i

GLOBALIZATION AND ECONOMIC INTEGRATION IN WEST AFRICA, 1999-2007

BY

UGWU, NNAMDI HENRY PG/M.Sc/12/62466

DEPARTMENT OF POLITICAL SCIENCE FACULTY OF THE SOCIAL SCIENCES

UNIVERSITY OF NIGERIA NSUKKA

SEPTEMBER, 2013

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TITLE PAGE

GLOBALIZATION AND ECONOMIC INTEGRATION IN WEST AFRICA, 1999-2007

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APPROVAL PAGE

This project report has been approved on behalf of the Department of Political Science

University of Nigeria, Nsukka.

By

____________________ ______________

Dr. Peter Mbah Prof. Jonah Onuoha

(Project Supervisor) (Head of Department)

___________________ ____________________

Prof C.O.T Ugwu External Examine Dean of Faculty

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DEDICATION

I dedicate this work to God Almighty for His Infinite Blessings, and to the Ugwu Nwude

Family

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ACKNOWLEDGEMENTS

For the successful completion of this project work, I am eternally indebted to a number of

people whose input and support were indispensible to me. Easily the first among these is my

Project Supervisor Dr. Peter Mbah whose encouragement, incisive comments and fatherly

guidance helped to clarify doubts and sharpen my focus.

Others are the many distinguished academics in the Department of Political Science,

University of Nigeria whose tutelage greatly broadened my horizon. They include my very

amiable HODProf. Jonah Onuoha, the coordinator of Postgraduate programmes Prof. A.M.N

Okolie, Professors Obasi Igwe, Okechukwu Ibeanu, Emmanuel Ezeani, and Ken Ifesinachi.

Others are Dr. H. Edeh, Dr. Ukwuaba, Dr. Ifeanyi Abada, Dr. G Ezirim, Dr. Jombo Nwagwu, Dr

Nwachukwu, Dr. Christian Ezeibe and Dr. Agbo This is not forgetting the contributions of such

intellectual giants like Mr. P.C. Chukwu, S. N. Asogwa whose administrative acumen has

contributed in no small measure to the completion of my programme.

Also, I deeply acknowledge the contributions of my parents Engr. and Mrs S. E. Ugwu

who have been untiring in their support and inspirationas well as many other worthy men and

women whose support were vital for the completion of this programme. They include Professor

Malachy Okwueze, the Deputy Vice Chancellor Administration, University of Nigeria, Mr and

Mrs AgboUkwueze Festus, Mr Ugwu Jude, Rev. Offor Fidelis, Mr Tagbo Okezie, and Nwoke

Ikemefuna. This is of course not forgetting the ever conscious members of Igbo Awareness

Movement (IAM).

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ABSTRACT

On face value the interface between globalization and regionalism would appear to be harmonious and complimentary since given the concern of both for issues of economic integration closer cooperation. On the contrary however, their relationship has generated heated debate in extant literature with one school of thought holding the view thatthe process of ‘globalization’ has been accompanied by the strengthening of economic and financial linkages within geographic regions., and that the world economy is simultaneously becoming more ‘regionalized’ and more ‘globalized.’ There is also a second school of which holds the view that even though both globalization and regionalization espouse the integration of economies, they differ markedly in the form and character of integration each espouses. They contend that regionalism is a counterpoise to globalization or Americanization and as such ‘progresses when hegemony is on the wane.’ The crux of their argument is that contrary to the common belief that globalization and regionalism would compliment to achieve greater integration, the globalization-type integration is actually antithetical to and therefore undermines regional integration processes, particularly in the more backward regions of the world. It is against this backdrop that this study examines how globalization impacted on the economic integration of West African sub-region between 1999 and 2007. The study is based on a mélange of the theories of open regionalism and complex interdependence and it adopted the qualitative descriptive method of data collection and analysis. Based on the research objectives, the study found that the liberalization of the economies of West African states as espoused by globalization actually undermines economic integration of the region, and that the low level of development of science and technology in the West African sub-region also undermines its economic integration. The study then recommended among other things that in order for the region to actualize the vision of greater economic integration, it must move beyond futile attempts at market integration towards cooperation in scientific, technological and industrial development.

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List of Abbreviations

ACP - African, Caribbean and Pacific Group of States

AMU - Arab Magherb Union

APEC - Asian Pacific Economic Cooperation Conference

ASEAN - Association of Southeast Asian Nations

AU - African Union

BWI - Bretton Woods Institutions

CEAO - Communaute Economique del’Afrique de I’Ovest

CEPGL - Comminaute Economique Des Pays des Grands Lacs

COMESA - Common Market of Eastern and Southern Africa

CU - Custom union

EC - European Community (EC)

ECA - United Nations Economic Commission for Africa

ECOWAS - Economic Community of West African States

EU - European Union

FDI - Foreign Direct Investment

FTA - Free Trade Areas

GATT - General Agreement on Trade and Tariffs

GCC - Gulf Cooperation Council

GDP - Gross Domestic Product

ICT - information communication technologies

IGAD - Intergovernmental Authority for Development

IMF - International Monetary Fund

IOC - Indian Ocean Commission

LPA - Lagos Plan of Action

MERCOSUR - South America by the Mercado Común del Cono Sur In Asia

MRU - Mano River Union

NAFTA - North America by the North American Free Trade Agreement

NATO - North Atlantic Treaty Organization

NEPAD - New Partnership for African Development

OAPEC - Organization of Arab Petroleum Exporting Countries

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OAU - Organization of African Unity

OCA - Optimum Currency Area

OECD - Organization for Economic Cooperation and Development

PTA - Preferential Trade Area for Eastern and Southern Africa

R&D - Research & Development

RECs - Regional Economic Commissions

RIAs - Regional Integration Agreements

SACU - Southern African Customs Union

SACU - Southern Africa Customs Union

SADC - Southern Africa Development Community

SSA - Sub Saharan Africa

UNCTAD - United Nations Conference of Trade and Development

UNIDO - United Nations Industrial Development Organization

WAMZ - West African Monetary Zone

WTO - World Trade Organization

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TABLE OF CONTENTS Title page - - - - - - - - - - - i

Approval page - - - - - - - - - - ii

Dedication - - - - - - - - - - iii

Acknowledgements- - - - - - - - - - iv

Abstract- - - - - - - - - - - v

List of abbreviations- - - - - - - - - - vi

Table of contents- - - - - - - - - - viii Chapter One: Introduction

1.1 Introduction- - - - - - - - - - 1

1.2 Statement of the Problem - - - - - - - - 4

1.3 Objectives of the Study- - - - - - - - 7

1.4 Significance of the Study- - - - - - - - 7

1.5 Hypotheses - - - - - - - - - - 8

Chapter Two: Literature Review

2.2 Theoretical Framework - - - - - - - - 24

Chapter Three: Method of Research

3.1 Method of Data Collection - - - - - - - - 28

3.2 Research Design - - - - - - - - 29

3.3 Method of Data Analysis- - - - - - - - 30

3.4 Logical Data Framework- - - - - - - - 31

Chapter Four: Economic Liberalization And Integration In West Africa

4.1 Economic liberalization and Low Level of Trade among West African States 37

4.2 Liberalization and African Economic Integration - - - - 65

Chapter Five: Development of Productive Forces and Economic Integration in the West African

Sub-Region

5.1 Low Level of Industrialization and the Challenges of Regional Integration in West Africa - 76

5.2 The Low Level of Research and development and the challenges of West African Integration - 96

Chapter Six: Summary, Conclusion and Recommendations

6.1 Summary and Conclusion- - - - - - - - 103

6.2 Recommendations - - - - - - - - - 104

Bibliography

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CHAPTER ONE

INTRODUCTION

1.1 Introduction

Globalization ideas claim an impressive intellectual ancestry, including Adam Smith,

Marx and John Stuart Mill, Hecksher and Ohlin, John Maynard Keynes and Lenin, to name only

the most distinguished. Perhaps not surprisingly given this diverse list of thinkers, beyond a

broad agreement that economic activity has a tendency to expand beyond its initial national

setting, connecting a growing number of more widely dispersed economic locations, most

contemporary observers have differed in their description of the globalization process, and have

failed to construct a consistent theoretical explanation of what is driving it and where it might be

going. In part, this struggle to construct a coherent framework reflects terminological confusion

over the closely related but nevertheless distinct concepts of openness, integration and

interdependence (Panic, 1995 cited in Bairoch and Kozul-Wright, 1996: 3). It is for this reason

that globalization is said to be a contested concept. Following Intriligator (2003) however,

"Globalization" is understood here to mean major increases in worldwide trade and exchanges in

an increasingly open, integrated, and borderless international economy. It involves greater

openness in the international economy, an integration of markets on a worldwide basis, and a

movement toward a borderless world, all of which have led to increases in global flows.

Throughout the 1990s the doctrine of economic globalization has been advocated with

such intensity as to seem the very spirit of the age. “Globalism,” as the discourse advocating

globalization may be called, has grown conspicuously extreme in its claims, asserting in various

ways that a unitary, undifferentiated world has or will in the near future become reality. At the

same time, arguments opposing or wary of that prospect have also been put forward on various

fronts. In the final decade of the twentieth century, the process of economic globalization has

advanced remarkably, supporting these claims for globalism’s ascendency. The advance is most

striking in the instantaneous transfer of large sums of money in the international financial market

(Kudo, 2000: 1).

According to him, the tide of globalization did not swell all of a sudden in the 1990s. The

groundwork for swift, international transfer of enormous quantities of funds was laid in the

1970s when trade and capital liberalization also gained momentum in developed capitalist

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countries, in parallel with the transition of the international monetary system to a floating rate

system. By the 1980s, this wave of trade and capital liberalization had extended to semi-

developed capitalist countries that had experienced sustained economic growth, and with this

came the establishment of a global, open-economy system. This, too, spurred the international

transfer of funds. This period was also characterized by dramatic growth on a global scale of not

only American- but also European- and Japanese-based large corporations, and by an increasing

trend toward corporate multi-nationalization. Multi-nationalization became another factor

accelerating the international movement of funds. The 1980s also saw the rise of “neo-

liberalism,” represented by “Reaganomics” and “Thatcherism,” which may be regarded as the

precursor of today’s globalism.

Looking further back in history we find the establishment of the Bretton Woods System

at the end of World War II, followed by its maturation in the 1950s and 60s. This system was the

cornerstone of postwar globalization growing out of the disintegration of the interwar period

world economy. Traced back even further to before World War I, we can see that Britain’s

advocacy of free trade and free-trade imperialism in the nineteenth century was also a kind of

globalism, and that that age was one of globalization as well. Capitalism, in other words, arose in

the sixteenth and seventeenth centuries literally as a world-unifying system (Kudo, 2000: 2).

The other major trend in the world today alongside globalization is regionalization. The

term “region” has various meanings. The development of regionalization has come to attract

considerable attention, especially since U.S. hegemony began to wane. Although varying in

scale, character, and significance from region to region, regionalization progressed on a

worldwide scale from the latter half of the 1980s through the first half of the 1990s. The

economic aspect of regionalization may be described as efforts to form free-trade zones and—

through the creation of common markets, the coordination of economic policies and the

implementation of joint economic policies—to form even larger economic zones. In Western

Europe this trend is represented by the European Community (EC) and the European Union

(EU); in North America by the North American Free Trade Agreement (NAFTA); and in South

America by the Mercado Común del Cono Sur (MERCOSUR). In Asia, meanwhile, the

Association of Southeast Asian Nations (ASEAN) has been enlarged and consolidated, and

efforts have even been made toward integration at the pan-Pacific level in the form of the Asian

Pacific Economic Cooperation Conference (APEC).Among the Arab States there are the Gulf

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Cooperation Council (GCC); and the organization of Arab Petroleum Exporting Countries

(OAPEC). In Africa meanwhile, there are Common Market of Eastern and Southern Africa

(COMESA), Southern Africa Development Community (SADC); Southern Africa Customs

Union (SACU) Preferential Trade Area for Eastern and Southern Africa (PTA). There are also

the Communaute Economique del’Afrique de I’Ovest (CEAO), Comminaute Economique Des

Pays des Grands Lacs (CEPGL); the Union Douanieve ef Economique de (‘Afrique Centrale );

and the Economic Community of West African States (ECOWAS).

ECOWAS came into being on the 28th of May 1975 after a Treaty signed in Lagos

Nigeria by leaders of fifteen (15) countries that make up West African Sub-region it entered into

force in July 1975. The first meeting of the council of ministers and the Authority of Heads of

States and Governments took place in Lome Togo, on November 4-5, 1976, during which

additional protocols to the Treaty were signed. Sixteen (16) West Africa Heads of States signed

a revised Treaty on July 24 1993. Onuh (2004:280) opined that the birth of this community was

to an extent a response to a call by the Organization of African Unity (OAU) since its birth in

1963 for economic integration among African countries as well as that of United Nations

Commission for Africa (ECA).The formation of ECOWASwas therefore informed more by the

desire among the member states for political stability and industrialization than a quick response

to the emerging global system. It was the dominant believe that an economically strong sub-

region will create the much-desired basis for political stability and become less economically

dependent on the great powers.

Gang and Padoa-Schioppa (2004) pointed out that it is widely recognized that the world

economy has experienced an unprecedented intensification of economic and financial integration

since the latter part of the twentieth century. According to them, developments such as trade and

capital account liberalization, as well as technological innovation in transport and

telecommunications, have increased the international exchange of factors of production and final

products. They however reckoned that what is less often recognized is that the process of

‘globalization’ has been accompanied by the strengthening of economic and financial linkages

within geographic regions. According to them, the world economy is simultaneously becoming

more ‘regionalized’ and more ‘globalized’, and the trend towards regional integration has been

supported in many areas by regional policy initiatives, particularly in the field of trade. The

result, they say, is a proliferation of regional agreements that vary widely in breadth and depth.

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This view stands in sharp contrast to the position of scholars like Kudo who hold the

view that even though both globalization and regionalization espouse the integration of

economies, they differ markedly in the form and character of integration each espouses. They

contend that regionalism is a counterpoise to globalization or Americanization and as such

‘progresses when hegemony is on the wane.’ The crux of their argument is that contrary to the

common belief that globalization and regionalism would compliment to achieve greater

integration, the globalization-type integration is actually antithetical to and therefore undermines

regional integration processes, particularly in the more backwards regions of the world.

It is in the context of this raging debate in extant literature therefore that this study

examines the interface between globalization and economic integration in West Africa between

1999 and 2007.

1.2 Statement of the Problem

The concept of globalization has enjoyed emotive debate in extant literature. While some

viewed it as a process that is beneficial, key to future world economic development and also

inevitable and irreversible (Olisa, 1999 and Onuoha, 2002), others regard it with hostility,

believing that it increases inequality within and between nations, threatens unemployment and

living standards, and thwarts social progress (Asobie, 1998, Ibeanu, 2000). Despite these

disagreements among experts, globalization certainly exerts great influence on the development

process of both developed and developing states. As Asobie observed, globalization is a

programme of action and a strategic plan whose main aim is to facilitate the internationalization

of capital. And besides knocking down barriers to international trade, globalization has

contributed to the collapse of the restrictions on the operations of multinational corporations.

Concerning its impact on regionalization or regional integration precisely, ithas been

observed thatregionalism appears to be a counterpoise to globalization/Americanization.

Essentially, globalization entails the integration of all activities of man into one: the creation of

one world, a global village, which is increasingly interconnected; one in which national

boundaries and regional blocs are no longer important. Regionalism on the other hand is a

process that intensifies when multilateralism stagnates. In other words, regional cooperation fills

the gaps left where global cooperation fails and serves to strengthen the process of liberalization.

Professor Henning argued that weaknesses in the multilateral system had historically played a

key role in motivating regional cooperation and in designing the agenda. Moreover, he argued

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that multilateral institutions can be safeguarded by introducing provisions in the regional

arrangements that foster complementarity (Henning, 2004: 17).

Majority of sub-Saharan African countries are members of one or more regional or sub-

regional arrangements that seek to promote economic coordination, cooperation or integration

among the member countries concerned. The various African regional economic blocs, and

indeed the individual countries that comprise their membership, are at varying stages of

development and implementation of their regional arrangements. The blocs’ scope covers

various socio-economic,developmental and political considerations, including the promotion

ofintra-regional trade, socio-economic policy coordination, and managementor development of

shared physical infrastructure and the environment.

Some of the African regional arrangements also cover issues ofcommon interest in the

areas of public governance, defense andsecurity, among other socio-economic and political

dimensions.Some of the many African sub-regional arrangements have a longhistory of

existence, dating back to the pre-independence era, which hasbeen punctuated by occasional

stagnations or reversals in a few cases, andonly modest achievements at best in others. Some

African countries haveonly recently rekindled their interest in economic integration, but

fordifferent reasons from the initial decolonization agenda and the desireto overcome the

colonially imposed “artificial” boundaries. They havebeen inspired by the success of integration

efforts in Europe and theAmericas. They also need post-independence economic integration

togain bargaining power and survive economically against the threat ofmarginalization in the

globalization process (Maruping, 2005: 130).

One of these regional blocks that have continued to exist side by side with the

globalization process is the Economic Community of West African States (ECOWAS), a sub-

regional organization formed to integrate the economies of the West African countries in order to

enable them play a greater part in the international economic order.Trade, which is a very

important element of this globalization process, is also a key issue in ECOWAS. The problem

here is not the mere fact that the West African countries have integrated their economies under

the aegis of ECOWAS. The issue however, is that the process of globalization seeks to break all

these barriers, including the barriers instituted by national boundaries, so that there could be

unfettered flow of trade, finance and investment internationally. In this light, it would appear

that the even though both globalization and regionalism encourage greater economic integration,

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both appear to differ in the kind or scope of integration they envisage. Even though a number of

works have interrogated the interface between regionalism and globalization, such studies have

exhibited a high level of ethno-centrism, focusing their analysis on the EU, NAFTA, and

ASEAN to the neglect of the Sub-Saharan Africa, especially the ECOWAS region. The few

works that do exist in this area have done little to articulate the tension between globalization and

regionalization and the implication of the tension for the quest for the economic integration of

West Africa. Similarly, extant literature on economic integration in the sub-region has not

sufficiently come to terms with the regions technology gap and how that gap could undermine

the meaningful integration of any region.

However, there are two ways to explain the problematique of globalization and economic

integration in West Africa. First, globalization of the economy of West African states

undermines regional economic integration because by espousing the opening up the economies

of the West African states to the unrestricted movement of goods and capital from the

industrialized nations, it reinforces the asymmetrical relationship between the individual West

African states and the industrialized nations since the goods from the West African states are

unable to compete with goods from the industrialized countries. In this sense, it discourages the

integration of the West African economies. Second, the low level of development science and

technology in the West African sub-region impedes its regional economic integration because it

creates a situation of over reliance on the exportation of primary commodities by all the states in

the region resulting in very low level trade among them. In order words, given that the countries

of the West African sub-region are not industrialized, they depend mainly on the exportation of

agricultural and other raw materials with little or no value addition. Because of the homogeneity

of the exports of these countries, the level of trade between and among them is very low. Instead,

they trade more with the industrialized countries who are the consumers of such raw materials.

It is in this light,therefore, that this study examines the interface between globalization

and economic integration in the ECOWAS region. To do this, the study poses the following

research questions:

1. Does the liberalization of the economies of African states undermine regional economic

integration of the sub-region?

2. Does the low level of development of science and technology in the West African sub-

region impede its economic integration?

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1.3 Objectives of Study

The broad objective of this study is to examine the impact of globalization on the

integration efforts of an underdeveloped primary commodity exporting region such as West

Africa.

The specific objectives of the study are:

1. To explain how the liberalization of the economies of African states undermines regional

economic integration of the sub-region; and

2. To analyze how the low level of development of science and technology in the West

African sub-region undermines its economic integration.

1.4 Significance of the Study

The study has both practical and theoretical significance. On the latter the study will

benefit the students of International Relations and Political Economy, especially those of them

that are interested in studies concerning regional integration. This study will not only enrich

their knowledge but will also add to the pool of literature from which they can draw. The study

will also be relevant to the Ministry of Foreign Affairs and other related ministries within the

sub-region as well as the respective foreign policy makers of West African States. The issue that

will be tackled here will be of immense benefit to these countries. Also, the staff of ECOWAS

secretariat will benefit from the study.

Moreover, the study will be an addition to the existing works already done in this area by

other researchers. Since the research endeavour is an on-going process, there is no doubt that

this study will arouse the interest of other researchers to carry out further investigation in this

area.

On the practical significance, the study will be relevant for the practitioners of foreign

policies of the member states of the organization. It will not only guide their actions but will

also help them in shaping and implementing these policies, especially in this contemporary era of

globalization. Furthermore, the study will be of practical importance to business men and

corporate organizations operating within the sub-region as the issues that will be tackled here

will also help them in their relations with the global market/economy.

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1.6 Hypotheses

The study will test the following hypotheses:

1. If the economies of West African states are liberalized, then it is likely that economic

integration of the region would be undermined.

2. If there is a low level of development of science and technology in West Africa, then

it is likely that economic integration would be impeded.

