Globalization or Marginalization?
Past Strategies, Lessons and Way
Forward
1.0 Introduction
Globalization refers to a process of growing integration of economies and societies
through the cross-country flows of information, ideas, activities, technologies, goods,
services, capital, and people. It should pointed out from the outset that globalization
is multi-dimensional; it encompasses economic, political, social and cultural
dimensions. In this context, globalization needs to be interpreted comprehensively in
all its major dimensions relating to trade, investment, technology, production,
networks, mobility of people and ideas, cultural and environmental issues, as well as
new actors in the game (e.g. civil society organizations). Globalization process has
led to rapidly increasing complex interactions between societies, cultures, institutions
and individuals worldwide.
The increased international economic integration in this context has impacted
differently on different economies in the world. Some countries have benefited from
globalization having taken advantage of the opportunities created by international
trade and flows of capital and technology to bring about economic progress. Yet
other countries have not benefited from the opportunities presented by globalization,
instead they have been faced by the threats of globalization and lost out. These
countries are either already marginalized or are facing a high risk of being
marginalized.
Marginalization implies a challenge from the growing gap between societies at
different levels of development or between different groups in the same societies.
Both types of marginalization are raising concern hence the need to address the
question of accelerating development in a country or region and in the process
integrate as an effective participant in the global economic system.
This paper reviews past efforts and strategies that were adopted to address the
problem of marginalization in the global economy with the hope of enhancing
participation in the global economy. It addresses the strategies adopted in the post
Arusha phase (1967-85) and in the post-Adjustment phase (1986-present), identifies
lessons from experience and makes recommendations on the way forward.
2.0 Post-Arusha Tanzania
The post-independence period was associated with pursuit of market economic
policies , private sector development and foreign investment. Disappointments with
shortfalls in resource inflow from the private sector and foreign investment during
the first five year plan (1964-69) and concerns of political economy, fearing that the
economy was largely in the hands of aliens, precipitated the Arusha Declaration of
1967. The model which was adopted contained policies towards nationalization of
the major means of production and even competition. One implication of this policy
shift is that major investments would from that time be made by government directly
or through its subsidiary parastatal
3.0 Structural Adjustment Policies and post-adjustment
4.0 Lessons from own experience and that of successful exporters
5.0 Recommendations for the way forward
Policies to promote participation in the global economy
The formulation of economic policies for regional integration in Africa should be
guided by the following realities:
Considering that Africa has been increasingly marginalized in the
globalizing world, there is need to strive to position itself
appropriately in the global economy.
Carving an appropriate position in the world economy will require
policies which enhance market access and those which increase the
capacity to supply competitively. This will mean that as Africa
strives to remove barriers to developed country markets it will at
the same time be building the capacity to produce and supply
competitively in the world market.
The dominant paradigm of market forces and private sector driven
development will be adopted in the formulation of policies. The
policies and institutional framework to manage the market forces
will reflect the development objectives and realities in Africa.
The fruits of development in Africa should be broadly shared to
benefit the majority of the people of Africa.
Macroeconomic Policy management: a regional approach
What is needed now is to make progress on three fronts: to continue
improving the macroeconomic policy environment and governance; to
promote ownership of the process of formulating macroeconomic
policies and to adopt a regional approach to coordinating and
harmonizing national policies to ensure sustainability of
macroeconomic stability and a conducive environment for various
actors to contribute for accelerating regional integration in Africa.
The formulation of all macroeconomic policies such as fiscal and
monetary policies and trade policies should be coordinated and
harmonized at sub-regional and regional level with a view to
achieving national and regional development objectives while
promoting regional integration.
A number of African countries have made progress in preparing
poverty reduction strategy papers (PRSPs). The PRSPs have been
prepared usually in order to access debt relief in the context of HIPC.
Although initially they were introduced by BWIs, they contain key
features for promoting development and improving the policymaking
in Africa. The approach to the preparation of PRSPs provides for
features such as the poverty focus, comprehensiveness policy making
to integrate economic and social dimensions, promoting ownership
and encouraging broad participation.
The PRSPs, however, have been prepared with a national focus
without explicitly taking into consideration regional issues and
regional integration. Countries belonging to the same regional
communities have undertaken the preparation of PRSPs separately,
often at different times, without making reference to what the other
members were doing in their PRSPs. The initiative that ECA has
taken to facilitate the exchange of experiences and lessons among
African countries is a step in the right direction.
