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JAD
Journal of African Development
Fall 2010 | Volume 12 #2
Guest editors for this issue:
Elizabeth ASIEDU and Mohamed EL-HODIRI
Table of Contents
An Appreciation ............................................................................ 9
The Transition: Africa’s Development and the Journal ........................ 11
E. Wayne NAFZIGER
African Economic Development: An Overview .................................. 13
Elizabeth ASIEDU and Mohamed EL-HODIRI
Harnessing the Power of Globalization for African Development ......... 15
Kwabena GYIMAH-BREMPONG
Trade is Not the Enemy – Nor is it a “Magic Bullet” ........................... 27
Richard E. MSHOMBA
Young Women’s Marital Status and HIV Risk in Sub-Saharan Africa: .... 33
Evidence from Lesotho, Swaziland and Zimbabwe
Christobel ASIEDU, Elizabeth ASIEDU, Francis OWUSU
Civil War, Sexual Violence and HIV Infections: ................................ 47
Evidence from the Democratic Republic of the Congo
Isaac KALONDA-KANYAMA
Why Countries have both Subsidized and Free Condoms .................... 61
to Prevent HIV/AIDS: The Role of Stigma Mitigation
Robert J. BRENT
Agricultural Industrialization and Income Distribution in ................. 73
Developing Countries: A Focus on the Poultry Sector
Nyankomo MARWA
World Bank Participatory Development Approach in Country Assistance .... 85
Strategy: The Cases of Mozambique and of the Republic of Senegal
Mohamed EL-HODIRI and Rokhaya NDIAYE
JAD
Journal of African Development
Fall 2010 | Volume 12 #2
TRADE IS NOT THE ENEMY –
NOR IS IT A “MAGIC BULLET”
By RICHARD E. MSHOMBA1
Abstract
Trade is an important tool for economic growth. Trade steers countries toward an efficient use
of resources, an infusion of new technologies, and greater competition. But economic growth
is not automatic. Even when trade leads to economic growth, it does not necessarily translate
into real economic development. For that to happen, trade must be fostered in conjunction
with other development-enhancing initiatives. This paper focuses on the link between trade
and development, the role of domestic policies in agriculture, regional economic integration,
and the potential impact of aid.
T
HERE is general agreement that trade, at least in the long run, is good
for all nations. However, lately that understanding has come under
attack from many groups, some of whom have staged demonstrations against
the IMF, the World Bank, the WTO, the G8, and the G20. The criticism
is partially leveled against what appears to be the failure of trade to translate into improvement in people’s standard of living. African countries are
often cited as examples of countries where trade has not produced positive
results. Some critics go so far as to claim that the root cause of inequality
and poverty in the world is globalization. However, most empirical studies
suggest just the opposite.
Trade is an important tool for economic growth. Of course, economic
growth is not automatic. Even when trade leads to economic growth, it
1
University of Kansas African Studies Center, Lawrence, Kansas, October 2-3, 2009. Some of the
discussion in this paper is drawn from Mshomba (2009). I thank Mohamed El-Hodiri for his valuable comments.
28
JOURNAL OF AFRICAN DEVELOPMENT
may not necessarily translate into poverty reduction. Trade is sometimes
even blamed for a lack of development in some countries, as if trade was
supposed to have been a “magic bullet.” The reality is that trade must be
complemented by other policies for economic growth to bring about development.
Let’s consider Equatorial Guinea, which is among the top 25 countries
in the world in terms of GDP per capita. Its GDP per capita (PPP) in 2008
was close to $34,000, almost the same as that of France. The rapid economic growth in Equatorial Guinea in the last 15 years is due to oil exports. Yet
that growth in trade and GDP has not translated into comparable development. In 2008, Equatorial Guinea was 115th in the human development
index ranking. Of course, economic growth does not translate into a higher
standard of living across the board overnight.