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CHAPTER TWO

LITERATURE REVIEW

The review of extant literature in this study will revolve around the two questions we

posed. This is to ascertain whether the questions have been satisfactorily answered or otherwise.

Economic Liberalization and Regional Integration in West Africa

Writing in “Globalization and Regional Integration”,Mario Arturo Ruiz Estrada (2005)

stated that in the past twenty years, the whole world has been experiencing dramatic changes in

the economic, technological, political and social arenas. Many academicians and researchers in

the fields of economics, politics and sociology refer to these transformations as “globalization”.

Globalization started as a general concept among certain specialized academic groups in the

middle of the 1980’s, with reference to regionalism and the rapid development of new

advanced technologies. Later, the concept and uses of the word “globalization” started to expand

in the universal language, until it became adapted into our common lexicon. It is no longer a

special term used by economists, political scientists and sociologists. It is regarded to as the most

relevant economic phenomenon these days. Probably, there is no other concept that can better

define the fundamental challenges in the world economy in this century than “globalization”. But

it was not until the 1990‟s that globalization made its formal appearance and consolidation in the

international context. Furthermore, globalization is a complex and multidimensional

phenomenon taking place simultaneously in different levels and transforming the political,

social, economic and technological scenarios in different parts of the world

Onuh (2004) on his part stated that the phenomenon of globalization appears to be a

product of renewed belief and contestations in a global process, which has drawn the

international community at the threshold of a global village. These range from politics,

economy, communication and education to even agriculture and food. National economies are

all dissolving and distinct management of national economies are all becoming irrelevant and

giving way to globalized strategies characterized by powerful market forces. All forms of

integration have also been a logical consequence of globalization. These include economic and

monetary integration. According to Onuh, these formations have affected not only domestic

policies of states but also led to compromise of sovereignty and autonomy in domestic policy

making and implementation.

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While noting that this global phenomenon is not a recent one the author stated that the

West Africa sub-region is not an island in the global process. As part of global community,

events and activities in the sub-region have had their own logical outcomes, which could be

attributed to the global evolution. Part of this is found in the renewed vigour and efforts at

coming together in addressing regional problems ranging from harmonization of serenity efforts,

health legislative activities and process of adjudication. Over and above all is economic and

monetary integration, which is believed to be basis for rejuvenation and extractive capabilities of

member states. According to Onuh, despite the effort to integrate the West Africa states appear

very unlikely to be left behind in emerging global process, since activities by states in the sub-

regions demonstrate reinvigorated desires to become active players in the “new deal” in the

interest of their citizens.

Citing Haas (1958) and Lindberg (1963), Onuh conceptualized integration as an

incubator style process whereby existing political systems continuously forgo the desire and

ability to conduct key foreign and domestic policies independently of each other, seeking instead

to make joint decision or to delegate the decision making process to new central organs. In this

process of unification, integration affects the sovereignty of the integrating units. To this extent,

member states often find themselves constrained to conduct some key domestic and foreign

policies independent of each other without putting into serious consideration the implications

such would have on the overall interest of member nations. Integration involves a deliberate

choice of supra-nationality over intergovernmental procedures of decision –making. This has

often led to new structural formations that give common interest and take decision on behalf of

all.

According to the author, the linkage between integration and international relations may

border more on the opportunity provided by togetherness in the exercise of power among

members of the unit, especially the dominant and economically stronger members. Again, the

virtue of membership provides some air of not only domestic strength but also a feeling of

security, which gives them bargaining strength with extra-regional powers. If the regional

organization makes provision for military pact or defence treaties, possibility of external

inversion from more powerful neighbours are likely to be limited. According to him in such

committee of nations as the United Nations, regional bodies with bond of unity have been taking

11

advantage of block vote to press home issues of common concern to their members or even

defended their members and regional interests.

Onuh also noted that while the phenomenon of globalization took a centre stage in public

discourse in the closing part of 20th century and created greater awareness in the early part of 21st

century, plans for Economic Community of West African States (ECOWAS) were first formally

set out at the Monrovia Group meeting of April 1968. According to him, since globalization

started in the days of yore, ECOWAS only came into being on the 28th of May 1975 after a treaty

signed in Lagos by leaders of fifteen (15) countries that make up the West African sub-region.

Therefore, to really talk of ECOWAS before globalization in any meaningful form is like

attributing to a child the status of his father.

The main thrust of Onuh’s work is to determine whether the emerging globalization

process had any major impact on the process of economic integration in West Africa. While

answering in the affirmative, he concluded that it is not only that globalization has promoted

greater developments in the sub-region under the auspices of ECOWAS but also that the

globalization process has facilitated the implementation of ECOWAS treaties. However, Onuh’s

analysis has not helped us to empirically ascertain the extent of the impact of globalization on

economic integration in West Africa. More over, his contention that globalization has promoted

greater developments in the sub-region does not appear to be supported by the reality on the

ground as is reflected in the standard of living of ECOWAS community citizens.

Meanwhile, (Estrada, 2005) noted that globalization embodies particular characteristics

which are as follows: The first characteristic of Globalization, according to Estrada, is the

institutional and political reforms based on less public sector participation into the economic

activity or market. The institutional focus is supported by the idea to reduce public sector

participation into the economic activity under the argument of unnecessary bureaucracy (non-

efficient allocation of resources and production factors). The elimination of unnecessary

bureaucracy uses the mechanism of privatization based on the sale of assets from the public

sector enterprises (products and services) to the private sector. The sell of public sector to the

private sector assumes a better performance in the productivity and efficiency of public services

and products. The mission of privatization is to look for an efficient allocation of resources into

the economy of any country under the private sector management. The new institutional focus

and deep political reforms that constitute the first pillar of globalization is based on less public

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sector participation in economic activity. The idea behind the reduced public sector participation

is that unnecessary bureaucracy creates non-efficient allocation of resources and production

factors. The elimination of the unnecessary bureaucracy is implemented through the mechanism

of privatization, where goods and services from the public enterprises are sold to the private

sector. The sale of public sector assets to the private sector is assumed to give rise to higher

productivity and efficiency in the public sector. This is in line with the mission of privatization,

that is, to achieve efficient allocation of resources in a country’s economy. Since the end of the

Cold War -- with the collapse of the bipolar order (communism and capitalism) that reigned

since 1945, a new phase of reform in the economic, institutional and political arenas has been

created. A new institutional world order has been structured under deep political, economic,

technological and social challenges (Gaspar, 2000). Indeed, the analysis of post-Cold War

regionalization process and international order cannot be separated from the globalization

process (Hveem, 2002 and Sideri 2000). The new international order in the political and

institutional is supported by the strong promotion of democracy (more participation of the civil

society into the democratization process) and human rights (Estrada, 2005: 2).

The second characteristic of globalization is the development of information

communication technologies (ICT) tools resulting in the use of advanced technologies. The ICT

sector uses technological innovative tools such as Internet services (Web), sophisticated software

and hardware, satellite T.V. and satellite mobile phone systems. These tools enable quick

accessibility of information and hence, easier business transactions. The present advances in

technology have come a long way since the industrial revolution in England. With advanced

technology, new Research & Development (R&D) methods and tools emerged, which in turns

led to expansion in world production and business. However, the above benefits of technological

revolution are mainly enjoyed by high income countries. This results in concentration of high

technology amongst high income countries. Therefore, middle income and low income countries

continue to be highly dependent on high income countries for their technological needs.The final

characteristic, he said, is the expansion of regional integration agreements (RIA‟s) around the

world based on custom union (CU) and free trade areas (FTA) schemes (Estrada, 2005: 3).

Implied in his analysis is that the RIAs are part and parcel of globalization and as such

are mechanisms for greater intra-regional economic integration.

13

In his own analysis, Browne (1998) noted that regionalism is not new to the global

agenda and that it is more and more frequently bracketed with globalization. All forms of

political and economic cooperation are receiving a higher priority among countries in all regions

and at all levels of development. While stating that regionalism is now in vogue, he noted that

there are a few examples of long established regional groupings that have become stronger over

time notably the European Union and the Association of South-East Asia Nations. But many of

those established over the last three decades have been short-lived or have retained mainly

symbolic political significance. The author stated that for a number of reasons, there has been a

growing commitment to regionalism since the late 1980s. Some of the reasons include:

First, regionalism reflects an increased understanding of the importance of trade and

economic openness. Inward-oriented development and self-sufficiency are terms disappearing

from the development lexicon. He gave an example of Russia and the four largest continental

developing countries – Brazil, China, India and Indonesia – and noted that they have all

recognised the need to widen their markets. They have all shown interest in regional cooperation

in recent years. On the other hand, for small states, membership of regional bloc can provide

economic openness without exposure to the full blast of global competition.

The second allied reason for regionalism, according to the author, is globalization. He

stated that the real world is perceived as increasingly borderless, and competitive boundaries

between transnational corporations count less than national boundaries. Thus, while regionalism

receives official recognition in formal intergovernmental agreements, it is also manifested in the

rapid expansion of privately sponsored cross border economic activity.

Third, in many parts of the world, there is a more conciliatory political climate. The cold

war kept many neighbours at political odds. In its aftermath, old ideological enemies and

political rivals are more willing than before to collaborate. For instance, countries of the Warsaw

pact are now joining the North Atlantic Treaty Organization (NATO) and seeking membership

of the European Union. The same thing is happening in West and Central Asia. The arrival of

full democracy in South Africa also gave a new lease of life to the Southern Africa Development

Coordination Conference, renamed a Development Community in 1992. There have also been

examples of stronger regionalism in East and South Asia.

The fourth reason why there has been a growing commitment to regionalism, according

to Browne, is that regionalism reflects collective solidarity in trade. He noted that when the

14

Uruguay Round of trade negotiation began in the 1980s, there were widespread hopes that they

would be completed within a few years. In the event, although the Round went further than had

originally been anticipated, there was much frustration at its slow pace, prompting many

countries to take a “sub-globalist” route. In global negotiations, moreover, regionalism also

encourages the formation of collective negotiating positions, likely to have more weight in the

overall balance.

The author went on to discuss three types of regionalism. The first he called protected

regionalism and gave its example to be the Preferential Trading Arrangement (PTAs) which are

usually formed among limited members of countries with the specific purpose of fostering more

trade within the grouping. They do this by lowering tariff and other trade barriers, streamlining

border administrations etc. In customs union, common external tariffs are raised against goods

imported from non-members.

The second type of regionalism as discussed by Browne is open regionalism. This entails

regional cooperation which promotes the benefit of closer regional ties, but without selective or

discriminatory trade measures. Open regionalism, as well as many examples of the protected

variety, also goes beyond trade to embrace other forms of cooperation. The third form of

regionalism, micro-regionalism, according to the author, is gaining increasing prominence. It

involves activities within contiguous economic and environmental space encompassing parts of

national territories hence the term “micro-regionalism”.

In conclusion, Brown remarked that regionalism is an important manifestation of greater

economic openness being witnessed on a global scale. Through regionalism, markets are

broadened albeit sometimes within protected boundaries. However, regionalism in the context of

a process of global trade liberalization led by the World Trade Organization is ultimately

contributory rather than inimical to free trade. By bringing more countries into the fold of liberal

and outward – looking economies moreover, regionalism also contribute to continuing reform,

especially in countries in a transitional phase away from central planning and management.

Finally while noting that regional bodies also undertake important security and peace-keeping

initiative, trade provides the driving force for most regional initiatives.

Browne made a salient good point when he noted the importance of regionalism in the

contemporary phase of globalization, especially as it concerns trade. He examined the different

forms of regionalism with the purpose of reviewing the growing importance of such partnership

15

as frameworks for expanding lateral as opposed to vertical – forms of development cooperation.

Therefore, his analysis does not help us to ascertain the reasons behind the resurgence of the

regional organization – ECOWAS - despite the growing interconnectedness of nation – states

occasioned by globalization.

Meanwhile, Nwanegbo (2005), interrogated existing concepts of globalization and

regional integration and explored their interconnections in the context of global order. He was

more interested in exploring how the recent craze towards the formation of regional bodies could

give room to, or enhance globalization. Citing Ibeanu (1997:2), Nwanegbo noted that the term

globalization has been given three different interpretations. First, from a universal point of view,

the term signifies phenomena, characteristics, events and problems that are universally present,

or are becoming so. In this sense, there is a meaning of presence, visibility, immediacy and

availability worldwide or in what can be considered important global centres. The second

interpretation is the integrationist perspective. This is the widening, deepening and speeding up

of worldwide interconnectedness in all aspect of contemporary social life, from the cultural to

criminal, the financial to the spiritual. This perspective explains globalization as a supra-national

phenomenon which is propelling disparate parts of the globe into one outlook and culture.

According to the author, this is highly related to the universalist perspective. The third one is the

constructionist perspective, which presents globalization as an order. It integrates the elements

of power relations and presupposes the making or remaking of the world, and the existence of a

system or structure whether it is that of an integrated capitalist market, a world information,

culture or communication order, or a world political order.

On integration, the author noted that it entails the building up of a stronger and virile

body that will among other things seek to enhance the people’s way of life and to live. It denotes

the bringing together of hitherto autonomous regions or centres into a whole. It is the combining

of two or more things so that they work together effectively, like the closer integration of the

countries economies. Using the European Union and the African Union as case studies of

regional integration, the author remarked that globalization is not going to get the friendly

cooperation to succeed. This is because some of these regional bodies were established to serve

as a centre of negotiation, primarily to cover up for the weakness of its constituting countries, in

the face of others (the bigger body). These pursuits, according to Nwanegbo, made the

objectives and operations technically irreconcilable.

16

As we have stated above, the author was interested in exploring how the formation of

regional bodies could enhance the process of globalization. Notwithstanding the close

relationship this has with our task in this study, the questions we posed still beg for answers.

Garica (1998) studied Latin American patterns of globalization and regionalism. In it she

conceptualized globalization to imply changes in the way production is organized as required by

the general dismantling of trade barriers and the free mobility of accelerated technological

change. Rapid integration of national economies into the global market is another especially

conspicuous feature of the process.This globalization, according to her, has not been a neutral

process. Its growth has not had an equal effect everywhere that would result in improved living

conditions for people in all, or at least the great majority of the countries involved. It has also

been disharmonic, asymmetric and inequitable within individual countries and between levels of

intensity and with different effects. Added to the foregoing is an increasingly recurring financial

instability which was not properly foreseen by international financial agencies. This has become

more and more pervasive, dragging a growing number of countries along with it.

Garcia noted that by setting off a struggle for world markets, globalization has generated

the “be included at any cost” syndrome. In general, this competition takes place in two ways.

First, through the permanent reduction of wages, and second, through collective effort to increase

productivity, achieve productive reconversion, invest in human capital, create skilled jobs and

raise wages at least, for more highly skilled jobs.

In the short range, therefore, Garcia observed that, regionalism is seen as a seemingly

more accessible option for entering the globalization process, but only between a few countries

so as not to incur the high cost required by globalized competition. She however noted that

regionalization is also not exempt from asymmetries and inequalities within the nations that

constitute new regions. Nor has it been exempt from asymmetries and inequalities in foreign

trade. Many regional synergies are based on principles of “inward” strengthening, the avoidance

of new flows of trade rather than their creation and an inequitable and exclusive treatment of

non-participants, not only in the economic but also in the political sphere.

While narrowing down her discussion on Latin America, Garcia remarked that Latin

America has been forced to enter the process of globalization and regionalization. The results of

this process in the economic sphere, in the repositioning of Latin America in the world economy,

measured by its international competitiveness and in social aspects, have not been encouraging.

17

She asserted that for Latin America, globalization means a change from the pattern of earlier

years, which served towards substitution of domestic products for imports. Instead, the new

pattern is to promote growth in the external sector as the engine that provides the motive force

for growth. The Latin American group of countries made an effort to increase exports and

achieve an opening to the outside world. The result is that the region’s exports grew faster than

the world exports overall. However, this was not reflected in a substantive improvement in the

countries’ economic or social welfare. Though their international competitiveness has improved,

as measured by its insertion into the most dynamic market of the OECD countries, it is still very

low in comparison with the level reached by other countries.

To face the challenges of these years of accelerated globalization, Garcia observed that

groups of Latin American countries made political decisions to form regions which would give

them greater negotiating strength in the international competition for market and capital. This

led to the establishment of several regional market (Mercosur, the Andean Pact, the Central

American Common Market) and bilateral trade liberalization agreements. In practice, these

arrangements are ultimately competing with one another in the search for better positioning in

international competition. In many cases, they involve a struggle for market where transnational

corporations have already planted their flags. The challenge to the region in the new

international context of globalization is to achieve development which is competitive, efficient,

equitable and pervasive. This undoubtedly involves a great many efforts, including slowing the

pace of globalization to permit incorporation of the social groups that have lagged farthest

behind.

In his own contribution, Oyejide (1998) examined globalization and its implications for

Africa trade policy and reviewed the trade and patterns of African exports in the context of the

regions perceived marginalization in world trade. He started by conceptualizing globalization as

increased integration, across countries, of markets for goods, services and capital. This in turn

implies accelerated expansion of economic activities globally and sharp increases in the

movement of tangible and intangible goods across national and regional boundaries. With that

movement, individual countries are becoming more closely integrated into the global economy.

Their trade linkages and investment flows grow more complex, and cross-border financial

movements are more volatile. Deepening integration of trade, markets and finance all mean

increasing interdependence.

18

According to the author, globalization has been created, and continues to be maintained,

by liberalization and economic policies in several key areas. He maintained that the increasing

integration of developing countries into the global economy, through not free of significant

challenges and problems brings certain opportunities for them to achieve higher economic

growth rates. Greater competition in wider markets can stimulate them in a number of ways. It

exposes developing country exporters of manufactured goods to new technologies designs and

products. It enhances access to imports that embody new technologies and encourages transfer

of technology. It also helps gain improved access to foreign resources generally.

Pursuing these opportunities can, in turn, lead to more efficient resource allocation,

generate productivity gains and contribute to higher rates. Such considerations underpin the

observation that open economics tend to grow faster than closed ones, and that countries

achieving more rapid and higher level integration into the global economy tend to experience

faster growth in output. The author noted that Africa stand out as the region with lowest levels of

integration. Despite its recent and wide-ranging policy reforms, Africa has not done enough; the

region retains high and dispersed trade barriers. He therefore, suggested that African countries

should open up to world trade in order to stimulate their economic growth, and the way to do this

is to liberalize their international trade and payments regimes even further. In other words,

Africa countries must fully liberalize and harmonize their trade policies to the global “standard”

as condition for increasing their integration into the global economy and eventually reaping the

associated benefits of faster growth rates.

Oyejide maintained that African countries can neither stand aside from nor ignore the

current globalization process. They have to adjust to the process and become more fully

integrated into the world economy. But that they should do so in ways that permits them to

revitalize their economics, as well as stop and reverse their marginalization in world trade.

According to him, two efforts can help achieve the later objective. One is to establish and

strengthen African capacity to compete internationally. The other is to seek special market

access abroad for the region’s exports before this capacity is fully established.

In conclusion, the author argued that Africa’s poor export and overall economic growth

performance predated and therefore, not directly ascribable to the current wave of globalization.

He nonetheless acknowledged that the process of globalization may contribute to a worsening of

19

the current trend towards the marginalization of Africa in world trade. Nevertheless, he

maintained that integrating fully into the global economy remain the best option for Africa.

Oyejide was more interested in the marginalization of Africa in world trade and the way

to reverse this trend. Thus, he prescribed full integration into the globalization process as a

panacea. He did not see regionalism either as an impediment towards this goal or as a willing

ally. In fact, his work did not address the issue of regionalism in the West Africa sub-region.

Therefore, our questions still beg for answers.

In his own contribution Nnanna (2006) took a look at economic and monetary integration

in Africa and opined that the ultimate goal of regional integration is to create a common

economic space among the participating countries. The process entails the harmonization of

macroeconomic policies, legal frameworks and real convergence. Some other objectives include

the enlargement and diversification of market size, the promotion of intra-regional trade and the

strengthening of member countries bargaining power in the global economy.

Nnanna noted that regional integration has been present in Africa’s development agenda

for most of the post-independence period. In part, as a result of the de-colonization process, the

number of regional integration initiatives boomed in the 1960s. Today economic integration has

been identified as a key strategy for minimizing the unintended negative consequences of

globalization, growing the economies and reducing poverty in the continent. He identified five

major sub-regional economic integration arrangements that encompass all the countries of

Africa. These are: the Arab Magherb Union (AMU); The Common Market of Eastern and

Southern African States (COMESA); The Economic Community of West African States

(ECOWAS); and the Southern African Development Community (SADC). In addition, he said,

there are eight other regional integration arrangements which are subsets of these larger

arrangements. These include the central African Economic and Monetary Community

(CEMAC) a group of six countries of ECCAS; the Great Lakes River Basin (CEPGL), consisting

of three members of ECCAS; the East African Community of COMESA, and the SADC the

Indian Ocean Commission (IOC) grouping five countries, four of which are in COMESA and

one of which (Reunion) is dependency of France. Others include the Intergovernmental

Authority for Development (IGAD); embracing seven countries in the Horn of Africa and the

northern part of East Africa; the Mano River Union (MRU) with three countries all members of

ECOWAS; the West Africa Economic and Monetary Union (UEMDA) comprising eight

20

members of ECOWAS; and Southern African Customs Union (SACU); consisting of five

members of SADC; the West African Monetary Zone (WAMZ) comprising five members of

ECOWAS countries, namely, The Gambia, Ghana, Guinea, Nigeria and Sierra Lone.