What is needed now is to continue to promote ownership and
participation in the preparation and improvement of PRSPs with
attention to regional coordination and harmonization with a view to
ensuring that policies contained in the PRSPs contribute to promoting
regional integration. Countries should coordinate and harmonize
their approaches to prioritization, policies to achieve poverty
reduction and growth strategies pursued to reduce poverty. Such
coordination and harmonization should be done with a view to
accelerating regional integration.
Cross- cutting policies such as investment policies and social policies
notably HIV/AIDS policies.
In order to build the capacity to supply competitively the
investment activity in the region is very crucial. Policies for
promotion of cross-border investments both by local and foreign
investors deserve high priority. Technology which is the needed
for firms to attain competitiveness largely comes through the
investment activity. Promotion of cross-border investments will
require that investment policies be coordinated and harmonized in
the region. Investment facilitation and a conducive regulatory
framework will need to be put in place in a coordinated and
harmonized manner.
Coordination and harmonization of social policies will be
necessary for addressing social challenges facing the region. In
particular policies for addressing social ills and scourges, which
easily cross borders, should receive priority. In this context,
policies towards preventing and controlling the spread of
HIV/AIDS should be given top priority. Individual countries have
started to make progress in this area. For instance, within the East
African Community, Uganda had an earlier start in fighting AIDS
followed by Tanzania and later Kenya. The three countries,
however, have been taking policy initiatives separately not in a
coordinated manner. What is needed now is a regional approach to
the formulation and implementation of these policies.
Sectoral Policies
Industry is one sector which has suffered most from trade
liberalization under structural adjustment policies. Yet
industrialization is crucial for transformation and diversification of
African economies. There is need for revisiting industrial policy in
the new context. The new industrial policy should promote
competitiveness in firms which have the potential to be
competitive, promote investments in the technology needed for
competitiveness to be achieved, promote the provision of
supportive services and formulate trade policies which provide
breathing space for firms which are undergoing the transition
towards efficiency. Policies to promote industrialization will need
to be brought back to the agenda with a view to promoting regional
integration.
Infrastructure development is necessary for reducing the cost of
doing business and for facilitating balanced development within
regions and within countries if it is sufficiently spread out within
the region and within individual countries. There is need to
coordinate and harmonize policies, regulatory frameworks and
promotion of public-private sector partnerships in the development
of infrastructure.
The emergence of a knowledge economy and the centrality of
technology in raising productivity in the economy and in driving
international competitiveness have provided the context for
bringing science and technology back to the development agenda
in Africa. Priority should be given to the coordination and
harmonization in three key areas:
(i) Education policies to ensure that the requisite human
resources are prepared to cope with the challenges of science
and technology in the 21st century.
(ii) Policies to promote access to technology. These policies will
be designed to enhance access to international sources of
technology including policies towards building the capacity
to negotiate in TRIPS and other technology related
negotiations in international fora and policies to promote
technology capability building at national and regional
levels.
(iii) Policies to promote investments in R&D at national and
regional level and through strategic partnerships (e.g. with
institutions in more technologically advanced countries and
technology acquisition through FDI).
The Policy making process
The capacity for policy making and the approaches adopted for policy
making will need to cope with the demand for accelerating regional
integration. This will require national and regional level action on three
fronts:
(i) Capacity building in policy analysis and policy coordination at
national level as well as at regional level. It should be pointed out
that whatever measures are taken at regional level to accelerate
development of the member countries, it will be necessary to
improve domestic policy making at national level as a prerequisite
for these measures to be effective. For instance, the EU adopted
regional level measures to accelerate the development of the lesser
developed members. These measures were more effective in
accelerating development in Ireland than in Greece. One reason
for this differential response has been attributed to the differential
quality of national policies in the two countries. Regional
integration needs good quality national policies for accelerated
development to be attained. Hence the importance of capacity
building in policy analysis and policymaking processes at national
level.
(ii) Democratization of the policy making process to provide for
institutionalized involvement and participation of all the key
stakeholders and actors in development at national and regional
level.
(iii) Adopting regional approaches to policy making in order to address
regional issues more directly and to coordinate and harmonize
national policies more effectively. This require the setting up or
strengthening of regional level policy coordinating and
harmonizing institutional framework with clearly defined criteria
for making peer review and providing peer pressure to ensure
convergence of national policies.