With corrupt governments, the benefits of trade accrue mainly to those
connected to the leadership. Equatorial Guinea has consistently been among
the top 10 countries perceived to be most corrupt. In fact, if one considers
the last five years, there seems to be a correlation between economic growth
and the level of corruption in Equatorial Guinea. Of course, correlation
does not imply causality. Nonetheless, it is tempting to hypothesize that
when greed begets more greed, trade, particularly in enclave economies,
may not only fail to bring about real human development, but may actually
give those in power the means to exploit the population. Yet, even with this
possible conclusion, we cannot say that trade is bad anymore than we can
say education is bad because some people use the positions they achieve
through their education to oppress and exploit others. Trade is an important
tool for development. However, it must be made to work for more people.
The proceeds of trade must be used to improve social services, production,
and livelihoods of the populations. In Africa, the most important sector in
terms of employment is clearly agriculture.
Although African countries have made progress in implementing policies
that are friendlier to farmers, their approach to agriculture still reflects a
state of confusion. In 2005, at the G8 meeting in Scotland, African leaders
pleaded for the removal of farm subsidies in developed countries. The subsidies reduce world prices of agricultural products, hurting farmers in Africa.
Just three years later, in 2008, at the G8 meeting in Japan, the pressing
problem for African leaders was that food prices were too high and, again,
developed countries were partially to blame. Those countries were using
corn for combustion instead of human consumption. The political pendulum had shifted from that of being concerned about low prices for farmers
to the plight of the net buyers of food.
To deal with high prices, African countries implemented various
measures. Some were constructive measures such as a reduction of tariffs
on food imports. Some measures were implemented at the expense of small
TRADE IS NOT THE ENEMY – NOR IS IT A “MAGIC BULLET”
29
farmers, reminiscent of the policies of the 1970s. Some countries imposed
price controls and placed restrictions on exports, even to members of their
regional economic blocs. Some went so far as to deny small farmers the
right to sell their own produce, even domestically. As an example, but not
an isolated one, the District Commissioner of Morogoro, in Tanzania,
warned in 2008 that those who would sell food crops would be prosecuted
for “inviting hunger.” (Mwananchi, 2008)
The solution to food problems is not issuing decrees, but rather implementing comprehensive policies that increase agricultural productivity (NEPAD, 2003). These include promoting effective dialogue between
governments and farmers, orderly land reform that would give women
access to and control of land, adequate health and education services, political solutions to civil and cross-border conflicts, an efficient physical infrastructure, improved agricultural research and information dissemination,
and the removal of obstacles to cross-border trade.
There is a consensus that regional economic integration is a vitally
important strategy for Africa to develop its competitiveness in the global
economy. There are 14 regional economic blocs in Africa and a multitude
of bilateral trade agreements between African countries and developed
countries (UNCTAD, 2009). Regionalism can be an important path by
which African countries can graduate from exporting mainly unprocessed
raw materials to exporting value- added products. Yet the pursuit of economic integration in Africa faces several challenges. Specifically, the factors that
limit intra-African trade include high costs associated with trade – transportation costs, inefficiencies of border procedures, corruption, a lack of transparency and trade barriers. Many efforts are being made to facilitate trade
through computerized systems. These efforts must continue. However, it is
important to note that there are other impediments to trade that are not
related to technical capacity or inadequate infrastructure. Customs clearance in many African countries is still prone to corruption and even harassment. In such cases, no amount of aid for trade facilitation will solve the
fundamental problem of border delays. It becomes an issue of governance,
transparency, inculcating moral and ethical behavior, and enforcing laws. As
mentioned above, some countries dealt with high food prices by banning
exports, even to members of a regional bloc. These ad hoc trade barriers
on intra-regional trade reflect a lack of genuine political commitment to
regional economic integration.
The main reason for a lack of political commitment goes beyond
economic integration. Many African countries lack political accountability. Dictators talk about creating the United States of Africa without
being challenged about their repressive regimes. Some leaders change their
constitutions to stay in power indefinitely and then speak about creating a
democratically governed federation. In most African countries, there is no
30
JOURNAL OF AFRICAN DEVELOPMENT
true separation of the state and the ruling party; accountability and checks
and balances become arbitrary and dependent on the personality of the
leadership rather than the rule of law.