The author made an attempt to situate the selected regional groupings within the broad

framework of Optimum Currency Area (OCA) theory. A key characteristic feature of an OCA is

price and wage flexibility, which is the basis for the argument in favour of flexibility exchange

rates. Another characteristic of an OCA is that of financial market integration, suggesting that a

successful currency area must be tightly integrated in financial trading. Other characteristics

include factor mobility, especially, capital and labour, and the integration of the goods market.

The author opines that based on available qualitative and quantitative assessments the

monetary union arrangement in Africa does not satisfy the text-book OCA conditions when

measuring against the following criteria; income structure, product market flexibility, labor

market mobility, degree of openness, intra-trade relations and asymmetric terms of trade shocks.

With regard to income structure, he noted that African regional arrangements fall short of the

requirement, as in most regions, one or two countries are at a higher development trajectory than

others within the group. As regards market flexibility, it is obvious that most countries in Africa

and West Africa in particular depend on limited number of primary commodities. He also noted

that concerning labour market mobility, the various regions are typically, insular. Although in

some region such as the ECOWAS the protocol guarantying free movement of person within the

sub-region is now being implemented, albeit at slow pace. On capital mobility, available data

suggests that most financial market in Africa are not integrated.

In the face of all these, Nnanna concluded that African regional groupings have not

satisfied the traditional OCA criteria. His work however fell short of providing an empirical

assessment of the implication of globalization for intra-regional economic integration of Africa.

While writing on globalization and regional integration in Latin America, Iglesias (1997)

wanted to know if regionalism is detrimental to globalization or economic openness. He noted

that globalization has to do with cheaper and more efficient communication networks, economic

liberalization and greater competition among market and economic sectors have set in motion an

unprecedented increase in the flow of goods, services and capital among national economies or

countries and continents. According to him, this process of globalization entails risk as well as

opportunities, and is regarded by some as a mixed blessing. In the face of this globalization, the

21

author remarked that we see at the same time an increasingly marked trend – almost everywhere

in the world-toward the establishment, or intensification, of regional integration agreements as

implying preference exclusively favourable to certain countries. They always give rise to some

degree of trade diversification. But, however, that what we have seen in recent years is a kind of

outer, not inner-directed integration, a kind of integration that supports measures to open up

markets and promotes higher productivity and competitiveness in the participating economics.

According to him, this is what is called “open regionalism”.

This “open regionalism” as the author asserted is particularly in evidence in Latin

America and as experience has shown, also includes a strong trade generation component. This

joined to the dynamic effects of higher productivity, leads the proponents of “open regionalism”

to assert that it is part of globalization and, therefore, far from interfering with world economic

openness, and integration, in fact, promotes them Outer-directed regional integration agreement

can give their participating countries formidable opportunities to prepare for what could be

called a ‘creative’ or ‘proactive’ response to globalization and the increase of international

competition carried with it. In so doing, they can also help reduce the risks of rising

protectionism in the world economy.

After outlining the benefits and risks involved in the process of globalization, Iglesias

discussed “open regionalism” as a vehicle for the attainment of international competitiveness in

Latin America. According to him, there is some controversy about the magnitude of the benefits

that can occur to participating countries and to the world economy as a whole. It is usually

thought that from the purely economic stand point, agreements on preference are not as effective

as unilateral or multilateral trade liberalization. This is unquestionably true when regional

integration is carried out in a setting of inner-directed protectionist economic policy, which is

characterized by the prevalence of high trade barriers against participants outside the national

borders.

He asserted, however, that the regional integration progamme in Latin America today are

anything but inner-directed. To the contrary, they are characterized by a spirit of “open

regionalism” which promotes competitiveness, specialization, and thereby higher productivity on

the domestic markets to the obvious benefits of the consumer and of economic soundness in

general. He noted that the sub-regional integration programmes are part of Latin American

overall strategy of opening itself to the world economy, and hence complement the unilateral and

22

multilateral programmes for liberalization of the region. He finally remarked that there are some

specific benefits that could be generated when regional integration is carried out in keeping with

the principle of “open regionalism” – that is, is directed at faster liberalization with some

countries than with others, instead of building a “fortress” for protection against third countries.

Iglesias made a very good attempt to establish a relationship between globalization and

regionalism. However, he was interested in what happens in Latin America not in West Africa

or ECOWAS. Therefore, our research questions were not pointedly addressed by his analysis.

In his contribution, Padoa-Schioppa (2004) submitted that globalization, the rapid

increase in economic and financial activity across borders leading to a more integrated global

economy, is best evidenced in international trade. For over three decades, he said, world trade

has grown on average 3.5 times faster than world output, and the annual value of goods and

services trade reaches around USD 10 trillion, close to the total GDP of the United States. Yet,

trade patterns are far from being distributed around the globe evenly. Over half of total global

trade volume is intra-regional trade. According to him, this regional clustering has come to

replace the north-south links that characterized the early part of the last century, when the

industrialized countries of the northern hemisphere traded with, and invested in, the commodity-

rich countries of the southern hemisphere. In some way, therefore, regional clustering is a

relatively new phenomenon,whose macroeconomic, monetary and financial policy implications

still need to be fully understood (Padoa-Schioppa, 2004:28).

Using the metaphor of a house, he stated that global economic exchanges resemble a

house, with each floor signifying a level of economic linkage. In this case, the architecture of the

global economy would have five floors. The first three floors make up the country level, which

has for centuries been the main reference for economic exchanges and policies: they comprise

the local, federal and national level of economic relations. On top of that is not – as we perhaps

would have thought even some years ago – the global level, but an intermediate, mezzanine

level. It is this mezzanine fourth floor – between the national and the global – of interaction

within global regions or continents that constitutes a very important layer in the structure of

global economic exchanges. For one thing, international trade turns out to be heavily clustered in

regions.As I mentioned, over half of global trade is within the world’s main regions. For another

thing, several macroeconomic and financial spillovers have a strong regional focus, for better or

for worse. And finally, a number of relevant policy tools, including regular consultations and

23

policy cooperation, are often seen as most realistic to implement at a regional level. He then

highlighted the need to explore the economic and policy relevance of this fourth floor in the

global economic architecture and investigate its interrelations with the national and global

spheres.

Citing the examples East Asia, Latin America, and European Union,, Padoa-Schioppa

proposed that over the past half a century or more, the initial motivation for regional integration

has almost always been a major catalytic event – a political or military conflict, a financial crisis,

the transition from socialist to market economies, or common endowments related to common

shocks, to name only a few – which made us understand that nation states individually are no

longer capable of dealing with important economic and political developments in isolation. In

other words, it is often major catalytic events that have provided the impetus to regional

integration, that explain many of the differences in regional integration and that will also

continue to shape the process in the coming years and decades.

The review of existing literature above did not make any link between the liberalization

of the economies of West African States and its regional economic integration. In other words,

there is no explanation of how liberalization of the economies of West African states undermine

economic integration of the sub-region. Specifically, the scholars cited above failed to

adequately demonstrate how the opening up of the economies of the West African states to the

unbridled movement of goods and services from the advanced industrialized nations has

rendered the goods produced within the sub-region uncompetitive thereby forcing the members

states of the sub-region to trade more and more with external trading partners than with one

another. They also fail to capture the fact that even the modest trade that goes on among the

countries of the sub-region are mainly in the form of re-exportation of goods from the

industrialized nations; a situation which is known to create trade diversion rather than encourage

integration.

Secondly, extant literature also failed to explain how low level of development of science

and technology in the West African

sub-region impeded its economic integration. For instance, such studies did not adequately

highlight the fact that due to the low level of development of science and technology in the sub-

region, the economies of the countries of West Africa are not diversified as virtually all of them

are exporters of primary commodities. This being the case, they do not have the industrial base to

24

consume the raw materials they produce let alone import raw materials from the other countries

of the sub-region. Being net exporters of raw materials therefore, they depend on the

industrialized nations for most of their trade. The examination of the implication of these

scenarios for regional integration in the West African sub-region therefore will form the point of

departure for this study.

2.2 Theoretical Framework

A theory is a set of logically interrelated concepts, variables, axioms, and constructs used

for the explication of phenomena.Echezona (1998:10) had observed, the primary function of

theory is to explain singular fact or occurrence or much more importantly, to explain empirical

generalization. This being the case, a theory has to be judged not on whether it is true or not but

on how useful it is in explaining empirical laws.

It is to be noted that while single theories are most often employed for the explication of

a particular social reality, it is not uncommon for scholars to adopt a blend of two or more

theories, particularly in a given complex situation. Given the complex nature of our subject

matter of investigation therefore, we shall adopt a blend of the theories of open regionalism and

complex interdependence.

As is very well known, the major proponents of the integrationist are Karl Deutsch, and

Ernest B. Haas. Deutsch, for instance, defined integration as the “attainment, within a territory of

a sense of community and of institutions and practices strong enough and widespread enough to

assure dependable expectations of peaceful change, among its population”. Haas, on his part,

notes that integration is the process where by political actors in several distinct national settings

are persuaded to shift their loyalty expectations and political activities towards a new and larger

25

center, whose institutions possess or demand jurisdiction over the pre-existing national states

(Haas cited in Echezona, 1998:31-32).

The inherent elements in Haas’ model is that political actors in different national societies

within a regional area would firstly decide to collaborate, and beyond that, to confer authority or

a decision making framework beyond the nation state. In each area of cooperation, politicization

of issue arises, national autonomy erodes and there is a choice between retention of the

autonomy of national decision-making or moving to a supra-national decision-making.

However, with the open regionalism variant of the integrationist theory as espoused by

Iglesia (1997:9), the choice between the retention of the autonomy of national decision-making

and moving to a supra-national decision-making does not arise. Instead nation states are

encouraged to embrace the values and benefits of integration or regionalism. In a sense therefore,

rather than being in contradiction to the tenets of globalization, open regionalism propagates

such values. Instead of being inner-directed, this kind of integration supports measures to open

up markets and promotes higher productivity and competitiveness. This kind of integration

instead of interfering with world economic openness, in fact, it promotes them. It is part of

globalization itself.

Open regionalism was developed and promoted at the end of the 1980‟s. Based on trade

liberalization or open market, it uses the export-led oriented or outward oriented model. Contrary

to closed regionalism, open regionalism seeks to eliminate all trade barriers and non-trade

barriers in the same region based on a minimal government intervention which is applied to

protect domestic industries from foreign competition. Cable and Henderson (1994) consider open

regionalism as a negotiating framework consistent with and complementary to GATT/WTO. The

authors cite the Asia Pacific Economic Cooperation (APEC) as a model of this approach. But, as

they point out, “openness” carries at least two different meanings: openness in terms of non-

exclusivity of membership; openness in terms of contributing economically to the process of

global liberalization than detracting from it through discrimination (Estrada, 2005: 7).

According to Baldwin (1999), there are two reasons for the success of this new

regionalism: (i) GATT/WTO’s unsatisfactory performance in terms of multilateralism and its

incapacity to dissolve trade differences among its members with the first regionalism; (ii) United

States‟ changed position on multilateralism and the move in its trade policy towards open

regionalism. It can be argued that open regionalism helps to manage the world trade. NAFTA,

26

for example, started to adopt the open regionalism model. The results it obtained were positive,

especially for the United States and Canada. In order to achieve a stream of open regionalism

based on North America Free Trade Area (NAFTA) experiences, the following conditions must

be considered, such as (Ruiz, 2005.d): Economic Conditions: market proximity (gravity model),

foreign direct investment (FDI) incentives and strong legal framework among its members,

different production structures, efficient combination of production factors (K, L), low inflation

rates, stability in the exchange rates, maximized uses of economies of scales and large market

size. Political Conditions: democracy, economic power, group’s willingness to integrate the

countries in the region, strong legal framework, political stability and ability to solve

geographical border problems. Social Condition: historical antecedents among countries in the

same region originated by the immigration from small economy to large economy. According to

him, the combination of the conditions constitutes the factor leading to the present success of

open regionalism.

The complex inter-dependence theory on its part extends the discussion even further by

highlighting the fact that the world is increasingly becoming inter dependent, and that the

growing interdependence of economies of nation states in this era is being driven by the process

of globalization. The complex inter-dependence theory was developed by Robert Keohane and

Joseph Nye. According to them, complex interdependence refers to the various, complex

transnational connections (Inter dependencies) between states and societies. The theory does not

see one country as being perpetually dependent on another, but that all share in a complex web of

interconnectedness and interdependence (see Okolie, 2005:4-5, 2006: 74-75).

Applying this blend of open regionalism and complex interdependence theories to the

study of globalization and economic integration in West Africa, it is to be noted that even though

regionalism had been said to be a counterpoise to globalization, its countervailing influence can

only be meaningful in regions with globally competitive economies. Given the weak and non-

competitive economies of the ECOWAS member states, rather than be a counterpoise to

globalization, regionalism in West Africa has since been sucked into the globalization process. In

other words, though it was formed to enhance the economic interests (especially trade) of the

member states, it nevertheless, gave itself out to the forces of globalization. Despite the

formation of the organization, the West African sub-region is still part and parcel of the

globalization, train in its move towards one global village. In such a move towards the formation

27

of one global village, world economies are becoming increasingly interdependent. What is more,

the region is sucked into the globalization in a manner most disadvantageous to it and which

reinforces its dependency status within the global political economy. Okolie (2006:75) opined in

this regard that the complex interdependence theory enhances appreciations of cooperative

actions among states and facilitates deep understanding of global patterns of inter-relationship.

In other words, to understand why the liberalization of the economies of West African

states undermine regional economic integration of the sub-region, it is important to note tat the

open regionalism framework upon which West African integrationist efforts are hinged are not in

the least antithetical to globalization. On the contrary, it is receptive to the basic tenets of

globalization, which is the opening up of domestic economies for unhindered movement of

goods and capital from the global factor market. It is to be noted however that in spite of the

receptivity of West African integrationist model to the tenets of globalization, the region appears

to have experienced less rather than more integration. To understand this counter-intuitive

outcome, it is important to look at the level of development of science and technology of the

countries of the sub-region. Given that the global economy is by and large a knowledge-based

economy, and that the global integration process is by and large technologically driven, it stands

to reason that a region as technologically underdeveloped as the West African sub-region is not

able to reap the fruits of the integration of the global economy as globalization protagonists had

promised. Neither are they able to reap the fruits of regional integration given the pressure for

liberalization imposed on them by the requirements of globalization. Drawing from the complex

interdependent theory, we are able to appreciate the dilemma of the integrationist efforts the

West African sub-region in that being lacking the capacity to resist the pull of globalization, the

region has been drawn into a complex interdependent relationship with the more illustrious

industrialized nations, which in turn impedes its capacityfor effective regional integration.

28

CHAPTER THREE

METHOD OF RESEARCH

3.1 Method of Data Collection

This study is based on the secondary source of data. According to Obasi (1999), the

qualitative research is one which has variables that are not easily or objectively amenable to

empirical measurement and verification but which nevertheless proves its hypothesis using the

deductive or inductive method or the method of content analysis. Merriam(2002:12) further

noted that the data collection strategy used is determined by the question of the study and by

determining which source(s) of data will yield the best information with which to answer the

question (Merriam, 2002:12). The data for this study are sourced mainly from documents such as

books, journal articles, conference papers, internet materials, etc. Generally, documents refer to

any written material (whether hand-written, typed, or printed) that was already in existence,

which was produced for some other purpose than the benefit of the investigator (Nwana,

1981:177 cited in Obasi, 1999:172). Put differently, documents can be defined as published and

unpublished materials on activities of public and private organizations, and found mainly in

libraries, archives, and in such public and private organizations. Usually, these documents are

produced for reasons such as historical documentation of the nature, dynamics and trends of

events (Obasi, 1999: 173). Such documents are usually in the form of textbooks, journal articles,

Magazines, periodicals, etc.

The strength of documents as a data source lies with the fact that they already exist in the

situation; they do not intrude upon or alter the setting in ways that the presence of the

investigator might. Nor are they dependent upon the whims of human beings whose cooperation

is essential for collecting data through interviews and observations (Merriam, 2002:13).

Cozby and Bates (2012) observed that qualitative research focuses on people behaving in

natural setting and describing their world in their words. In essence, qualitative research

emphasizes collecting in-depth information on a relatively few individuals or within a very

limited setting. Green (2005) on his part noted that qualitative methods are characterized as those

that aim to explore meaning and produce non-numerical data. In effect, qualitative research

according to him depends upon not numerical but conceptual analysis and presentation. Again,

he noted that it is used where it is important to understand the meaning and interpretation of

29

human social arrangements such as hospitals, clinics, forms of management or decision making.

Qualitative methods are intended to convey to policy makers the experiences of individuals,

groups and organization that may be affected by policies.

The method aims to gather an in-depth understanding of human behaviour and the

reasons that govern such behaviour. The qualitative method investigates the why and how of

decision making, not just what, where, when. Hence, smaller but focused samples are more often

needed, rather than large samples. There are certain attributes to it this method: First, in

qualitative research, cases can be selected purposefully, according to whether or not they typify

certain characteristics or contextual locations. Second, the researcher's role receives greater

critical attention. This is because in qualitative research the possibility of the researcher taking a

'neutral' or transcendental position is seen as more problematic in practical and/or philosophical

terms. Hence, qualitative research reflects on the role of the researcher in the research process

and makes this clear in the analysis. Third, qualitative data analysis can take a wide variety of

forms, and approaches analysis holistically and contextually, rather than being reductionistic and

isolationist. Systematic and transparent approaches to analysis are therefore regarded as essential

for rigour, which forms part of the justification for the application of this method.

3.2 Research Design

A research design is a plan that guides the investigator in the process of collecting,

analyzing and interpreting observations. It is a logical model of proof that allows the researcher

to draw inferences concerning causal relations among the variables under investigation. It also

defines the domain of generalizability, that is, whether the obtained interpretation can be

generalized to different situations (Bailey 1978: 19, Nnabugwu 2006: 100). Obasi (1999)

delineated two main types of research design: survey research design and experimental research

design. He further sub-divides the survey research design into descriptive and ex-post facto

research designs.

This study is based on the ex-post facto research design in which the hypothesis testing

involves observing the independent and dependent variables at the same time because the effects

of the former on the latter have already taken place before the investigation. Kerlinger (1977)

defines the ex-post facto design as a form of descriptive research design in which an independent

variable has already occurred and in which an investigator starts with the observation of a

30

dependent variable. He then studies the independent variable in retrospect for its possible

relationship to and effects on the dependent variable. Cohen and Manion (1980) defined the ex-

post facto research design as those studies which investigate possible cause-and-effect

relationships by observing an existing condition and searching back in time for possible causal

factor. This research design is represented thus:

O1 --------X --------O2

With the ex-post facto design, testing the performance of the economic integration within

ECOWAS involves establishing the level of economic integration within the sub-region before

1999 O1, observing the state of affairs after 2007, which is our study period and then analyzing

the difference to see how it has or has not increased over the period.

3.3 Method of Data Analysis

Data analysis can be defined as the breaking down and ordering of the information

gathered through research or some other means of data gathering. It also involves searching for

trends and patterns of association and relationships among these data or groups of them (Asika,

2006: 110). According to him, analysis of research data is made up of the following elements:

data preparation, data tabulation, and data presentation and analysis.

Meanwhile, the data for this study shall be analyzed using content analysis. This involves

logically breaking down the data to draw inferences about the relationship between the variables

that are of interest to the researcher on the particular occasion. According to Merriam (2002), in

qualitative research, data analysis is simultaneouswith data collection. Simultaneous data

collection and analysis allows the researcher to make adjustments along the way, even to the

point of redirecting data collection, and to test emerging concepts, themes, and categories against

subsequent data. Data analysis is essentially an inductive strategy. One begins with a unit of data

(any meaningful word, phrase, narrative, etc.) and compares it to another unit of data, and so on,

all the while looking for common patterns across the data (Merriam, 2002:14).

The choice of qualitative descriptive analysis is informed by the character of data with

which we have to grapple, which is largely qualitative, and by the fact that it enables us arrive at

a valid argument and make valuable deductions in respect of the nature of the relationship

between globalization and regionalization and the implication of that relationship for economic

integration in West Africa.

31

3.4 Logical Data Framework

Hypotheses Main Variables Main Indicators Sources of data Method of data collection

Method of data analysis

1.The liberalization of the economies of African states undermines economic integration of the sub-region;

(X) The liberalization of the economies of African states

i. Trade liberalization;

ii. Economic deregulation;

Text books, journal articles, conference/ seminar papers, official/government documents, internet materials, etc.

This study is based on the qualitative data generation technique.

The data for this study shall be analyzed using qualitative, descriptive analysis. (Y)

economic integration of the sub-region

i. Greater volume of trade between the West African states and the industrialized states;

ii. Removal of obstacles to free movement of global capital;

2. The low level

of development of science and technology in the West African sub-region undermines its economic integration.

(X) The low level of development of science and technology in the West African sub-region

1. Low level of industrialization;

2. Low level of research and development;

(Y) Economic integration of West African sub-region.

