Trade in Africa: Exports Are the Best Way to Develop | Stephanie Nieuwoudt, IP... - The Diigo Meta page

• 05 Aug 08
  

  Dripa B

  Lack of export orientation in the past has caused economic failures in African countries, which is why these countries should focus on exports to build industries.

  Africa economics trade development globalisation poverty

  • After colonisation there were high rates of economic growth between 1960 and 1975. Africa's share in the global industry rose from seven to eight percent.
  • African economies were based on import substitution instead of export-oriented industrialisation.  
    
     Countries did not invest in manufacturing plants -- for example the motor industry, heavy machinery and mining. Instead the focus was on reducing imports and producing primary commodities such as tobacco or manufactured goods such as beverage and clothing and leather products. Import substitution led to ‘‘shallow industrialisation’’.  
    
     There was also no cohesion of industrial projects and a failure to deepen import-substitution industrialisation through regional integration.
  • The economies of the developing countries in sub-Saharan Africa not only stagnated but actually declined. De-industrialisation took place and led to the demise of institutions and capacity. 
    
     The harmful legacy of a lack of export-driven industrialisation is again becoming apparent in the current global economic climate. Although the World Bank cited an increase of exports from 5.7 billion dollars in 1990 to 12.5 billion dollars in 2005, there is a false optimism as the exports were mainly in the form of raw products by multinational companies whose headquarters are elsewhere.
  • Some analysts argue that the services industry -- e.g. communication technology and tourism – is more important than the manufacturing industry.
  • Corruption has also been identified as a hurdle to growth and development in Africa.
  • ‘‘In Asia corruption, or rent seeking and rent creation, is rampant.  
    
     ‘‘But in these countries rents were achievable through activities which served national interests and the realisation of rents was related to performance standards. In other words, money from corruption was kept in the country, which benefited the national economy.  
    
     ‘‘In contrast many leaders in Africa have used graft money to open Swiss bank accounts, which does not benefit their countries."
  • ‘‘Africa has to rethink regional cooperation. Early ideas of regional integration assumed planned national economies that somehow allocated activities among themselves in a planned way. This failed.  
    
     ‘‘Current regional integration policies assume that the markets in neoliberal member states will grow if the state provides infrastructure and some regional regulatory bodies. However, this is not working, hence the need for a rethink.’’

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