It should be noted that the dependence on or the anticipation of foreign
funds may explain, in part, why some countries join many regional groups
and why they set unrealistic schedules. They join too many regional blocs
to be sure they get a piece of every pie coming from foreign donors into the
region.
Dambisa Moyo (2009) has recently stimulated the debate about the role
of aid to Africa. The debate itself is not new. In the 1960s and 1970s, the
discussion with respect to Africa was framed in the context of aid for development. When development failed to materialize in the vast majority of
African countries, questions were raised about the relevance of financial
aid to Africa. Economists started to pay closer attention to the domestic
policies of African countries and those of the developed countries. The
slogan became, “trade not aid.” African countries acknowledge the potential
benefits of trade. However, they also maintain that to take advantage of trade,
they need aid directed toward trade-enhancing projects. In 2005, four years
into a troubled Doha Round, the “Aid for Trade” initiative became an agenda
item that warranted a task force.
Of course, for aid to work, countries must have good policies. The experience of Botswana tends to support this conclusion. According to Lancaster and Wangwe (2000), Botswana’s success is explained by several factors
including: good governance; the ability to plan and implement growth
enhancing polices; and the ability to integrate aid-supported projects into
the national development framework.
The merit for the aid for trade initiative comes from the fact that it can
help to reduce supply side constraints, thus improving production capacity
and helping countries to diversify and add value to their exports. However,
to make sure that aid is well targeted, aid should be determined by what needs
to be done, rather than aid determining what should be done. Aid should
facilitate trade reforms; it should not be the reason for reforms.
In conclusion, trade can be an effective engine for growth that, in turn,
brings development. However, for that to happen, trade must be fostered
in conjunction with other development-enhancing initiatives. African
countries have high trade ratios and, thus, are highly susceptible to external
factors. Nonetheless, domestic policies and supply constraints are arguably
the most important factors in determining the long run course of agricultural production in Africa. Economic integration in Africa faces challenges,
but none that cannot be overcome. Associations of manufacturers and other
business associations are gradually becoming more involved in formulating and shaping economic integration. Their increased participation will
restrain governments from making empty declarations and will hold
TRADE IS NOT THE ENEMY – NOR IS IT A “MAGIC BULLET”
31
government leaders accountable for their commitments. The Aid for Trade
initiative is an indicator that most African countries have not made progress
towards lessening aid dependence. Some still depend on aid to help them
identify priority needs and build their capacity to utilize aid. Yet Africa has
noticeably changed from the one-man rule found in many countries in the
first two and a half decades after independence to democracies or quasidemocracies in many countries in the 21st century. Aid used effectively to
facilitate trade can be an important tool to foster economic growth and, in
turn, to reduce poverty. Therefore, although trade is not a “magic bullet,” it
is also not the enemy. In short, trade can and should be an ally.
References
Lancaster, Carol and Samuel Wangwe (2000), Managing a Smooth Transition
from Aid Dependence in Africa. Washington, D.C.: Overseas Development Council and African Economic Research Consortium.
Moyo, Dambisa (2009), Dead Aid: Why Aid Is Not Working and How There
is a Better Way for Africa. New York: Farrar, Straus and Giroux.
Mshomba, Richard (2009), Africa and the World Trade Organization.
New York: Cambridge University Press.
Mwananchi (2008), “Watakaouza chakula Moro kushtakiwa” [those in
Morogoro who will sell food crops to be prosecuted], Mwananchi
(June 26, 9). Dar-es-Salaam,Tanzania: Mwananchi.
NEPAD (2003), Comprehensive Africa Agriculture Development
Programm. Midrand, South Africa: NEPAD.
UNCTAD (2009), Economic Development in Africa Report 2009: Strengthening Regional Economic Integration for Africa’s Development.
Geneva: UNCTAD.