I. Lack of cooperation in infrastructural development;

II. Lack of implementation of regional

science and technology policy.

32

CHAPTER FOUR

ECONOMIC LIBERALIZATION AND INTEGRATION IN WEST AFRICA

Introduction

In this chapter, we test the first hypothesis of this study which states that “if the

economies of West African States are liberalized, then it is likely that economic integration of

the sub-region would be undermined.

According to Astrada (nd) globalization started as a general concept among certain

specialized academic groups in the middle of the 1980s, with reference to regionalism and the

rapid development of new advanced technologies. Later, the concept and uses of the word

“globalization” started to expand in the universal language, until it became adapted into our

common lexicon. It is therefore no longer a special term used by economists, political scientists

and sociologists. It is regarded to as the most relevant economic phenomenon these days.

Probably, there is no other concept that can better define the fundamental challenges in the world

economy in this century than “globalization”. But it was not until the 1990‟s that globalization

made its formal appearance and consolidation in the international context. Furthermore,

globalization is a complex and multidimensional phenomenon taking place simultaneously in

different levels and transforming the political, social, economic and technological scenarios in

different parts of the world. However, globalization embodies particular characteristics which are

as follows:

The first characteristic of globalization, according to Estrada, is the institutional and

political reforms based on less public sector participation into the economic activity or market.

The institutional focus is supported by the idea to reduce public sector participation into the

economic activity under the argument of unnecessary bureaucracy (non-efficient allocation of

resources and production factors). The elimination of unnecessary bureaucracy uses the

mechanism of privatization based on the sale of assets from the public sector enterprises

(products and services) to the private sector. The sell of public sector to the private sector

assumes a better performance in the productivity and efficiency of public services and products.

The mission of privatization is to look for an efficient allocation of resources into the economy

of any country under the private sector management. The new institutional focus and deep

political reforms that constitute the first pillar of globalization is based on less public sector

33

participation in economic activity. The idea behind the reduced public sector participation is that

unnecessary bureaucracy creates non-efficient allocation of resources and production factors.

The elimination of the unnecessary bureaucracy is implemented through the mechanism of

privatization, where goods and services from the public enterprises are sold to the private sector.

The sale of public sector assets to the private sector is assumed to give rise to higher productivity

and efficiency in the public sector. This is in line with the mission of privatization, that is, to

achieve efficient allocation of resources in a country’s economy. Since the end of the Cold War -

- with the collapse of the bipolar order (communism and capitalism) that reigned since 1945, a

new phase of reform in the economic, institutional and political arenas has been created. A new

institutional world order has been structured under deep political, economic, technological and

social challenges (Gaspar, 2000). Indeed, the analysis of post-Cold War regionalization process

and international order cannot be separated from the globalization process (Hveem, 2002 and

Sideri 2000). The new international order in the political and institutional is supported by the

strong promotion of democracy (more participation of the civil society into the democratization

process) and human rights (Estrada, nd: 3).

The second characteristic of globalization is the development of information

communication technologies (ICT) tools resulting in the use of advanced technologies. The ICT

sector uses technological innovative tools such as Internet services (Web), sophisticated software

and hardware, satellite T.V. and satellite mobile phone systems. These tools enable quick

accessibility of information and hence, easier business transactions. The present advances in

technology have come a long way since the industrial revolution in England. With advanced

technology, new Research & Development (R&D) methods and tools emerged, which in turns

led to expansion in world production and business. However, the above benefits of technological

revolution are mainly enjoyed by high income countries. This results in concentration of high

technology amongst high income countries. Therefore, middle income and low income countries

continue to be highly dependent on high income3 countries for their technological needs.

The final characteristic is trade liberalization. Trade liberalizationgenerally means that

there are no artificial impediments (tariff) to the exchange of goods across national markets and

that therefore the prices faced by domestic producer and consumers are the same as those

determined by the world market (allowing for transportation and other transactions costs). These

prices reflected the relative scarcity and abundance of goods around the world and constitute a

34

relevant opportunity cost to domestic firms and households (and hence to the country as a whole)

because the world market is always available for trades at those prices (Irwin, 1998). According

to Estrada, we can observe the fast expansion of trade liberalization under the preferential trade

agreements (PTAs) concept that has taken place throughout the world up to today. In the shape

of Free Trade Area (FTA), the participant countries agree to eliminate the internal tariff barriers

but set their external tariffs barriers independently. It is important to remember that the Customs

Union (CU) constitutes the other main shape of PTAs. CU differs from FTA essentially because

its members have a common external trade policy (Breton, Scott & Sinclair, 1997). The study of

PTAs revolves around trade creation and trade diversion effects. This is partly due to the fact that

many economists consider these effects to be the fundamental dimension for evaluating trade

blocks (Devlin and Efrench-Davis, 1998).

Meanwhile, Intriligator (2003: 2) similarly identified several sources of globalization

over the last several decades. According to him, technological advances that have significantly

lowered the costs of transportation and communication and dramatically lowered the costs of

data processing and information storage and retrieval comprise one such source. The latter stems

from developments over the last few decades in electronics, especially the microchip and

computer revolutions. Electronic mail, the Internet, and the World Wide Web, he said, are some

of the manifestations of this new technology.

A second source of globalization is trade liberalization and other forms of economic

liberalization that have led to reductions in trade protection and to a more liberal world trading

system. This process began in the last century, but the two World Wars and the Great Depression

interrupted it. It resumed after World War II through the most-favored-nation approach to trade

liberalization, as embodied in the 1946 General Agreement on Tariffs and Trade (GATT) that

has evolved into the World Trade Organization (WTO). As a result, there have been significant

reductions in tariffs and other barriers to trade in goods and services. Other aspects of

liberalization have led to increases in the movement of capital and other factors of production.

Some economists and historians have suggested that globalization is little more than a return to

the world economy of the late nineteenth century and early twentieth century. At that time,

borders were relatively open and there were substantial international capital flows and migrations

of people when the major nations of Europe depended critically on international trade as part of

the colonial system. This is particularly the view of some British scholars, looking back to that

35

period of British imperial dominance of the world economy. While there are some similarities in

terms of trade and capital movements, the period of a century ago did not have some of the major

technological innovations that have led to a globalized world economy today that is qualitatively

different from the international economy of the last century (Intriligator, 2003: 3).

A third source of globalization is comprised of changes in institutions, where

organizations have a wider reach, due, in part, to technological changes and to the more wide-

ranging horizons of their managers, empowered by advances in communications. Thus,

corporations that were mainly focused on local markets have extended their range in terms of

markets and production facilities to a national, multinational, international or even global reach.

These changes in industrial structure have led to increases in the power, profits and productivity

of those firms that can choose among many nations for their sources of materials, production

facilities and markets, quickly adjusting to changing market conditions. Virtually every major

national or international enterprise has such a structure or relies on subsidiaries or strategic

alliances to obtain a comparable degree of influence and flexibility. As one measure of their

scale, almost a third of total international trade now occurs solely within these multinational

enterprises. With the advent of such global firms, international conflict has, to some extent,

moved from nations to these firms, with the battle no longer among nations over territory but

rather among firms over their share of world markets.

Non-government organizations, NGOs, have also taken a much broader perspective that,

as in the case of the global firms, is often multinational or global. Even international

organizations, such as the United Nations, the International Monetary Fund and World Bank, and

the World Trade Organization have new global roles. Overall, multinational enterprises and other

such organizations, both private and public, have become the central agents of the new

international globalized economy (Intriligator, 2003: 4).

A fourth reason for globalization has been the global agreement on ideology, with a

convergence of beliefs in the value of a market economy and a free trading system. This process

began with the political and economic changes in China’s 1978 reforms and then involved a

“falling dominoes” series of revolutions in Eastern and Central Europe starting in 1989 that

ended with the dissolution of the Soviet Union in December 1991. This process led to a

convergence of ideology, with the former division between market economies in the West and

socialist economies in the East having been replaced by a near-universal reliance on the market

36

system. This convergence of beliefs in the value of a market economy has led to a world that is

no longer divided into market-oriented and socialist economies. A major aspect of this

convergence of beliefs is the attempt of the former socialist states to make a transition to a

market economy. These attempted transitions, especially those in the former Soviet Union and in

Eastern and Central Europe have, however, been only partially successful. The nations involved

and their supporters in international organizations and advanced western market economies have

tended to focus on a three-part agenda for transition, involving: 1) stabilization of the macro

economy, 2) liberalization of prices, and 3) privatization of state-owned enterprise.

Unfortunately, this “SLP” agenda fails to appreciate the importance of building market

institutions, establishing competition and providing for an appropriate role for the government in

a modern mixed economy (Intriligator, 2003: 5).

A fifth reason for globalization is comprised of cultural developments, with a move to a

globalized and homogenized media, the arts, and popular culture and with the widespread use of

the English language for global communication. Partly as a result of these cultural developments,

some, especially the French and some other continental Europeans, see globalization as an

attempt at U.S. cultural as well as economic and political hegemony. In effect, they see

globalization as a new form of imperialism or as a new stage of capitalism in the age of

electronics. Some have even interpreted globalization as a new form of colonialism, seeing the

U.S. as the new metropole power and most of the rest of the world as its colonies. In this view,

the rest of the world supplies the U.S. not only with raw materials and markets on a global basis,

as in earlier forms of European colonialization, but also with technology, production facilities,

labor, capital, and other inputs to the production process.

Intriligator noted that whether one sees globalization as a negative or as a positive

development, it must be understood that it has clearly changed the world system and that it poses

both opportunities and challenges. According to him, it is also clear that the technological,

policy, institutional, ideological, and cultural developments that have led to globalization are still

very active. Thus, barring a radical move in a different direction, these trends toward greater

globalization will likely continue or even accelerate in the future. One important aspect of these

trends will be the growth in international trade in services that has already increased substantially

but promises even greater growth in the future, especially in such areas as telecommunications

and financial services. The result will be continued moves toward a more open and a more

37

integrated world as it moves closer and closer to a planet without borders and to a more

integrated, open, and interdependent worldeconomy. The result will be even greater worldwide

flows of goods, services, money, capital, technology, people, information and ideas (Intriligator,

2003: 7).

4.1 Economic liberalization and Low Level of Trade among West African States

Economic liberalization is a very broad term that usually refers to fewer government

regulations and restrictions in the economy in exchange for greater participation of private

entities; the doctrine is associated with classical liberalism. Thus, liberalization in short refers to

"the removal of controls", to encourage economic development. It has been observed that most

first world countries have pursued the path of economic liberalization in recent decades with the

stated goal of maintaining or increasing their competitiveness as business environments.

Liberalization policies include partial or full privatization of government institutions and

assets, greater labour market flexibility, lower tax rates for businesses, less restriction on

domestic and foreign capital, open markets, etc. In support of liberalization, British Prime

MinisterTony Blair wrote that: "Success will go to those companies and countries which are

swift to adapt, slow to complain, open and willing to change. The task of modern governments is

to ensure that our countries can rise to this challenge" (Blair, 2005).

In developing countries, economic liberalization refers more to liberalization or further

"opening up" of their respective economies to foreign capital and investments. Three of the

fastest growing developing economies today; Brazil, China, and India, are said to have achieved

rapid economic growth in the past several years or decades after they have "liberalized" their

economies to foreign capital (Zuliu and Khan). According to them, many countries nowadays,

particularly those in the third world, arguably have no choice but to also "liberalize" their

economies in order to remain competitive in attracting and retaining both their domestic and

foreign investments. This is referred to as the TINOA factor, standing for "there is no

alternative".

Meanwhile, in line with the logic of liberalization the African development policy

landscape has changed radically over the last three decades. Liberalization and privatization have

replaced state controls and enterprises associated with import substitution. These failures can be

traced to the displacement of strategic developmental thinking by policies of economic

liberalization. Ironically, while economic analysis during the pre-liberalization developmental

38

era seriously considered the impact of external factors on economic growth, the subsequent era,

associated with globalization, has tended to focus on ‘domestic’ determinants of economic

performance (more recently, this internal focus has gone beyond economic policies to include

institutions, governance, rent-seeking, ethnic diversity, geography, etc.).

In 1981, the World Bank published the influential Accelerated Development in Sub-

Saharan Africa: An Agenda for Action, often referred to as the Berg Report, after its principal

author, Elliot Berg from the University of Michigan’s Economics Department. The document is

seen as having set out the framework for subsequent economic reform led by the two Bretton

Woods institutions over the last two decades in sub-Saharan Africa. The international sovereign

debt crises from the early 1980s enabled the BWIs to impose the reform agenda as policy

conditionalities for providing desperately needed credit in the face of the Volcker-induced world

recession, following the contractionary impact of raised US interest rates in the early 1980s

(Sundaram, 2005:3). He noted that while the International Monetary Fund (IMF) was generally

responsible for short-term stabilization programmes, the World Bank generally handled medium-

term structural adjustment programmes (SAPs). These programmes were later dubbed as part of

the Washington Consensus, also reflecting the economic policy preferences of the US leadership,

particularly the Treasury Department.

The Washington Consensus is generally associated with the global trend towards greater

economic liberalization since the 1980s, and has changed over time, largely in response to poorer

economic performance throughout the world, especially in the developing countries, over the last

two and a half decades and despite Nobel laureate Joseph Stiglitz’s acknowledgement that the

Washington Consensus had failed, and needed to be replaced by a reflationary and

developmental post-Washington Consensus, there is little evidence of significant fundamental

policy change despite growing dissent over those policies.

This is clearly reflected by remarks from the BWIs (for example, see Finance

&Development, September 2002) with every hint of seeming economic success. The BWIs and

their supporters have continued to deny that the poorer economic performance of the African

region and the world in recent decades, can be directly attributed to the recommended or

imposed policies pursued over the last two and a half decades. As the IMF puts it, ‘globalization

is proceeding apace and SSA must decide whether to open up and compete, or lag behind’

(Fischer et al. 1998: 5). Or, as a World Bank economist has argued, ‘If Africa is to reverse its

39

unfavourable export trends, it must quickly adopt trade and structural adjustment policies that

enhance its international competitiveness and allow African exporters to capitalize on

opportunities in foreign markets’ (Yeats 1997: 24). The key message of the BWIs to ‘get prices

right’ through economic liberalization is promoted as the conventional wisdom by media

pundits. Commenting on the continuing stagnation of African per capita incomes, The Economist

(2001: 12) argued that ‘it would be odd to blame globalization for holding Africa back.

According to it, Africa has been left out of the global economy, partly because its governments

used to prefer it that way’ (Sundaram, 2005:4)

Sundaram explained that most African governments accepted the BWIs’ policies,

expecting the promised ‘catalytic effect’ on foreign capital inflows of the BWIs’ stamps of

approval. The actual response of private capital has, in the words of the World Bank, ‘been

disappointing’ (quoted by Mkandawire 2005), although rates of return to FDI have generally

been much higher in Africa than in any other region (Bhattacharya et al. 1997; UNCTAD 1995,

2005). This, however, has not made Africa much more attractive to foreign investors, due to ill-

specified and intangible ‘risk factors’. Africa is systematically rated as more risky than warranted

by economic indicators. Increased foreign investment into Africa has not increased Africa’s

share of global FDI flows. Although average annual inflows have increased five-fold by 1998,

the share of FDI going to sub-Saharan Africa (1.2 percent in 1999) was less than half its share in

the mid-1980s (UNCTAD 2000).

However, from the mid-1990s, the BWIs began to claim success for their economic

liberalization and adjustment programmes. IMF officials suggested a ‘turning point’ (Fischer et

al. 1998), claiming that the positive per capita growth rates of 1995-97 (averaging 4.1 percent)

‘reflected better policies in many African countries rather than favourable exogenous

developments’ (Hernández-Catá 2000, quoted by Mkandawire 2005). Michel Camdessus, then

IMF Managing Director, said at the 1996 annual meeting of the World Bank and the IMF,

‘Africa, for which so many seem to have lost hope, appears to be stirring and on the move’. The

World Bank President reported to his Board of Governors that there had been progress in the

SSA, ‘with new leadership and better economic policies’ (Wolfensohn 1997). A senior IMF

official, Alassane Ouattara (1997), claimed that ‘a key underlying contribution has come from

progress made in macroeconomic stabilization and the introduction of sweeping structural

reforms’, while a major World Bank (2000: 21) report on Africa claims that there had been a

40

turn-around because of ‘ongoing structural adjustment throughout the region which has opened

markets and has a major impact on productivity, exports and investment’.

Meanwhile, African countries had been largely ‘adjusted’ by the late 1990s, with major

changes in African economic policies and institutions. Africa has been ‘liberalized’ and opened

to ‘globalization’. Most African countries experienced currency devaluation, trade liberalization,

privatization as well as various market and investor friendly policies. Yet, improvements in

terms of trade and favourable weather conditions have explained improved economic

performance much more than the BWI policies, underlining the continued vulnerability of

African economies to external and transient factors. Also, the deflationary bias of the

macroeconomic policies favoured by the Washington Consensus has put African economies on a

low growth vicious cycle. Keynesians argue that the causal chain is from growth to investment to

savings, and not the other way around. El Bedawi & Mwega (2000) and Mlambo and Oshikoya

(2001) have found that the causality runs from growth to investment in Africa as well. Capital

needs are essentially determined by expected output, i.e. investment demand is driven by

expected growth. Meanwhile, ‘endogenous growth theories’ suggest that some ‘determinants of

growth’ may themselves be dependent on growth.

Mkandawire (2002) argues that successful adjustment in Africa placed the continent on a

‘low growth path’. He notes that oft-invoked ‘determinants’ of growth (for example, income

growth) are themselves determined by growth (Macpherson and Goldsmith 2001), including the

global growth slowdown of the last two decades (Easterly 2000). There is strong evidence that

growth has been slower since the 1980s, with liberalization and globalization in most of the

developing world, including sub-Saharan Africa, compared to the previous two and a half

decades (Weisbrot, Baker, Naiman and Neta 2000; Weisbrot, Naiman and Kim 2000; Weisbrot,

Baker, Kraev and Chen 2001; Weisbrot et al. 2005). Thus, slower growth has been attributed to

the deflationary bias inherent in BWI stabilization and adjustment programmes.

The investment patterns induced by economic liberalization measures appear not to be

associated with high economic growth. Historically, investment, growth and productivity have

moved together. For instance, investment was associated with relatively high growth and

significant total factor productivity gains in the pre-adjustment era (Rodrik 2001). The

transformation due to economic liberalization has instead brought economic stagnation, de-

industrialization and agricultural decline, rather than structural change induced by differential

41

productivity gains and changing demand due to increasing incomes (Mkandawire 1988; Singh

1987; Stein 1992; Stewart 1994). Institutional Investor ratings for Africa deteriorated from 31.8

percent in 1979 to 21.7 percent in 1995 (Collier and Gunning 1997). The two countries that

performed well were Botswana and Mauritius, both high growth economies not pursuing

orthodox adjustment programmes.

When other developing economies embarked on import substitution industrialisation,

most of Africa was still under colonial rule. In fact, the import substitution phase in most of sub-

Saharan Africa was relatively short, lasting barely a decade in many countries (Mkandawire

1988). Thus, trade liberalization prematurely exposed African industries to global competition

from mature industries, causing de-industrialization. UNIDO notes that African countries had

been increasingly gaining comparative advantage in labour-intensive manufacturing before such

forced de-industrialization. Given the BWI presumption that import substitution in Africa was

bad, there was no attempt to see how the existing industries could form the basis for new export

initiatives. Assuming that African import substituting industries had been protected for far too

long and would never become viable, let alone competitive, the policy was simply to abandon

existing industrial capacity. Hence, the share of manufacturing in GDP has fallen in two-thirds of

the countries (Mkandawire 2005, Figure 4). The rates of growth of manufacturing value added

have fallen continuously from the 1970s, and actually contracted by an annual average of one

percent during 1990-97 (UNIDO p. 245, quoted in Mkandawire 2005). UNIDO found that in ten

industrial branches in 38 African countries, labour productivity declined by seven percent

between 1900 and 1995. According to the report, the decline in total factor productivity can be

attributed to de-industrialization.

Meanwhile, Ocampo and Parra (2006)observed that African countries have not been

exempt from trends in the international terms of trade which have moved against developing

countries over the decades. They noted that:

• The prices of primary commodities have declined against those of manufactures, as suggested

by Prebisch and Singer more than half a century ago.

• The prices of tropical agricultural products, compared to temperate agricultural goods, have

fallen, as observed by W.A. Lewis decades ago; and that

42

• Recent decades have also seen the decline of the prices of generic manufactures, where access

to industries has not been inhibited, compared to manufacturing monopolies protected by

strong intellectual property rights.

The likelihood of developing countries gaining from trade has been frustrated by

protection and subsidies in most rich economies. For example, their tariff structures have been

biased against developing countries. Hence, tariffs on imports between developed countries

average only one percent. Meanwhile, tariffs on agricultural products from developing countries

have been as high as 20 percent, while the tariffs on textiles from developing countries have been

as high as 9 percent.

