE WITHOUT POWER

FOCUSING ON INTRA-AFRICAN MARKETS



22Thank You!

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Yves Ekoué AMAÏZO, Ph D, MBA