According to them, it is now generally acknowledged that economic growth is needed for

trade expansion, rather than the other way round. Not surprisingly, the World Bank estimates a

very modest contribution to economic growth of 0.6 percent by 2015 attributable to full trade

liberalization based on what many would consider to be optimistic assumptions. Also, rapid

resource reallocation to accelerate growth is unlikely without high rates of growth and

investment in the first place. Even, trade liberalization advocate, Jagdish Bhagwati, urges the

need for aid to compensate economies for the loss of tariff revenue and trade preferences

associated with trade liberalization, as well as to build up production and export processing

capacities to be available to take advantage of opportunities created by trade liberalization. The

‘new trade theories’ and evolutionary studies of technological development suggest that

countries risk being locked into permanent slow growth by pursuing static comparative

advantage. It is now generally acknowledged that economic growth precedes export growth,

while UNCTAD has long pointed to the importance of growth for trade expansion, more

specifically, to an investment-export nexus that accounts for the failure of many countries to

expand and diversify their exports. Rapid resource reallocation is generally not also feasible

without high rates of growth and investment.

Before the recent liberalization measures, monetary and other policies in East Asia

ensured relative prices favourable to export industries (instead of non-tradables) with preferential

interest rates supporting investment and economic restructuring. Export promotion strategies

have generally involved an investment-export nexus, including measures to promote public

investment, subsidized inputs (from state-owned enterprises and with preferential special

exchange rates), direct subsidies (including tax incentives), selective credit allocation and other

43

industrial policy instruments (Akyüz 1996). Government instruments for stimulating investment

and industrial development have been severely eroded by economic liberalization measures.

Mkandawire (2005) notes that, from the outset, the advent of the WTO trade regime was

expected to entail losses for Africa, especially with the loss of preferential treatment (from

erstwhile colonial rulers and the European Union under the Lome Convention). It has further

been noted that trade liberalization under WTO auspices has significantly reduced policy options

utilised by developmental states, especially for industrial or investment policy (Adelman and

Yeldan 2000; Panchamukhi 1996; Rodrik 2000a), though some (for example, Amsden 1999) still

argue that the WTO regime still leaves room for industrial policy initiatives (Sundram, 2005:

11).

Meanwhile, a major premise of the Berg Report was that Africa’s comparative advantage

lies in agriculture. If only the state would stop ‘squeezing’ agriculture through marketing boards

and price distortions, agricultural producers would respond, thereby enabling export-led growth.

Recent changes in Africa’s exports indicate no general increase in output in activities in which

African countries ostensibly have a ‘revealed’ comparative advantage. Indeed, after two decades

of reforms, the most striking trend has been a lower African share of global non-oil exports to

less than half what it was in the early 1980s (Ng and Yeats, quoted by Mkandawire 2005).

Mkandawire cautioned that contrary to current popular wisdom, it is not clear how much

Africa would gain from agricultural trade liberalization. After all, many food importing African

countries would be worse off without subsidized food imports, while very few economies are

likely to be in a position to significantly increase their exports. African agricultural production

and export capacities have been undermined by the last three decades of economic contraction

and neglect. Severe cuts in public spending under structural adjustment caused significant

deterioration of infrastructure (roads, railway systems, etc.) and undermined potential supply

response (UNECA 2003), even though numerous micro studies have confirmed the importance

of good infrastructure for trade facilitation (Badiane and Shively 1998; Abdulai 2000). As Table

6 shows, existing estimates of the overall welfare effects from multilateral agricultural trade

liberalization do not point to significant gains, but on the contrary, suggest the likelihood of

some losses.

In the 1980s and 1990s, Africa’s export collapse has involved ‘a staggering annual

income loss of US$68 billion — or 21 percent of regional GDP’ (World Bank 2000, quoted by

44

Mkandawire 2005). However, ‘Africa’s failures have been developmental, not export failure per

se’ (Helleiner 2002a: 4). Rodrik (1997) argues that Africa’s ‘marginalization’ is not due to trade

relative to GDP, although this is low by cross-national standards. Given its geography and its per

capita income level, Africa trades as much as is to be expected. Indeed, ‘Africa overtrades when

compared with other developing regions in the sense that its trade is higher than would be

expected from the various determinants of bilateral trade’ (Coe and Hoffmaister 1999; Foroutan

and Pritchet 1993).

Meanwhile, by the end of the 1990s, the few gains from trade generally acknowledged

were of a one-off character, often reflecting switches from domestic to foreign markets without

much increase in overall output (Helleiner 2002a, 2002b; Mwega 2002; Ndulu et al. 2002). In

some cases, manufactured exports increased even as the manufacturing sector contracted. ‘No

major expansion occurred in the diversity of products exported by most of the sub-Saharan

African countries. Indeed, the product composition of some of the African countries’ exports

may have become more concentrated. Africa’s recent trade performance was strongly influenced

by exports of traditional products which appear to have experienced remarkably buoyant global

demand in the mid-1990s’ (Ng and Yeats: 21, quoted by Mkandawire 2002).

According to the UNCTAD/AU Commission joint report, Africa’s total gross domestic

product (GDP) in 2009 was valued at about US$ 1.4 trillion, similar to that of ASEAN – a

grouping of 10 South-East Asian countries, and much smaller than those of developing Asia and

developing America (Table 1).

45

Table 1: Africa’s and RECs - Total GDP, 2002-2009 (United States Dollars at Current Prices in Millions)

Source: UNCTAD, 2012

According to the report, this comparison is indicative of a lower level of output in total

by the 54 African countries compared to other developing regions. It also underlines the point

that Africa has yet to fully exploit its economic potential. But importantly, as with global

economic performance, Africa’s GDP was increasing strongly over recent years, exceeding the

trillion–dollar mark in 2006, until 2009 when it dropped slightly owing to the effects of the

global slowdown arising from the financial and economic crisis. Africa’ strong economic growth

performance was thus curtailed by the global crisis and it may take some time before the

continent can fully recover and realize the same kind of dynamic growth in the immediate pre-

crisis period. At RECs level, a similar trend occurred as that of overall African economic

performance (Table 1). Most RECs experienced steady and in some cases strong economic

growth between 2002 and 2008 which then contracted in 2009 with the exception of SADC and

EAC, which showed positive growth. The REC with the largest GDP owing to number of

member countries including some of the larger economies was CEN-SAD (US$ 723 billion in

2009), followed by COMESA, SADC, UMA, ECOWAS, IGAD, ECCAS and EAC.

In terms of economic sectors contributing to GDP, the larger proportion of economic

activities is accounted by services (exceeding 43 per cent) in COMESA, SADC and EAC (Table

2); industry (exceeding 55 per cent) in UMA, ECCAS; while in ECOWAS there is an equal

contribution from agriculture, industry and services (about 30 per cent each). It is striking that

46

the manufacturing sector contributes the least to the GDP in all RECs compared to other

activities (with the exception of SADC where it is higher than agriculture). The regional data

also conceals individual country performance where the contribution of the manufacturing sector

is even more limited. Moreover in the past decade or so, the contribution of the manufacturing

sector to GDP has been declining.

Table 2: RECs Percentage of Gross Domestic Product by Economic Activity, 2008

Source: UNCTAD, 2012

This performance shows why Africa’s participation in regional and international trade of

manufactured products is marginal. SADC, with 15 per cent share of manufacturing in GDP

(thanks to South Africa’s manufacturing strength) is the highest among all RECs, thus showing a

higher level of manufacturing output and industrialization. Most RECs, however, face a difficult

road towards structural transformation based on attaining a higher level of industrialization led

by manufacturing industries for domestic and international consumption. The industry and

services sectors make important contributions and could be developed further to enhance

economic growth and transformation of RECs. With respect to the West African sub-region

however, both the industrial and service sectors are still grossly underdeveloped with the

consequence that liberalization leads to trade diversion rather than trade integration in the region.

Africa’s Participation in Global Trade

According to the UNCTAD report, African countries remain on the margins of global

trade flows. In 2008 and 2009, Africa accounted for an insignificant 3 per cent of global exports

and imports as compared to about 6 per cent for developing America and a massive 27–30 per

47

cent for developing Asia (Tables 3 and 4). Even the 10 ASEAN countries together accounted for

around 6 per cent of global trade, twice as high as Africa’s share. In order for Africa to capture a

larger share of global trade, it would need to venture more forcefully into the production and

trade of goods and services that command higher value and enjoyed growth prospects, as seen

from the case of some Asian countries.

Despite their marginal share of global trade flows, in nominal terms the value of

aggregate global exports of Africa and RECs perform quite well compared to the world average

or Asian economies since 2000 (Table 5). During 2002– 2009, the average nominal export

growth of Africa reached 15.1 per cent outpacing world average of 9.7 per cent and those of

developing countries of Asia (13.7 per cent) and America (9.9 per cent). In regional terms the

global exports of all RECs expanded much faster than those of ASEAN, particularly in ECCAS

(21.3 per cent). A similar trend can be seen in the case of imports. Average yearly growth rate of

imports in Africa (16.9 per cent) outpaced that of developing Asia (13.7 per cent) and America

(9.7 per cent) leading to increase in openness of African countries to world trade.

The nominal trade figures are indicative of value of economic activities however these do

not measure real change in the volume of exports or imports. Real export indices and geometric

yearly average real growth rate of exports (Table 5) do not indicate any superior performance of

African exports over Asia or America. During 2002-2008, Africa’s real average export growth

(3.3 per cent) lagged behind both developing Asia (12.7 per cent) and America (4.3 per cent) as

well as the world economy as a whole (6.9 per cent). Interestingly though, ECCAS performed

relatively better compared to ASEAN. ECOWAS’s real export performance (0.5 per cent) is far

from being satisfactory as a stimulus for sustainable development. This shows that liberalization

of West African economies has undermined the integration of the economies of the sub-region.

48

Table 3: Total Exports of Africa, Selected RECs and Other Groupings (US$ Million at Current Prices), 2002-2009

Source: UNCTAD Globstat database

A. Intra-African Trade Performance

The contribution of intra-African trade to Africa’s aggregate trade performance is the

lowest compared to other regions. Intra-African trade accounted for about 10 per cent of Africa’s

total trade in 2009 as compared to 22 per cent for Latin America and 50 per cent for Asia (Table

6). So far intra-African trade liberalization since the1980s when the Lagos Plan of Action was

adopted does not seem to have provided a significant boost to intra-African trade. The modest

levels of intra-African and RECs trade are attributed to several factors, most commonly of

which, apart from inherent economic constraints arising from limited size of markets and low

income, are Africa’s unfinished business in trade policy such as reducing and elimination of

tariffs, and addressing non-tariff barriers, and limited and weak trade related complimentary

measures including infrastructure, trade financing, investment, human and institutional

capacities, underdeveloped agriculture, manufacturing and services sectors.

49

Table 4: Total Imports of Africa, Selected RECs and Other Groupings (US$ Million at Current Prices), 2002-2009

Source:UNCTAD Globstat Database

Table 5: Regional Volume Indices of Exports of Africa, Selected RECs and Other Groupings, 2002-2008

Source: UNCTAD Globstat Database

50

There is, however, a caveat to be noted namely that in Africa, as many reports have

pointed out, informal (unrecorded) trade is intensive and effected mainly by individuals. There is

also intermediate trade taking place in global supply chains which is also a rising. Thus the full

extent of intra-African trade could reasonably be higher than the officially recorded figures. So

intra-African trade is considerably more important than the aggregate official figures suggest as

Africa is the second most important export market for most African countries behind

Europe.Africa counts as the main export market for 7 African countries, and for 25 African

countries it is the second main export market. Also 5 African countries exports to African

countries are larger than half of their total exports and 14 countries export more than a quarter of

their exports to Africa.

In terms of RECs’ trade performance, with the notable exception of SADC and EAC,

intra-group trade is minimal. SADC showed the highest level of intra-group trade (exports plus

imports) with a share of over one tenth, followed by ECOWAS and others. Intra-group exports in

EAC is relatively higher (18 per cent) than in other RECs, however the value of such export is

lower than in other RECs. The largest regional market is CEN-SAD with a value of trade (export

and imports) of over $320 billion. In comparison, intra-ASEAN trade accounts for over one

quarter of the group’s total trade, showing a much higher level of intra-group trade, and a much

higher value at $1.4 trillion. As with overall intra-African trade, apart from SADC, mutual trade

among members of RECs presently is negligible notwithstanding over several decades of efforts

at liberalizing trade and strengthening economic integration.

These huge regional differences between African RECs and ASEAN highlight the

fundamental weakness of Africa’s regional integration and the need for the continent to take

serious steps to expedite and deepen trade and economic integration. This requirement has

however become untenable within a liberalized global economy as West Africa has become a

dumping grounding for manufactured goods from the more industrialized regions of the world.

What is more, under the current global trading regime being superintended by the World Trade

Organization (WTO), West African countries are powerless to reverse this situation as they are

forbidden to use tariff and non-tariff restrictions to check the dumping of goods on the sub-

region.

51

Limited Diversification of Intra-African Trade

The degree of commodity diversification of a country’s exports can be analysed, inter

alia, by studying the commodity concentration index. The commodity concentration index is a

type of Herfindahl-Hirschmann degree of market concentration index which takes values

between 0 and 1. Increases in the index (moving towards 1) indicate rising concentration of a

country’s exports in few commodities. A high commodity concentration of Africa relative to

other regions is very evident from Table 7. In 2008, the index is 0.47 in Africa, while 0.12 and

0.16 in developing Asia and developing America respectively.

Among selected RECs the commodity concentration is even more striking: 0.85 in

ECCAS and 0.72 in ECOWAS. The index is relatively low in SADC (0.35), due to South Africa,

but even that is considerably higher than ASEAN’s concentration index (0.13). This confirms the

widely known fact that African countries’ exports (and related production) are concentrated in a

few products which are mainly primary commodities. Some diversification has taken place

mainly in Southern Africa thanks to South Africa and in North Africa. The same can however

not be said of West Africa as most countries of the sub-region have continued to rely on the

exportation of primary products with no value addition whatsoever resulting in little or no

integration within the sub-region.

52

Source: UNCTAD, 2012

Table 6: Africa, RECs and Other Groupings’ Intra- and Total Merchandize Trade (United States Dollars at Current Prices in Millions) and as Share of Total Trade (Percentage), 2009

53

Even more worrying is that not only is the commodity concentration high among African

RECs, but there is upward tendency in the concentration index. The index increased from 0.31 in

2002 to 0.47 in 2008 for Africa as a whole, representing a considerable movement towards

concentration in exports. A similar trend is evident in African RECs as well. In contrast, the

index fell from 0.17 to 0.13 for the ASEAN economies indicating increased commodity

diversification across member States. ASEAN has consistently improved its diversification of

production and exports. Thus, for African countries and RECs to achieve the objective of

diversifying production and exports to build up economic resilience and robustness, drastic

measures are needed to switch away from the trend towards export concentration and move

toward greater export diversification. Production-cum-export diversification is important for

contributing to stabilizing and upgrading export earnings and, importantly, for diversifying and

engaging in higher value production and trade which can foster industrialization and economic

transformation of countries.

The structure of intra-African trade, not surprisingly and similar to Africa’s trade with the

rest of the world, has concentrated on few primary commodities. The products traded among

African countries can largely be grouped into two groups: (a) primary commodities including

petroleum oils, crude, nickel ores, coal, minerals, carbon, copper ores, tea, lime, gold); and (b)

some limited manufactures including printed material, cement, sleepers of wood, tobacco, tea,

ships, boats, aircraft and associated equipment, perfumery and cosmetics.

Table 7: Commodity Concentration Index of Africa, Selected RECs and other Groupings,

2002-2008

Source: UNCTAD, 2012

African countries’ exports to each other are concentrated on primary commodities and in

case of the limited trade in manufactured these could largely be attributed to South Africa, Egypt

54

and other North African countries. In terms of intra-group imports within RECs, the main

products are: (a) primary commodities (petroleum oils, vegetable oils, vegetable oils and fats,

copper ores), and some (b) manufactures (tobacco, edible products, lime, cement). Imports of

machinery and transport equipment are present in SADC owing to South Africa’s exports of the

items. In other RECs, such essential items for supply and productive capacity building are

imported from outside Africa.

The extent of participation in global manufacturing exports for Africa and RECs is minor.

Africa’s share increased from 1.4 per cent in 2004 to 2.0 in 2009 while that of ASEAN increased

from almost 6 per cent to 6.3 during the same period respectively. SADC showed the largest

share among RECs in world exports of manufactures of about 0.7 per cent in 2009.

55

Table 8: RECs Shares in Manufactured Goods Trade with the World (SITC 5 to 8 Less 667 and 68) Thousands of US$ and Share (in Percentage) 2004-2009

56

Table 8 Continued

Source: UNCTAD, 2012

Also a comparison of exports of manufactured products of Africa and RECs to the world

with shares of primary commodity exports to the world indicate that the shares of the latter go

beyond one per cent (except for EAC) while for the former the highest share was achieved by

SADC. In world primary commodity trade, Africa and RECs participation is also low although

higher than in manufacturing in comparative terms. Africa’s share in world commodity exports

increased from 5.1 per cent in 2004 to 5.8 per cent in 2009 while that of Asia increased from 26

to almost 30 per cent and that of ASEAN from 6 to almost 7 per cent during the same period.

Individual RECs also increased their trade shares during the period, driven largely by higher

commodity prices. This confirms the dominant role of primary commodity exports over

manufactures.

57

58

Source: UNCTAD, 2012

ASEAN’s share in global manufactured exports (6.3 per cent in 2009) outstrips that of all

RECs. Developing Asia’s 30 per cent share of world exports of manufactures in 2009 is about

fifteen times more than that of Africa This dominance of manufactures exports for Asia and

ASEAN compared to Africa is attributed largely to a robust combination of productive-cum-

industrialization and trade policies including regional integration. Behind the regional success of

ASEAN are the individual countries’ own initial industrial success which later catalyzed regional

development. RECs could learn from ASEAN’s experience in fostering a more diversified and

more value addition through manufacturing based on coordinated national and regional

integration industrialization and trade strategies.

African countries’ intra-trade in manufactures is relatively higher however and this is an

encouraging factor. Importantly, the share of intra-REC trade in manufactures (about 43 per cent

in 2009) is significantly higher than in its share of exports to the world (8.3 per cent in 2009).7In

2009, intra- African trade in manufactures accounted for 43 per cent of total intra-African

merchandise trade as compared to 57 per cent for primary commodities (Table 10). While

confirming the dominance of primary commodity exports within Africa as is the case in the

world, it also shows the relative importance of manufactures trade. Within RECs, the share of

manufactures intra-trade is significant in EAC, SADC, UMA and COMESA (46 - 60 per cent)

and is higher than in primary commodities for some. Trade in commodities is significant for

most RECs, with a share that is largely higher than that of manufactures (except for EAC).

59

Table 10: Africa, RECs and Other Groupings’ Intra-Trade (Exports) in Manufactures and Primary Commodities, (United States Dollars at Current Prices in Thousands) and as Share of Total Merchandise Trade (Percentage), 2009

Source: UNCTAD, 2012

Even more telling, according to the report, is the story that emerges from a comparison of

Africa’s (a continent) exports of manufactured goods to the United States with those of Vietnam

(one country). In 1995, Africa’s exports of manufactured products to the United States exceeded

those of Vietnam (Table 11). Africa exported US$ 2 billion worth of manufactures to the United

States compared to Vietnam’s US$ 38 million. Even at country level, Egypt, Mauritius, Lesotho

and Zimbabwe each were ahead of Vietnam in 1995 in exports of manufactured goods to the

United States. In 2009, 14 years later, Africa was outpaced by Vietnam with the latter exporting

US$8 billion of manufactures to the United States compared to Africa’s $6 billion. Such exports

to the United States increased for both Africa and Vietnam with the latter experiencing a

phenomenal expansion.

60

Table 11: Africa's' Exports to United States of Manufactured Goods (SITC 5 to 8 Less 667 and 68) Compared to Vietnam (Thousands of US$), 1995, 2009

Source: UNCTAD Globstat database

It is pertinent to examine why the continent was surpassed by a country once devastated

by war. A clear point is that Vietnam underwent rapid structural change and transformation in

production and trade while Africa’s performance was weak. Regional integration also played a

major role. Vietnam joined ASEAN in July 1995 and was able to take advantage of the

dynamism of ASEAN in production-sharing, technological learning, innovation and knowledge.

The message for Africa and RECs is that dynamic export growth will come from moving out of

the primary commodity box into the value added and manufacturing export basket.

Across countries, services contribution to income generation, employment creation and

foreign exchange earnings has increased significantly over the last two decades. Between 1990

and 2008, the share of services in GDP grew continuously, from 65 per cent to 73 per cent in

developed countries, and from 49 per cent to 50 per cent in developing countries. Services now

account for about 72 and 35 per cent of employment in developed and developing economies

respectively. Further, services trade in general has been more resilient to the global economic

crisis than trade in goods (UNCTAD, 2010).

In Africa, the share of services in total output varies significantly among countries and

RECs. Figure 1 reveals that for RECs in Central and West Africa (ECCAS and ECOWAS) the

share of services in total output is relatively low, varying between 25 and 40 per cent, and even

decreasing over time for ECCAS. In contrast, the share of services in total output is substantially

higher for RECs in Eastern and Southern Africa, ranging from approximately 45 to 60 per cent.

61

Figure 1: Services as a Share of Total Output in African RECs (in %)

Source: UNCTAD, 2012

Growing much faster than both world GDP and merchandise trade, between 1980 and

2008, international trade in services expanded rapidly, with total exports increasing from about

$400 billion to $3.9 trillion. Developed countries currently dominate world services trade;

however, developing economies have achieved strong growth in their services exports since

1990, boosting their share of world exports from 18.7 per cent in 1990 to 26 per cent in 2008,

with developing Africa and Asia recording the sharpest growth (Figure 2).

62

Figure 2: Growth in Developing Country Services Exports

Source: UNCTAD, 2012

Exports of services from Africa grew at an average annual rate of 14.2 per cent in 2000–

2008. However, there are significant variations in services export growth among African RECs.

From 2000 through 2008, at 17 per cent the EAC recorded the fastest average annual growth,

while COMESA and SADC services exports grew at 14 per cent, and ECCAS and ECOWAS

services exports grew at 10 to 11 per cent, lower than the average for Africa. The evolution of

services exports from African RECs shown in Figure 3 indicates continuing increasing exports

from all groups.

63

Figure 3: Evolution of Services Exports from African RECs

Source: UNCTAD, 2012

Despite this sharp growth, in most African countries the service sector remains nascent

and a substantial push is needed to build productive capacity and moving into high value services

activities for: enhancing the quantity and quality of services output for domestic consumption

and export; diversifying away from over-dependence on commodities; building a competitive

economy; and generating new employment opportunities, particularly for women and youth.

There is also the persistent problem of sizeable and growing trade imbalances in services for

many African countries. In 2008, on average, African countries imported 1.55 times the volume

of services that they exported. Growing services trade imbalances are present in most African

RECs.

Figure 4 shows balanced trade in services for two RECs, namely COMESA and EAC, but

growing trade in services deficits for ECCAS, ECOWAS and SADC.

64

Source: UNCTAD, 2012

The development of infrastructure services (e.g. transportation, finance,

telecommunications, electricity, water) and related regulatory and institutional frameworks is

especially important in the African context in terms of strengthening infrastructure linkages

among countries and enhancing the competitiveness of production and facilitating the flow of

goods and services.Also, African countries could consider reviewing their services policy with a

view to developing national services strategies that can be aligned with regional services policy.

It is of great interest to policymakers to assess the extent of African services that are

bound for other developing countries, other African countries as well as other African countries

within relevant RECs. Unfortunately, however, data on services trade transactions collected by

African countries, and other developing countries more generally, does not include any

specification of the partner country with which services trade transaction have taken place.

Currently, this data is only collected by Organization for Economic Cooperation and

Development (OECD) countries. To remedy this data deficiency, in accordance with

recommendations made by the Interagency Task Force on Statistics of International Trade in

Services (TFSITS)many developing countries have plans to separately collect services trade data

by partner (UNCTAD, 2012).

65

4.2 Liberalization and African Economic Integration

In their foreword to the UNCTAD report titled “Trade Liberalization, Investment and

Economic Integration in African Regional Economic Communities Towards The African

Common Market”, Supachai Panitchpakdi, Secretary-General of UNCTAD and Jean Ping,

Chairperson of the African Union Commission reiterated that achieving regional economic

cooperation and integration in Africa that is people-centred and development-oriented is a key

challenge, and opportunity, facing African countries in the post global financial and economic

crisis period. According to them, African economic, social and cultural cohesion and union has

been an unwavering objective of African countries. It gained widespread political support

following the adoption of the Lagos Plan of Action in 1980 by the Summit of the Organization of

African Unity (OAU).

They noted that much has been achieved in terms of institution building for an integrated,

continent-wide African grouping and that the creation of the African Union (AU) by African

Heads of State and Government at the turn of the new millennium in 2000 has the acceleration of

the process of African integration as its key objective. They also acknowledged the various

regional economic communities (RECs) that have been set up to foster free trade areas, customs

unions and economic communities, which are said to constitute the building blocks for the

formation of a Pan-African economic and monetary community, possibly by 2030. They

nonetheless observed that progress and acceleration of the pace towards continent-wide African

economic integration faces formidable challenges. According to them, the pace of practical

economic integration has been sluggish, as evidenced by the low levels of intra-African trade (10

per cent in 2009) and intra-RECs trade (ranging from 1 to 11 per cent), as compared to intra-

trade of Asia (50 per cent) and Latin America (20 per cent) and their regional groupings. This is

notwithstanding the institutional infrastructure for regional and continent-wide integration that is

also supported by continental strategies approved by African countries, such as the Abuja Treaty

which lays out a blue print and time frame for achieving an African Economic Community.

A major difficulty, they said, has been the multiplicity of regional and sub-regional

economic communities and of their integration programmes. They then pointed out that there is a

need for greater coordination, synergy and harmonization among the institutions and their

programmes, in line with continental integration plans. The AU has made some advance in this

66

regard by recognizing eight RECs to be the official building blocks of the African Economic

Community, and instituting a regular process of review of progress in the groupings. Yet

countries often have overlapping membership in these RECs and other smaller groupings

continue to exist alongside them. The need for further consolidation of RECs, as institutions, and

their programmes, such as free trade agreements and customs union, continues to be a challenge.

A start is being made in this regard in terms of the agreement by COMESA, EAC and SADC

member States to have a tripartite free trade agreement among them by 2012. This initiative

should inspire other RECs in Africa to consolidate and harmonize their integration programmes.

In addition to the multiplicity of African integration groupings, African countries are also

involved in the formation of free trade agreements and economic partnerships with other

developed and developing countries. The challenge of ensuring coherence between the external

initiatives and intra-African initiatives further complicates the efforts directed at strengthening

intra-African integration, growth and development. The lack of substantive progress in economic

integration has contributed to limiting African countries’ endeavours in fostering structural

transformation towards greater production diversification, value addition and services

development that can create more and better jobs, foster income-earning opportunities and widen

access to basic services for ordinary people. Integration remains primarily a concern of

Governments, while the business community and the ordinary people that would benefit from

and foster economic and social linkages remain at the margins. Moreover, in some RECs, the

adverse impact on the economic growth and trade of many African countries wrought by the

global financial and economic crisis has led them to review and postpone target deadlines for

achieving free trade and custom unions.

In a bid to bring about greater rationalization among these groupings so as to

facilitate convergence towards achievement of a continental common market and economic

community, the AU Head of States recognized eight RECs as the building blocks for continental

integration, namely: Arab Maghreb Union (UMA), Common Market for Eastern and Southern

Africa (COMESA), Economic Community of Central African states (ECCAS), Economic

Community of West African States (ECOWAS), Southern African Development Community

(SADC), Intergovernmental Authority on Development (IGAD), East African Community

(EAC), and the Community of Sahel- Saharan States (CEN-SAD).

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Many recent reports on African economic integration, including by AU, UNECA, and

African Development Bank individually or jointlyand UNCTADhave highlighted among others

the following pertinent points. First, significant progress has been made since the Lagos Plan of

Action in forming regional institutions to foster integration, such as the RECs, and at the

continental level culminating in the creation of the African Union from the former Organization

of African Unity. Several of the regional institutions grapple with existential and credibility

issues relating to overlapping membership, weak internal finances and hence reliance on donor

support, and others challenges so institution strengthening including human resources and

expertise from Africa remains an ongoing concern.

Second, RECs and the AU have elaborated comprehensive trade liberalization and

cooperation programmes for the formation of free trade areas in goods (liberalizing tariffs and

non-tariff barriers) and economic integration programmes for the achievement of customs union

through the adoption of common external tariffs, and followed by the formation of common

markets through adoption of common policies especially common currency, free movement of

persons with right to establish and work, common competition policy and other policy

harmonization including sector cooperation such as infrastructure, energy and investment.

Programmes for the liberalization of trade in services have started in a few RECs, such as

SADCand COMESA, and the free movement of persons and capital is a declared goal of most.

As an outcome of developments over this period, Africa as a group has become a region of a

larger potential for mutually beneficial trade, financial flows and transfer of technology.

Differences within African countries in terms of levels and forms of skills and technical know-

how provide conditions conducive to mutual exchanges of goods and services. In parallel, the

rapid shift in competition from national to regional and global dimensions, as well as the

impressive economic gains in Asia through cooperation and integration (i.e. the Association of

Southeast Asian Nations (ASEAN) has further spurred interest in regional integration in Africa.

The intense competition for markets and external resources of economic development provided

an incentive to Africa to strengthen economic links between themselves at sub-regional, regional

and continental level.

Third, the performance in architecture and institution creation and programming for

regional and continental integration is not matched by sustained and successful implementation

and operationalization of the trade liberalization and economic integration programmes, leading

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to deeper integration. More often, it is the non-implementation or partial and slow

implementation of agreed trade liberalization schedules and other common obligations,

particularly the trade, development, monetary, financial, investment, technology and

infrastructure cooperative measures, that undermines progress towards the desired level and

depth of integration and its coherence.

Some progress in some aspects of trade liberalization has been recorded in some

RECs, however limited steps have been made to implement the commitments for full tariff

reductions, elimination of non-tariff barriers (NTBs), adoption of common external tariffs and

common policies. To some extent, the lack of full intra-regional trade liberalization is a factor

explaining the low level of official intra-REC trade for most RECs (although unrecorded and

informal trade is said to be vibrant). Overlapping mandates and memberships of some RECs

further complicate the process of advancing and harmonizing African regional integration.

Efforts at accelerating integration have been undertaken including by the African Union in

adopting the Minimum Integration Programme in May 2009 which provides a continental

framework for acceleration of integration and coordination, convergence and collaboration

among RECs.

More fundamentally, the lack of progress in real economic integration has also

contributed to limited progress among African countries in fostering structural transformation

towards greater production diversification, value addition and services development that can

create more and better jobs, foster income-earning opportunities and widen access to basic

services for ordinary peoples. Integration remains primarily a concern of Governments while the

business community and the ordinary peoples that would benefit and foster economic and social

linkages remain at the margins (and thus are sceptical of the process). Moreover, in some RECs,

such as SADC, the adverse impact on economic growth and trade of many African countries of

the global economic crisis has led them to review and postpone (extend transition period)

deadlines for achieving free trade and common external tariffs. So, African integration has been

adversely affected by the global crisis, leading to further delays in implementation. This is made

complicated by chilling effect of trade agreements between Africa and developed countries, such

as the African, Caribbean and Pacific Group of States (ACP)–European Union (EU) economic

partnership agreements (EPAs). It is thus crucial that there is accelerated full implementation and

operationalization of African integration among RECs to serve as building blocks for conduct of

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trade relations with developed countries, including with the EU under EPAs, and also ensuring

that such North– South agreements are conducive to and coherent with the development of

Africa and its economic integration process. Precisely because of the current downturn in the

world economy that leads to weakened exports from Africa,4 the region could focus attention

towards its domestic, sub-regional or regional markets which are not only relatively unexploited

but also are expected to grow at a reasonably high rate comparable to that of other developing

regions (UNCTAD, 2010).

Some transnational corporations (TNCs) from both outside and within Africa have

quickly responded to these developments to seek business opportunities. The implications of this

for Africa, as host and home to foreign direct investment (FDI), are important in not only

maintaining existing levels of and even attracting new inflows of FDI, but also securing the

participation of TNCs to add momentum to the regional integration efforts and integration into a

rapidly changing world and regional market economies. Measures have been undertaken at

national, regional and inter-regional levels to facilitate and attract FDI flows and mutual FDI

among African countries. Bilateral and regional free trade agreements and economic cooperation

arrangements dealing with investment occupy have increased. Since much of production, trade

and international financial flows are shaped by TNCs which integrate goods and services and

factor markets across national boundaries, corporate integration has gained particular relevance

in the quest for regional economic integration. Integration in the corporate sector by TNC

initiatives on the one hand and government efforts in regional economic and financial integration

on the other can reinforce each other and strengthen the mutual links.

Thus, in 2010, the road towards regional and continental Africa integration remains a

vision and realizing it will require strong political will at the highest level and consistent and

sustained follow-up implementation and operationalization at the regional level, and close and

rigorous monitoring and evaluation to ensure progress. The multiple crises including the global

financial and economic crisis and the attendant crisis mitigation and counter-cyclical measures

taken, the impasse in the World Trade Organization (WTO) Doha Round of trade negotiations

and the proliferation of free trade agreements especially by developed countries, including with

African countries such as in EPAs, are indicative of a malaise in the global economy and trading

system and search for new models to foster sustained growth and development.Trade under

regional and bilateral free trade agreements now covers almost 50 per cent of global merchandise

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trade, indicative of a growing trend towards regionalism (UNCTAD, 2011). As indicated earlier

however, the reverse appears to be the case in Africa as Africa’s trade with the rest of the world

has continued to surpass intra-African and inter REC trade.

Meanwhile, since the independence era, virtually all African countries have embraced

regionalism. Today, there are more regional organizations in Africa than in any other continent

and most African countries are engaged in more than one regional integration initiative (see

figure 1). Regional integration appeared to be the framework to address obstacles to intra-

African trade; reducing barriers to intra-African trade will create larger regional markets that can

realize economies of scale and sustain production systems and markets as well as enhance

Africa’s competitiveness. In the period from the 1960s to the 1980s, over 200 intergovernmental

multi-sectoral economic cooperation organizations had been established and over 120 single

sectoral multi-national and bilateral organizations (Adedeji, 2002).

The commitment to regionalism was part and parcel of the broader aspiration of

continental integration, which takes its roots from the Pan-African movement of shared values,

collective self-reliance in development and political independence. From the beginning of the

decolonization process in the 1960s, the establishment of sub-regional economic communities

was a significant part of Africa’s development strategy. In the period from the 1960s to the

1980s, several intergovernmental economic cooperation organizations were established to

promote technical and economic cooperation. These regional agreements in Africa generally

sought to (a) expand the growth of intraregional trade by removing tariffs and non tariffs

barriers; (b) strengthen regional development, through the promotion of economic sectors,

regional infrastructures and the establishment of large scale manufacturing projects; (c) remove

barriers to the free movement of production factors; and (d) promote monetary cooperation.

During this period, many African countries implemented highly interventionist and protectionist

trade regimes, motivated by several concerns, among which were fiscal concern and the

protection of domestic industry, in the context of import-substitution industrialization strategy.

The Lagos Plan of Action (LPA), adopted in April 1980 in response to the deteriorating

economic situation in Africa, proposed a strategy for shifting Africa to a sustainable

development path which calls for an inversion of the experience since the 1960s. The LPA

encourages the pursuit of three goals: (a) high and sustained economic growth; (b)

transformation of the economic and social structures; and (c) maintenance of a sustainable

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resource base. Regional and sub-regional integration constitutes the principal impulse in

restructuring the fragmented African continent into more coherent and stronger economic

regional and subregional entities. The overarching objective of the LPA remains the achievement

of effective regional integration though national and collective self-reliance. But during this

period, African trade policy and general economic development strategy have experienced two

contrasting tendencies (Oyejide, 2005). While collectively, African countries have embarked on

an inward-looking regional strategy — which implies an inward-oriented import-substitution

industrialization strategy based on protected regional markets — during the mid-1980s, African

countries at the individual country level started rationalizing and liberalizing their trade regime

in the framework of the structural adjustment programmes of the World Bank and the

International Monetary Fund, the outward-oriented focus of which implied the closer integration

of Africa into the world economy. During this period, the attention of African policymakers

shifted from regional integration to the implementation of structural adjustment and economic

liberalization programmes. Thus, this period stalled the effective working of many regional

groupings in Africa.

The implication of the liberalization of African economies for regional integration in

Africa was that as individual West African countries opened up their economies to the

unrestricted movement of goods and capital from the industrialized capitalist nations, in keeping

with the conditionalities imposed on them by the International Monetary Fund (IMF) and the

World Bank under the SAP, the less competitive goods from the sub-region became and

therefore the less integrated their economies. It is perhaps worth noting that most African states

were at the time also highly indebted to the international creditors including the Multilateral

Financial Institutions and therefore lacked the capacity to resist the demand from those quarters

for the wanton liberalization of their economies.

Nevertheless, African countries continued to consider the regional approach as the best

tool for their development and a new chapter in the history of African regional integration

commenced in Abuja, Nigeria, on 3 June 1991. The treaty establishing the AEC committed the

continent along the path of economic integration. This treaty calls for the establishment of the

AEC by 2027, with a common currency, full mobility of the factors of production, and free

movement of goods and services among African countries. The year 2001 saw an acceleration of

policy discussions on regional integration with the establishment of the African Union (AU) and

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the launch of the New Partnership for African Development (NEPAD). NEPAD focuses on the

provision of essential regional public goods (such as transport, energy, water, information and

communication technology, disease eradication, environmental preservation and provision of

regional research capacity), as well as the promotion of intra-African trade and investments. The

focus is on rationalizing the institutional framework for economic integration, by identifying

common projects compatible with integrated country and regional development programmes,

and on the harmonization of economic and investment policies and practices.

One notable characteristic of regional integration in Africa has been the multitude of

regional integration initiatives and consequently the participation of African countries in several

of these regional trade agreements (RTAs). Many African countries hold multiple memberships.

Of the 53 countries, 27 are members of two regional groupings, 18 belong to three, and one

country is a member of four. Only seven countries have maintained membership in one bloc.

Multiple arrangements and institutions, as well as overlapping membership in the same region,

tend to confuse integration goals and lead to counterproductive competition between countries

and institutions (ECA, 2008). Bad as the situation was, it was further compounded by the

demand for the liberalization of African economies in that whatever hope there was for the

streamlining of those regional groupings literally vanished in the face of increasing integration of

the economies of the African states in a most unfavourable manner into the global capitalist

economy, more so as many of those groupings owed allegiance to their erstwhile colonial

masters who also control the global financial architecture. Hence, the hope for regional

integration receded as the individual African economies become more liberalized.

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Figure 1 - Africa: Overlapping membership in regional integration groups

Source: UNCTAD, 2012

To overcome this situation, African leaders attempted to achieve more rationalization of

regional integration initiatives. In their search for unity and collective development strategy,

African countries have also proposed a number of external partnerships, which the continent has

endeavored to cope with collectively. Among these external partnerships are (a) multilateral

partnerships in the framework of the World Trade Organization (WTO); (b) the African,

Caribbean and Pacific Group of States (ACP)–European Union (EU) partnership, through

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economic partnerships agreements (EPAs); and (c) a growing number of bilateral initiatives in

support of African development, such as the African Growth and Opportunity Act (AGOA,

United States), the Tokyo International Conference on African Development (TICAD, Japan),

and initiatives from China, India and Brazil. Turkey proposed recently to enter in a partnership

with Africa. African countries have been trying to bring such initiatives into a continental

framework under the African Union, to bring about greater synergy and ensure a mutually

beneficial outcome for partner countries.There are also regional integration arrangements made

up of regional initiatives, which link African countries into North–South trade arrangements.

The point has to be made though that in spite of the growth trends in intra-REC trade, the

pattern of REC exports continues to be strongly influenced by historical links with the outside

world. In the majority of the RECs, over 80 per cent of exports are still destined for markets

outside Africa, with the European Union and the United States accounting for over 50 per cent of

this total. Notwithstanding geographical proximity, African countries trade more with the EU

than with other economies inside Africa (ECA, 2008). This situation was a direct consequence of

the liberalization of African economies under the structural adjustment programme of the IMF

and the World Bank.

What emerges from the foregoing presentation of data on Africa’s economic and trade

performance is that the economies of the countries of the West African sub-region have not

achieved any meaningful level of integration in spite of the concerted efforts of the region’s

political leaders in that regard over the years. The study found that the non-integration of the

economies of the sub-region is to be located within the liberalization policies pursued by the

individual nations since the introduction of the IMF sponsored structural adjustment programme

of the 1980s. It is to be noted that economic liberalization has had the singular effect of sucking

the individual West African countries into the global capitalist system as bearers of primary raw

materials with little or no value addition. Because of the homogeneity of the economies of the

sub-region, there is little to exchange between them. One way to overcome this situation would

have been to encourage greater cooperation in industrial and infrastructural development. But

with the liberalization of the global economy, this has not been allowed to happen as countries of

the sub-region, and of Africa generally have become dumping grounds for manufactured goods

from the industrialized nations.

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Whereas the unfortunate tendency has been to blame the Africa’s political leaders for

their lack of commitment to regional integration, Margaret Lee, a then Visiting Scholar with the

African Studies Program at the School of Advanced International Studies of Johns Hopkins

University, Washington, DC, had correctly predicted the implication of the liberalization of the

global economy for the non-industrialized countries of the global south way back in 2003.

Reacting to the report by the United States Department of Commerce on trade between

Africa and the US which painted a glowing picture of the impact that the African Growth and

Opportunity Act (AGOA) has had on increased access for African countries to the US market.,

Lee had remarked that it was perplexing that the US and EU sees the need to gain greater access

to the markets of a region, sub-Saharan Africa, whose income is the equivalent of one European

country – Belgium. According to her, after two decades of structural adjustment programs there

exists irrefutable evidence that openness, without an appropriate economic development strategy

in place, does not result in economic growth and development, or increased integration into the

world economy. Such integration, she rightly argued, is a consequence of economic growth and

development and not greater openness. Lee then predicted presciently that instead of enhancing

Africa’s integration into the world economy, the free trade agreements proposed by the US and

EU, under the aegis of globalization, will likely result in Africa’s further marginalization and the

undermining of the already perilous state of regional economic integration in Africa. She then

observed that on the one hand it seems unbelievable that African governments have not rebelled

against these proposed free trade agreements, but on the other, the history of rebellious states

against world hegemonies does not bode well for countries that are struggling to stay afloat

amidst the rising tide of the vicious waves of the ocean. The irony of the integration project in

the West African sub-region therefore is that the liberalization of their economies has neither

enabled them to be integrated into the global economy in a beneficial manner nor does it permit

them to pursue meaningful integration of their economies using appropriate integration

mechanisms.

On the basis of the foregoing therefore, we validate our first hypothesis which states that

if the economies of West African States are liberalized, then it is likely that economic integration

of the sub-region will be undermined.

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CHAPTER FIVE

DEVELOPMENT OF PRODUCTIVE FORCES AND ECONOMIC INTEGRATION IN THE WEST AFRICAN SUB-REGION

Introduction

In this chapter, we test the second hypothesis of this study which states that “If there is a

low level of science and technology development in West Africa, then it is likely that economic

integration would be impeded”.

Technology, in its widest form, can be taken as the application of human intellectual

ability tothe task of harnessing nature in its entirety for humankind’s development and

sustenance. Thisnotion is contingent on the fact that technology is seen as the intermediary

between humans andthe vast resources available from nature. Similarly, technology can be said

to be the systematicstudy and development of techniques for making and doing things (Avae,

2003).Etymologically, technologycomes from the Greek term technologia, which is a

combination of “techne”, meaning “craft”,and logia, which means “saying”. So technology

might be considered literally as the articulationof a craft. Broadly speaking, technology refers

both to artifacts created by humans, such asmachines, and the methods used in creating those

artifacts. However, the word is also used todescribe the extent to which a society can manipulate

its environment. That is the motivatingfactor behind all technological activity is the desire to

fulfill a need.

Technology, according to Ogungbure, is therefore thinking about the best way to do

things while drawing inspiration from the cultural mindset within a social praxis. This is

probably why S.A. Ali (2003); defines it from the perspective of culture thus:

Technology, as a term is a scientific attempt by man to transform the

natural world in which he finds himself. It entails the ability to create

devices, tools and machines through which the threats of the society can

be subdued and brought under control…Indeed; the conglomeration of

technological devices available at man’s disposal is best represented by

the artifacts and edifices available within a given cultural terrain. In this

sense, the culture of a people is symbolically the totality of both the

material and nonmaterial innovative ideas and techniques (Ali, 2003 cited in Ogungbure, 2011: 89).

Invariably, Eze (1986) sees technology as the systematic application of knowledge for

theproduction of goods and provision of services for the achievement of perceived socio-

economicsystems. This explains why technology is often associated with the hardware of

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production knowledge about machines and processes. Here, a much broader definition is

adopted, whichextends to all skills, aimed at producing different kinds of knowledge and

procedures necessaryfor advancing technical capabilities. Also, technology consists of a series of

techniques; hencetechnology available to a particular nation is a sum total of all the techniques

that it knows about,and could acquire, while the technology in use is a subset of techniques it has

acquired andmastered (Stewart, 1978).

According to Ogungbure (2011: 91), the philosophy of technology entails a capacity for

critical thought and deep scientific thinking to harness and exploit the resources of nature for

human benefit. It is a cultural disposition of a people that expresses how they transcend their

environmental limitations by radically modifying the way they interact to shape, re-shape, and

make sense of their world. There is no doubt that the development of technology have largely

contributed to the rapid pace of change in the world today, with an ever expanding influence and

impact. Thus, this aspect of philosophical thinking entails the challenges of conquering nature by

applying technical knowledge in a bid to achieve a critical understanding of the conceptual

nature and practical consequences of such technologies, and consequently provide the conceptual

foundations for their fruitful and sustainable developments. Although, there are innumerable

benefits to the advancement of technology in today’s global community, it has also raised new

and pressing challenges, whose complexity and global dimensions are speedily growing and

evolving, sometimes at the detriment of underdeveloped nations. In this guise, most African

nations are considered technologically backward and incapable of the capacity for critical

thought and critique; and not being able to grasp the philosophical foundations of technology.

Meanwhile, there seems to be the general agreement that the real difference between the

developed nations of America, Europe, Asia, the Far East, and the underdeveloped nations of

Africa rest on their technological ability. This ability refers to the extent to which nations access,

utilize, and exploit science and technology for solving socio-economic and humanistic

problems.A county is said to be technologicallybackward when:

(i) It cannot produce capital goods such as tractors, lathe machines, drilling machines,

cars, trains, and other earth moving equipments.

(ii) (ii) It is unable to exploit her natural resourcesexcept with the help of foreigners who

willnormally provide the technology andexpertise to undertake the exploitation of

hernatural resources.

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(iii) (iii) It is unable to mechanize her agriculture i.e.crude implements are still used

foragricultural production activities by a largepercentage of those who are involved

inagricultural production.

(iv) It depends on other countries for the supplyof its spare parts for industrial machinery

(v) It exports raw materials to other countries asagainst finished products

(vi) It is unable to produce her own militaryhardware with which to defend herself if

theneed arises(Uwaifo, and Uddin, 2009: 107).

A critical examination of the West African sub-region reveals thatall the points itemized

above are present in theregion. While some scholarstraced the root of this problem of African

technological gap to their colonial and post-colonial experiences, others are of the view that

African people are solely liable for the paths taken togrowth and development which has

seriously marginalized its attempt at mechanistic expressionsof aspects of its cultural identity.

Olusegun Oladipo for instance, is of the view that:

A careful look at the African situation, since the period of the continent’s encounter with Europe, is likely to show that the African predicament can be attributed to a major gap in the African development process. Whether our reference is to the slave trade, to the colonial era or even to the post-colonial era, it is clear that African oppression and exploitation by others have been a function of her technological underdevelopment. In other words, the possibility of slave trade and colonialism was largely due to the underdevelopment of the African technological capacity (Oladipo,2009:32)

Oladipo noted that African nations have responded to the challenges of sustainable

growth and technological development collectively through creation of regional or sub-regional

schemes, strategies and robust home-grown economic groupings and advancing frontiers for the

flourishing of conceptual foundations on the philosophy of technology. Obuah however observed

that although these schemes were intended to put African nations in the path of growth and

technological development, the results have been abysmal and disappointing (Obuah, 2010).

Also, in some African nations like Ghana, Nigeria, Malawi and Zaire, attempts by

government to include the teaching of science and technology in both primary and post-primary

educational curricula has yield little or low results; such policies where they exist are mostly far-

fetched and lacks the connection between the technically viable aspects of African culture and

the realization of a salient fact that science and technology is not all about amassing theorems

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and statistical formulas but a phenomenon that is defined by the attitudes and the philosophical

disposition towards creativity. Even in tertiary institutions within Africa, research on science and

technology are poorly funded by government, coupled with the fact that there is the dearth of

necessary facilities, which makes it near impossible to advance new frontiers in knowledge

(Alozie, 2008).

Meanwhile, in his explanatory notes on the political economy of Africa, Ake (1976)

observed that to explain the phenomenon of African underdevelopment, one must begin with an

appreciation of the material base. African economies, he said, can be characterised as follows: (i)

They are highly statist, that is to say, the state dominates the economy - much more so than in the

industrialized West. (ii) Their productive forces are underdeveloped and their economic surplus

is meagre. (iii) They are highly dependent, particularly on the former colonial powers; for

instance, practically all their technology is imported, most of their capital requirements are met

from loans, grants, and foreign investments, and a high percentage of their Gross National

Product comes from the export earnings of a few products. (iv) They are highly 'disarticulated' -

the economic exchanges between sectors are very limited; the differences in productivity and

incomes are of a high magnitude; the more dynamic sectors of the economy look outwards to

other countries, and there is only marginal integration. (v) There is a juxtaposition of three

modes of production, as follows: (a) The primitive community mode of production. The basic

means of production in this case is land, generally owned collectively by the lineage or clan or

tribe, but its use is permitted to members of these primary groups, subject to certain conditions

which vary from place to place. Labour is usually organised on the basis of the family or kinship,

and the exchange of commodities is infrequent. However, the situation varies throughout Africa.

In some places, vestiges of this mode of production are now associated with commodity

exchange. Elsewhere, the communal land has been alienated wholly or in part, and individual

ownership has emerged. Increasingly those who are granted use of the communal land employ

agrarian labourers occasionally to help them. In addition, there have emerged enclaves of large-

scale private and state farms and plantations employing wage labour.

According to him, the picture is very confused and it is hard to generalized. However, it

may be confidently stated that most of rural Africa is under the primitive community mode of

production, at various stages of decomposition; that the commercialization of agriculture is

increasing significantly, to the extent that in some places as much as 40 per cent of the peasants

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can be classified as semi-wage labourers; and that the dominant feature almost everywhere is still

family production for subsistence. (b) The simplecommodity modeof production. This is based

on private property, and depends on the personal labour of small-scale producers, who may be

peasants, tradesmen, or artisans. The wide prevalence of this mode can be gauged from the fact

that in most African countries the proportion of wage-earners in manufacturing is usually less

than 30 per cent of all those engaged in production. Simple commodity production meets and

merges with the lower forms of capitalism. However, it is not clear that it is yielding ground to

capitalism, although it seems hardly economically viable in many cases. This mode of

production continues to thrive because of lack of credit facilities, and because the ability of

'small' producers to accommodate themselves to an extremely low standard of living has enabled

them to 'hang on' despite the encroachment of capitalism. Moreover, their ranks are being

swelled by jobless urban proletarians, semi-proletarianized peasants, and landless peasants. It

looks as though, in the short run, the spread of capitalism is in fact making simple commodity

production more widespread. (c) The capitalist mode of production. The capitalism of African

economies is unique, and may be described as 'derivative' in the sense that it developed (almost

incidentally, so to speak) as an effect of the quest by western capitalists for markets, raw

materials, and profits; certainly much of the capital, the technology, and even the entrepreneurial

skills still come from abroad. It is a form of capitalism grafted on to societies in which the

development of the forces of production is still very rudimentary. According to Ake, although

capitalism is rapidly penetrating African economies it has still a long way to go if we assess its

importance by the extent to which the national economies are based on wage labour. That is, the

extent of the development of the continent’s productive forces.

5.1 Low Level of Industrialization and the Challenges of Regional Integration in West

Africa.

According to a 2006 UNESCO/UNIDO report on the Review of African Sustainable

Industrial Development, Africa lags behind other developing regions in almost all its industry

related indices. Similarly, WorldBank data provided in Table 5.1below indicate that with a few

exceptions (Botswana, Cape Verde,Madagascar, Namibia, Seychelles, Swaziland, South Africa

and Tunisia) industrial output percapita as measured by the dollar value of manufacturing value

added (MVA) per population hasbeen stagnant over the pas three decades or has even declined.

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Further analysis by UNIDO oftrends in industrial output suggests that MVA in Africa has grown

at a rate exceeding the worldaverage (although falling well short of the phenomenal growth rates

achieved in East and SouthAsia).3 However, in per capita terms, growth in Africa’s MVA

remains below the global average

The contribution of manufacturing output to total national income remains low, with

theshare of MVA in GDP in 2004 ranging from a high of about 20 % in Mauritius to as low as

0.5%in Djibouti and an average of only about 9% (50 countries excluding Libya, Sierra Leone,

andSomali are reported on in Table 1). Countries with significant manufacturing sectors

(i.e.exceeding $250 per capita per year) are few. Out of the 50 countries reported on in Table 5.1,

onlyMauritius, Seychelles, South Africa, and Tunisia have a significant manufacturing sector.

The report noted that structural change in African economies has been limited, with most

economies stilldominated by the agricultural or mining sectors. Yet, the analysis of structural

change in highlyperforming economies suggests that poverty elasticities of industrial

development are larger thanthose of agriculture. The experience of such economies confirms that

rapid growth in agriculturalproductivity is a precondition for economic take-off and sustained

poverty reduction, but it alsosuggests that this is not enough. Agricultural growth, especially at

the initial stages ofdevelopment, is not an end in itself but should also serve as a vehicle for

facilitatingindustrialization. This has however not happened and African countries have

continued to export mainly agricultural products with little or no value addition as shown in the

table below.

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Table 5.1: Manufacturing value added at constant factor cost (at 2000 prices) and as % of GDP (1980 to 2004)

* Average annual percentage growth rate in MVA per capita from 1980 to 2004 Source: The World Bank, World Development Indicators, 2004

The report observed that Africa’s share of world manufacturing outputdeclined slightly

from 0.9% to 0.8%over the two decades spanning 1980-2001 as shown in Table 5.2 above.It

further shows that within Africa, the distribution ofmanufacturing activity is highly skewed with

just one country, South Africa, accountingfor 27.3% of total MVA in Sub-Saharan Africa and

registering significant growth overthe past two decades. Thus for most countries there has been a

loss in their share ofglobal manufacturing output. The 1990's were a decade of rapid

globalization duringwhich there was a shift of production from industrialized to developing

country locations.As a result, developing countries as a whole increased their share of global

MVA from16.9 to 24%. Nevertheless, African countries actually lost their share in all

branchesexcept textiles and apparel, leather and footwear, and basic metals.

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Table 5.2: Distribution of World MVA at current market price, by region

Source: Development and Globalization, Facts and Figures, UNCTAD, 2004

The report recorded that the structural shift towards a greater role for industry in African

economies is limited by narrow local markets and a lack of appropriate marketing channels. As

for the international markets, tariffs and other barriers hinder value addition of goods and

perpetuate Africa’s condition as exporter of unprocessed raw materials. Neither is information

technology properly explored to build new markets.

The report further observed that countries such as Kenya, Cameroon, Egypt, Madagascar,

Morocco, Seychelles, Zambia and Mauritius have seen quite significant growth in their

manufactured exports with an increasing share of manufactured goods out of total exports. It was

however quick to point out that this is not universal across the continent, and that the volume of

manufactured exports from several countries has actually declined and, compared to other

developing regions the share of manufactured goods in total exports is still relatively low.

Primary products still dominate exports from most African countries. The average ratio of

primary exports to manufactured exports was 2:1 in 2001.Only in Madagascar, Mauritius,

Senegal, South Africa and Tunisia did the value of manufactured exports exceed the value of

primary exports and only South Africa has a significant proportion of high-technology

manufactured exports. A particularly striking feature of industrialization in economically well-

performing counties is that the share of manufactured exports from total exports increased

significantly faster than the share of MVA in GDP. By contrast, in Africa, Industry is geared

primarily towards import substitution for the domestic market rather than for export even the

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benefits that could be derived from import substitutive industrialization have been reduced by

companies continued heavy dependence on imports for inputs and intermediate goods and their

poor utilization of capacity due to foreign currency shortages and devaluation

(UNESCO/UNIDO, 2006: 5).

Table 5.3: Manufactured exports (1990 to 2004) in million US$, as % of total exports and volume index

Source: The World Bank, World Development Indicators, 2004

The report further noted that high technology exports account for only four percent of

manufactured exports from Africa as compared with32% in East Asia and a developing country

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average of 23%. Africa's ability to move up market into the export of manufactures, and

specifically of medium - to – high technology manufactures will depend on the development of

the necessary skills and technology accumulating process, which is currently at early stages of

development. Africa's industries thus continue to be dominated by low levels of technology,

skills and capacity utilization with a seemingly limited scope for adoption of computer-assisted

manufacturing and knowledge-intensive production systems and thus tend to be non competitive

on the world market.

Buttressing this point, the UNCTAD 2003 report had stated that effective technology

strategies are based on a clear understanding of the basic unit of technological activity, the

industrial firm, which imports, masters, uses and improves technology. It also subsequently

stimulates the demand for innovative technologies. For the process to thrive, it needs active,

supportive and dynamic government policies and institutions. Efficient technology use goes

beyond importing machinery. It entails building capabilities, technical understanding and an

informational base; acquiring new technical skills and managerial practices; and forging linkages

with other firms and institutions. It requires the ability to understand and master new technology;

to adapt it to local factors and conditions; and to upgrade it as technologies improve and new

products appear. Different firms use the same technology at vastly different levels of efficiency.

Moreover, countries vary in their technological capabilities.

Technological competitiveness lies in the effectiveness with which countries promote

capabilities. Firms in developing countries often lack the expertise to determine which new

skills, technical knowledge and organizational techniques are required to make newly imported

technologies function at optimal levels. Changes in traditional mindsets are required to form

interactions and linkages with other firms or institutions, and to build technical know-how, as

well as to overcome the problem of “leakage” of trained workers. Firms may not have access to

the information, skills, financing or other factors needed to develop their capabilities.

Furthermore, not all activities involve the same degree of effort or cost. For instance,

learning needs may be lesser in apparel manufacturing than in the making of advanced

electronics or machinery. They also vary with ownership: new knowledge and technology might

be more accessible to multinational affiliates than to local small and medium-sized enterprises

(SMEs). Effective learning is further constrained among firms by a lack of coordination.

Restrictions on learning within firms include reluctance to change, risk aversion, lack of

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knowledge and inability to undertake learning processes. Corrective policies are needed in order

to promote national technological growth. This is the essence of technology policy: to promote

in-firm learning and skill development; to improve the supply of information and skills from

markets and institutions; and to coordinate collective learning within and across related

industries, or industrial clusters. In addition to competition and trade policies, rules and

regulations, there are five main factors affecting technology development. These are physical

infrastructure, skills, financing, technology and supply clusters. The experiences of the more

economically dynamic developing countries, particularly East Asia’s newly industrializing

economies, indicate that coherent and carefully crafted technology policies can accelerate

competitiveness and promote entry into more complex and higher-level technology activities

(UNCTAD, 2003: 2).

Growth in African manufacturing in the past two decades has been very low and, in some

cases, negative, and that during the period, manufacturing value added in sub-Saharan Africa,

excluding South Africa, grew only 0.1 per cent per year. Sub-Saharan Africa’s share of global

manufacturing value added has remained constant since 1980, at under 0.4 per cent (UNIDO,

1999). Even this low level of activity is highly concentrated. In 1998, South Africa alone

accounted for 55 per cent of sub-Saharan Africa’s total manufacturing value added, and seven

countries for another 22 per cent. This poor performance has to be viewed in the context of

dynamic industrial growth in many other developing regions, with many countries using

manufacturing to drive a rapid structural transformation of production and comparative

advantage.

Sub-Saharan Africa is lagging not just in terms of volume but also in terms of

technological content in its manufacturing activity. In certain largely traditional activities, it is

possible to remain competitive with unskilled cheap labour and by processing natural resources.

However, this base is eroding steadily. In almost all industrial activities, competitiveness

involves technological change, new organizational methods, flexible response, greater

networking, and closely integrated production systems across firms and regions. The new

competition requires better technological capability in every country, regardless of resource base

and location – even in countries that are not at the frontiers of innovation.

African manufacturing does not show many signs of such upgrading. Its structure

remains dominated by low-level processing of natural resources and the manufacture of simple

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consumer goods aimed at domestic markets. There are few supply linkages between large and

small enterprises. Productivity growth is poor. Capacity utilization has fallen below its peak of

many years ago; a significant part of recent growth comes from utilizing existing capacity, rather

than building new capacity. Technological efficiency is relatively low, with little sign of

technological dynamism or innovation (Lall and Wangwe, 1998). African firms are well below

international “best-practice” technical levels, and below levels reached by other developing

countries (Biggs, Shah and Srivasatava, 1995). Consequently, manufacturing has slowed down

the economic growth of the region. Manufactured exports have not grown significantly; indeed,

growth of nontraditional exports has been rather anaemic in that “despite an evidently increasing

need for it, sub-Saharan Africa appears to have achieved remarkably little diversification of its

traditional primary export base over recent years” (Helleiner, 1999). In a world of accelerating

technical change, intensifying competition and globalizing production, Africa is not only failing

to improve its international competitive position, it is quickly falling behind. Moreover,

manufacturing is the only sector of the economy that appears to be able to act as a catalyst of

economic development and modernization. As many other countries have done, Africa must

industrialize efficiently in order to achieve growth and competitiveness and reap the benefits of

modern technology (UNCTAD, 2003: 3-4).

Some problems with African industrial development could be attributed to political and

ethnic conflicts; natural disasters; external market shocks, in the form of declining terms of trade;

debt or falling aid inflows; poor macroeconomic management; and inadequate infrastructure.

Others are due to inappropriate industrial policy. Many Governments have fostered industry

behind high and indiscriminate protection. Given the small and weak indigenous base of

industrial entrepreneurship, many gave the lead to state-owned enterprises that had even more

limited managerial and technological capabilities. This has resulted in rampant rent-seeking and

political interference, thereby exacerbating inefficiency. Some Governments nationalized

enterprises run by foreign firms or entrepreneurs of non-African origin. The business

environment was often inhospitable even to local private entrepreneurs, and was riddled with

high transaction costs. African enterprises have failed to build up comparable levels of

technological capability, and few have reached a level where they could compete directly in

international markets.

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Poor economic conditions, disillusionment with past strategies and intense pressure from

development partners have led most African governments to liberalize economic policies with a

view to reviving growth in manufacturing output, exports and employment. The dominant model

of policy reform – stabilization and structural adjustment, as proposed by the International

Monetary Fund and the World Bank – was applied across countries regardless of their level of

industrial development. Adjustment was intended to improve productive sectors by removing

inefficient interventions and exposing activities to international competition, with a view to

increasing efficiency and technological dynamism. Almost the entire burden of policy reform

was laid on adjusting prices; liberalization was considered to be sufficient for better

performance. In the early days of adjustment it was expected that liberalization would lead

Africa to emulate the success of export-oriented countries of East and South-East Asia.

The report further observed that the impact has been very different from what was

expected as import liberalization is devastating most exposed industries, largely as a result of

competition from more competitive developing countries. The African enterprises that are

growing are those with a local cost advantage, or those with niche markets that do not face direct

import competition. The share of machinery manufacturing dropped by nearly half, from 12.2 to

6.5 per cent, over 1980-96 (UNIDO, 1999). The industries that initially led export-oriented

growths in Asia, labour-intensive activities with simple technologies, are the ones worst affected

in Africa. Foreign direct investment is not responding as expected to the labour cost advantages

of Africa; there is only a trickle going into resource extraction and the privatization of state-

owned utilities.

The dynamic process of globalization that is driving manufacturing in many developing

countries is conspicuously absent in sub-Saharan Africa. Indications are that the divergence

between Africa and the leaders in the developing world is widening rather than narrowing. The

main structural problem of African industry appears to be its weak base of technological and

managerial capabilities. The revival of growth in a competitive setting has to be based on greater

technology inflows into Africa and, more importantly, significant improvement in enterprises’

ability to absorb, adapt and improve on imported technologies(UNCTAD, 2003).

Table 5.4 shows the dominance of primary products in sub-Saharan Africa’s exports.

Apart from the Middle East and North Africa and its huge oil-exporting base, Africa is the region

with the highest reliance on primary products. At the other extreme is East Asia, with the share

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falling from 15 to 4 per cent. Latin America having maintained its one-fifth share between 1980

and 2000. Therefore, it would seem that Africa has yet to break away from the tradition of

exporting unprocessed materials, which is not only the slowest growing segment of world trade

but also the least stimulating in terms of structural, entrepreneurial, skill and technology growth.

Table 5.4 Percent share of regions in developing countries exports, 1980 and 2000

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Meanwhile, Table 5.5 below buttresses Africa’s continued poor performance in the

global share of export of manufactured between 2004 and 2009 again with the implication that

African countries rely almost exclusively on the export of primary commodities; a situation

which makes horizontal integration within the region practically impossible.

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Table 5.5: Africa’s Shares in Manufactured Goods Trade with the World (SITC 5 to 8 Less 667 and 68) Thousands of US$ and Share (in Percentage) 2004-2009

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The table shows that ECOWAS’ 0.42, 0.45, 0.52, and 0.52 percentage shares of the world

export of manufactured goods for 2004, 2006, 2008 and 2009 respectively is clearly below the

average for developing Africa which stood at 1.40, 1.47, 1.86, and 2.01 respectively for the

same period. This is clearly in line with our hypothesis to the effect that the low level of

development of science and technology in the West African sub-region impedes its regional

integration.

Meanwhile, another area in which Africa’s technology gap is most manifest and which

has serious implication for integration in the West African sub-region is in the area of

information and communication technology (ICT). ICT incorporates technologies for creating

multimedia information content (sound, images, text and data) on the one hand, and

communication technologies used for broadcasting and telecommunication on the other. The

information technology (IT) component is computer-driven and supports different stages of

creation, processing, storage and delivery of content. The communication technology (CT)

aspect is the means of transporting to and receiving the above information in the form of

broadcasting or telecommunications. When properly connected through an agreed set of

protocols, all of these operate in a global network called the internet. In 1996 African countries

adopted the African Information Society Initiative (AISI) as a framework for building Africa’s

information and communication infrastructure to foster development. Accordingly, the RECs

have either already developed their regional e-strategies or are formulating them to build an ICT

infrastructure, strengthen capacity and facilitate regional economic integration and trade.

Regardless, Africa still lags behind the rest of the world in terms of ICT access, especially in

investment-intensive infrastructure, such as main, or fixed, telephone lines and fixed broadband.

The table below highlights Africa’s ICT deficiencies relative to other regions of the world.

Given the centrality of information and technology to regional cooperation and

integration, it stands to reason that the low level of development of ICT in region impedes its

economic integration. This is further compounded by the low regional and international

broadband gaps within the region as shown in table 5.5 below relative to other regions of the

world.

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Table 5.6:Main ICT indicators in 2006

Source: ITU

The ITU estimates that around 92,000 km of optical fibre link, including 25,000 km of

international submarine cable routes, are required to bridge regional and international broadband

gaps. This would require an investment of US$ 1 billion for an international submarine fibre

network, and more than US$ 1.6 billion for regional links. The undersea cables that currently

provide broadband services to Africa include South Atlantic (SAT-3) and West African

Submarine Cable (WASC), which link with SAFE to provide links to the Far East through South

Africa. Northern Africa is connected to the global network on SEA-ME-WE submarine cable

network, landing in Djibouti.

Currently 85 per cent of international bandwidth traffic in Africa is directed via Europe to

its final destinations. Access to the global backbone is vital for the development of this region,

and, according to a study by the NEPAD e-Africa Commission in 2004, Africa will require an

additional 52,040 km of infrastructure for total connectivity: 15,950 km in Central Africa, 2,200

km in Northern Africa, 19,330 km in Western Africa and 145,060 km in Eastern and Southern

Africa.

From all available indicators therefore, it is obvious that West Africa is among the lowest

performing regions in terms of the development of science and technology and that this has had

adverse impact on economic integration in the sub-region. The direct consequence of this low

level of development of science and technology is the underdevelopment of the region’s

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productive forces with the consequence being the low contribution of manufactured goods to

exports from the region. Since virtually all countries of the sub-region export only primary

products, their major trading partners are mainly the industrialized nations who make use of the

raw materials exported from this region. In that case, trade among countries of the region has

remained abysmally low. In point of fact, a substantial proportion of whatever trade that takes

place among countries of the region is nothing but the re-exportation of manufactured goods

from mainly Asian countries to the major port countries like Nigeria, Cote d’Ivorie and perhaps

Ghana to less endowed countries of the region, particularly the land-locked countries like Mali,

Burkina Faso, Niger, etc.

Theorizing the implication of this technology deficit for the integration paradigm pursued

by African countries, Lee (2000) had stated that there are basically two theoretical approaches to

regional and sub-regional integration. The first approach, according to her, is market integration,

and the second approach may be described as developmental regionalism or economic

integration. According to her, most Third world countries including African countries have

tended to favour market integration. Market integration, she said, involves a gradual and step by

step progression from Free Trade Areas (FTAs) through Customs Unions (CUs) to Common

Market, Economic Union to economic integration. On the other hand, developmental regionalism

is an arrangement which involves cooperation in scientific and technological matters,

cooperation in developing infrastructures, cooperation in the development and utilization of raw

materials, and cooperation in regional industrialization. Developmental regionalism also involves

the formulation and implementation of common policies at socio-economic and political levels in

relation to external states. Lee’s major argument is that although African countries tend to prefer

market integration to developmental regionalism, their peculiar conditions do not make

integration relevant to their integration needs. She argues that African economies are not

competitive. They are not competitive because they are not managed on the basis of comparative

advantage. More specifically, African countries are not industrialized. They produce primary

commodities. Consequently, trade among them is very low. There is higher level of trade

between African countries on the one hand and European and North American countries on the

other. Attempts to develop or achieve integration through market integration invariably lead to

trade diversion rather than trade creation.

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5.2 The Low Level of Research and development and the challenges of West African Integration

The concept of a national system of innovation has gained currency and is now widely

used in academic and policy circles to refer to technological performance and innovative

capacities of countries. A national system of innovation is a network of institutions that are

organized through linkages “to relate to each other as elements of a collective system of

knowledge creation and use as well as the technologies they use” (Mugabe, 2011: 5).According

to him, it promotes interactive activities between and among institutions in order to generate and

use new products, processes and organizational practices. The main institutional actors in the

national system of innovation include universities, public R&D institutes, private enterprises,

financial institutions such as commercial banks, technology support agencies, policy-making

bodies and the government in general. Understanding the linkages among the institutional actors

involved in innovation activities or processes is therefore crucial to improving a country’s

technological and economic performance (Mugabe, 2011: 5).

There are a number of studies that have reviewed the national R&D systems of the Sub

Saharan countries, and there are also new initiatives to conduct national R&D surveys. For

example, NEPAD is supporting most of these countries to conduct surveys. Individual countries

have also initiated activities to set their R&D priorities and formulate related science and

technology policies. These efforts vary from one country to another. Some countries (for

example Botswana, Mozambique, Mauritius and South Africa) have already outlined R&D

priorities in their science and technology strategies or plans. Others, such as Ghana and Kenya,

have R&D priorities in draft science and technology policy documents. Other countries, such as

Swaziland, have recently launched national R&D priority setting and policy formulation

exercises.

Many approaches are used by African countries to set their R&D priorities. In many

cases, there are no organized national R&D priority-setting processes. Priorities of R&D seem to

emerge from political statements. For most countries, R&D priorities are often set by or at the

level of individual research institutions based on the institutions’ anticipation of funding from

national governments or international donors. R&D priorities are also set within sectors such as

agriculture and health, and at the level of individual departments or ministries. There have been

efforts to set R&D priorities in specific technology fields such as biotechnology, nanotechnology

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and nuclear sciences. In the area of biotechnology, for example, most of the countries have

identified needs and set R&D priorities. National biotechnology R&D priority setting exercises

have been undertaken in Ghana, Kenya, Namibia, South Africa, Uganda, Tanzania, and

Zimbabwe in the past five years or so. The extent to which these exercises have influenced the

direction of research and funding decisions remains unclear.

Mugabe noted that the degree of sophistication of R&D priority setting varies from

country to country. In some countries, priority setting is done through stakeholders’ meetings or

consultations. This largely involves getting scientists, NGOs, business representatives and

government officials into workshops to identify national R&D priorities. In some cases,

background studies may be prepared for the workshops. Stakeholders’ meetings or workshops

are the most common approach for R&D priority setting in most African countries.

Despite the differences in approach to R&D priority setting, countries have identified a

number of common areas for R&D focus. In the area of agriculture, all African countries have

for a long time identified crop breeding (with an emphasis on cereals) and livestock disease

research. Ghana has placed emphasis on research to improve varieties of cassava in order to

increase its capacity for industrial starch production. Ghana, Kenya, Mauritius, Mozambique,

Seychelles, South Africa and Tanzania have over many years prioritised research on the

conservation and use of marine resources. A growing number of the countries are starting to

identify agricultural biotechnology as a priority. These include Botswana, Ghana, Kenya,

Uganda, Tanzania, Namibia, Malawi, Mozambique, Mauritius, Rwanda, South Africa and

Zimbabwe. Some of these countries have even identified specific crops and/or traits upon which

biotechnology R&D should focus. For example, Mauritius has identified sugarcane, while

Zimbabwe has identified tobacco and cereals.

On Public Expenditure on Research & Development Mugabe observed that statistics or

data on public expenditure on R&D in most African countries is scanty. Majority of these

countries do not have institutions and/or programmes that undertake R&D surveys and collect

data on R&D expenditure. National statistics offices do not seem to have a focus on surveying or

collecting statistics on expenditure on R&D. Of all African countries, South Africa has the most

advanced institutional and programmatic activities on R&D surveys. Its Centre for Science,

Technology and Innovation Indicators of the Human Sciences Research Council (HSRC) is

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specifically funded by the Department of Science and Technology (DST) to undertake R&D and

innovation surveys on a regular basis.

There are various attempts at collecting statistics on R&D expenditure in the other

countries. The UNESCO Institute for Statistics conducts R&D surveys in some of the countries

which this study focuses on. NEPAD is supporting Angola, Ghana, Kenya, Lesotho, Malawi,

Mozambique, Uganda, Tanzania and Zambia to undertake R&D surveys, with an emphasis on

collecting data on expenditure on R&D. Studies such as SARUA (2008) have generated

estimates of public expenditure on R&D for some of the SADC countries. These estimates show

that none of the countries under study expends 1 percent of its GDP on R&D. According

UNESCO (2007), R&D intensity in Sub-Saharan Africa (excluding South Africa) is less than 0.3

percent. Table 5.9 below provides an overview of public R&D expenditure in the 19 Sub-

Saharan African countries. It is based on different sources and different years.

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Table 5.9: Public Expenditure on R&D as a Percentage of National GDP

Sources: SARUA (2008), UNESCO (2007) Ghana’s Science and Technology Profile; and UNESCO Institute for Statistics http://stats.uis.unesco.org

Mugabe noted that in comparison to the rest of the world, in 2000, Africa as a whole

accounted for less than 1 percent of the world’s expenditure on R&D. Asia accounted for 30.5

percent, North America 37.2 percent, Europe 27.2 percent and Latin America and the Caribbean

for 2.9 percent of the total world expenditure on R&D.he observed that it is important to note

that for most African countries, data on public expenditure on R&D is too aggregated to tell us

how resources are allocated across R&D areas or much about the relevance, quality and

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effectiveness of the research projects and activities that get funded. What is clear though is that

the limited expenditure on R&D is to a great extent spent on small research projects and staff

salaries in the institutions. In many countries, a very small portion of the R&D expenditure is

directed towards building or improving infrastructure, such as equipping laboratories and buying

international journals for libraries.

The UNESCO report noted that most African countries have created institutions for

R&D. Universities and other institutions of higher learning also conduct R&D in addition to their

core business of education and training. A baseline study of science and technology conducted

for SARUA in 2008 provides a good profile of R&D institutions in 14 SADC countries.

UNESCO has also commissioned and undertaken surveys that provide profiles of R&D or

related institutions in Africa. These studies or profiles are mainly regional in coverage and do not

discuss specific institutions in the different countries. There have been a number of more detailed

specific reviews of some countries’ STI systems. These reviews show that African countries

have various institutional arrangements for STI in general and R&D in particular.

Some countries have concentrated their R&D activities in universities. Examples of such

countries are Angola, Botswana, Lesotho, Mauritius, Mozambique, Namibia, and Swaziland.

Some countries have sectoral R&D activities concentrated in public research institutes. For

example, in Kenya, R&D in the area of health is largely concentrated in the Kenya Medical

Research Institute (KEMRI). Other countries (for example South Africa) have R&D efforts

spread across universities, public R&D institutions and the private sector. In Ghana, most of the

R&D activities are concentrated in the Council for Scientific and Industrial Research (CSIR) and

a few other research institutes.

Ghana, Kenya and South Africa have the highest concentration of relatively large public

R&D institutions and universities. Ghana has seven public universities three of which

specifically focus on scientific R&D. In addition, Ghana has more than 15 research institutes.

Kenya has seven public universities (most of them with faculties of science and some related

R&D activities) and at least seven public R&D institutes. It hosts headquarters and laboratories

of the International Centre for Agro forestry (ICRAF), the International Livestock Research

Institute (ILRI) and the International Centre for Insect Physiology and Ecology (ICIPE) as well

as several regional research programmes.

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South Africa has the highest concentration of R&D institutions and R&D-performing

universities in Sub-Saharan Africa. It has seven large science councils with numerous research

institutes and 18 public universities of which five are dedicated to scientific research and

technology. The country also has specialized national laboratories or facilities that are managed

by the National Research Foundation (NRF). It hosts the African-component of the International

Centre for Genetic Engineering and Biotechnology (ICEGB), the African Institute for

Mathematical Sciences (AIMS) and the Southern Africa Biosciences (SANBio) Hub of NEPAD.

The Global Competitiveness Report 2007 ranked 128 countries based on the quality of

their scientific institutions. The ranking is based on an executive opinion survey undertaken in

2006. The scoring is 1 to 7; with 1 where there are no scientific institutions and 7 for countries

with institutions that are the best in their fields internationally. Generally, Sub- Saharan African

countries scored and ranked very low.

Also, the state of R&D infrastructure in African institutions of science and technology

training, mainly universities, was reviewed in a UNESCO 2005 report. The report’s main

findings include the following: only a few universities in Africa are in a position to boast of

quality scientific journals in their libraries; few university staff have access to computers in their

offices (even in computer science departments); many of the libraries in African universities do

not have computers and are not computerized; and in old universities the age of equipment is

about a quarter of a century old. The report establishes that engineering schools or university

institutes are the ones most lacking in equipment compared to those for basic sciences. Its overall

conclusion is: “the reported average age of laboratory equipment is too high (11.6 years for basic

sciences and 15.8 years for engineering sciences). Significant changes in laboratory technology

have occurred in the last 10 years. Hence African institutions are clearly lagging behind their

counterparts in other continents in the areas of experimental science. ”

From the foregoing presentation, it is evident that Africa, particularly the West African

sub-region has performed abysmally in the area of funding of research and development (R&D)

which has been shown to be a sine qua non for technological and industrial development. This

being the case, the region has been unable to develop the needed knowledge base to drive its

industrial take off. Also, given the low level of industrial research in the individual states that

comprise the region, there is absence of intra-regional cooperation in science and technology and

attempts to develop a regional science and technology policy has been largely ineffectual.

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Consequently, intra-region cooperation in infrastructural development and cooperation in

industrialization is virtually absent resulting in very low level of integration of the economies of

the region.

On the strength of the foregoing therefore, we validate our second hypothesis which

states that if there is a low level of development of science and technology in West Africa, then it

is likely that economic integration would be undermined.

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CHAPTER SIX

SUMMARY, CONCLUSION AND RECOMMENDATIONS

6.1 Summary and Conclusion

This study set out to examine the impact of the increasing liberalization of the economies

of West African states on the economic integration of the West African sub region. It also

examined whether the low level of development of science and technology undermined the

economic integration of the sub-region. The justification for the study arises from the debate in

extant literature on the impact of globalization on regional or sub-regional economic integration.

The two schools of thought that are discernible from the literature on globalization and regional

integration are those who see globalization’s concern with economic liberalization as being

helpful to the goal of regional economic integration, and those that perceive the requirements of

liberalization as espoused under globalization to be inimical to it. The latter group believe that

whereas liberalization encourages integration, such integration can only occur in regions with

globally competitive economies like the European Union whereas for regions dominated by

economies that are uncompetitive, it actually encourages vertical integration with countries of

the former group of countries which in turn undermines the integration of the latter group of

countries.

To explore this web of intricate relationships, the study explored the following research

questions:

3. Does the liberalization of the economies of African states undermine regional economic

integration of the sub-region? and

4. Does the low level of development of science and technology in the West African sub-

region undermine its economic integration?

The study accordingly proposed the following hypotheses for investigation:

1. The liberalization of the economies of West African states undermines regional economic

integration of the region; and

2. The low level of development of science and technology in the West African sub-region

undermines its regional economic integration.

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To test the hypotheses, the study collected and analyzed data using the qualitative

descriptive technique. It adopted the open regionalism variant of the integrationist theory as

espoused by Iglesia (1997:9), Henderson (1994), and Estrada, 2005: 7) among others as its tool

of analysis while employing the ex-post-facto research design. To measure the level of

integration in the West African sub-region following the spate of privatizations and deregulations

by the countries of the region, the study examined level of trade between and among the

countries of the region prior to and after the spate of liberalizations. It drew evidence from such

sources as the reports of the United Nations Commission on Trade and Development

(UNCTAD) for various years. It also took evidence from the UN Global Competitiveness Index,

United Nations E-Government Survey 2012 and other official and secondary source materials.

The study found that intra-regional trade in West Africa is still low compared to her trade with

the rest of the world. It also found that the bulk of exports of the countries of the sub-region are

made up of primary commodities with little or no value addition. It also found that the level of

industrialization in the region is still abysmally low and that the region still suffers severe

technological and infrastructural gap all of which render the economies of the countries of the

sub-region grossly uncompetitive.

On the strength of the available empirical evidence therefore, the study found as follows:

1. That the liberalization of the economies of West African states undermines economic

integration of the region; and

2. That the low level of development of science and technology in the West African sub-

region undermines its economic integration.

6.2 Recommendations

Following from the findings, the study makes the following recommendations in respect

of the integration of West African economies:

• For the region to actualize the vision of greater economic integration, it must move

beyond futile attempts at market integration towards cooperation in scientific,

technological and industrial development;

• Related to this is the need for individual countries of the sub-region to pursue the

policy industrialization along the areas of their comparative advantage. This they

must do through massive investment in education, particularly scientific and technical

education;

105

• Third is the need for massive infrastructural development (roads, railways, power

line, air services and telecommunications) of the sub-region; and

• Finally, ECOWAS political leaders must henceforth work towards transcending the

drive towards the integration of governments and institutions and aim for the

integration of peoples, skills and competences. One way to do this is through the

revision and renewed implementation of the ECOWAS Protocol on Free Movement

of Persons, Goods and Capital.

106

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