Reading through the rejoinder titled “Africa’s development: The fallacy of self-sufficiency” in Businessday Newspaper of 26th and 27th August 2014 by Dr. Olu Fasan, a Visiting Fellow at the London School of Economics (LSE), one cannot but throw the hat into the ring. The (anti)thesis is a response to a lucid synthesis on Africa and the global economy titled “Beyond Africa Rising” delivered by Dr. Kingsley Moghalu (Deputy Governor, Central Bank of Nigeria) at the LSE, which was subsequently published in Thisday and The Guardian Newspapers in August 2014. Among Dr. Fasan’s rich experiences and accomplishments, the erudite scholar was also a senior trade advisor to the UK government. A thoroughbred intellectual, no doubt, but as he rightly quoted in the article “the philosophical systems constructed by great thinkers are not always without fissures and flaws”; fatally flawed in this instance.
In a bid to deconstruct Dr. Moghalu’s call for an endogenous growth model that is inside-out in its perspective and less globalisation-centric, Dr. Fasan asserts rather profusely –“the idea that in a world of complex interdependence and linkages, a nation-state can ignore global economic realities and do what it wants at home is nothing but a false prospectus”. “Africa needs openness and, by extension, globalisation to achieve technological convergence”. He further drew on the words of Thomas Piketty to support his argument – “The diffusion of knowledge is not like manna from heaven: it is often hastened by international openness and trade”. The flowery intellectual was not done. Still in the mood of globalisation triumphalism and too possessed of a world without borders (he could have been a bit more prescient) he continued – “these anti-globalisation and self-sufficiency worldviews, however, pose enormous challenges”.
Moving on, he then suggested the most ruinous path to Africa’s development– “Africa should embrace the competition and opportunities that globalisation and particularly openness to trade bring. To this end, Africa needs to embark on supply-side reforms to improve the productive capacities of its industries and enable them to produce goods and develop services that can compete in international markets.” To cut through the jargon and explain the proposition in clear terms – Africa should throw its borders open and compete in an “unregulated” global market.
In response, one could have easily debunked the myth and fallacies embedded in his flamboyant glorification, with faint reservation, of globalisation as the panacea to Africa’s economic future by simply referring him to a book titled “Globalisation and its discontent” – a thought provoking piece written by Joseph Stiglitz (Nobel prize winner for Economics, former Chief Economist at the World Bank, Chairman of President Clinton’s Council of Economic Advisers and Professor of Finance & Economics at Columbia University). Dr. Fasan may also want to (re)read a compelling article titled “Why the world isn’t flat” by Pankaj Ghemawat (Professor of global strategy at IESE Business School and Professor of Business administration at Harvard Business School). The stakes are rather too high – given his pedigree and the capacity of his euphoric and extreme views on globalisation to drive mass illusion, a more prudent choice is to provide counter-evidence through this medium for the sake of the unsuspecting public. But suffice to say that trumpeting this version of a globalised world – or worse, using it as the “gospel-truth” for policymaking is not only unproductive, it is dangerous, to echo the words of Professor Ghemawat. Clearly, he has ignored the very global economic realities he referred to and may have also mistaken self-sufficiency for isolationism.
Dr. Fasan has this to say – “Dr Moghalu is certainly of the radical and structuralist school of international relations. He believes that globalisation has condemned Africa to the periphery of the global economy, and favours a more muscular state hand on the levers of capitalism”. To this there is an apt riposte – Dr. Fasan is an adherent of the extreme form of market fundamentalism far removed from the real world. State capitalism comes in different form and shape and is there no overwhelming evidence of visible muscular state hand on the levers of capitalism globally? If in doubt, please hear Stiglitz – “most of the advanced industrial countries , United States and Japan inclusive, had built up their economies by wisely and selectively protecting some of their industries until they were strong enough to compete with foreign countries.” Evidently, this is not the kind of wide-eyed globalisation that Fasan is fervently preaching to African countries.
The point is – there is no unfettered market anywhere. Perhaps a few examples will suffice which are unlikely to be unfamiliar to our Dr. In Europe, there was no free flow of capital until the seventies and till today there are high barriers to export, under different guises, of the few primary commodities produced in Africa. While the industrialized countries have proselytized and forced the opening of the markets in developing countries to their industrial products, they have kept their markets closed to goods from developing countries which have threatened their economies. Developing countries are often lectured on the evils of subsidy while billions are provided annually as subsidies for industries and the agricultural sector by advanced economies. Can Africa compete in this kind of global market without its own form of barbed wire?
Is it globalisation when anti-dumping duties (never mind the appellation, it is nothing but naked protectionism) were imposed by the United States on CEMEX of Mexico for cement importation in the 80’s. In not too distant past an aluminum cartel was born in the U.S, with the support of the government, to ward off competition from Russia – that does not sound like openness. Therefore, is there really any capitalism without cronies and can it sometimes serve the enlightened interest of a nation? – A question for deep reflection. In South Korea’s quest for development, the country reigned-in on the free spirit of free market – Korea had high import barriers in the 60s and 70s. In 1987, Korea grudgingly opened its doors to foreign and US automobiles – accompanied by 200% import tariff on the price of every car. Here is the interesting part – any Korean thoughtless enough to buy one would expect a scrupulous government scrutiny.
In 2013, the EU almost imposed hefty tariff on solar panels from China on the allegation of state subsidy but for fear of retaliatory actions. The two economic powers later settled for price regulation on the product. These are just a few examples of dykes and embankments constructed by governments to protect their local industries. The world is not yet as flat as Dr. Fasan thinks. In fact, the world is not flat. This is the real world that we live in and this is the path followed by all developed countries without exception.
Dr. Fasan concluded his eloquent exposition with an acknowledgement of the distortions in international trade but in a tone of inevitability, advised Africa to engage actively at the WTO to set trade agendas, in order to change the rules of international trade. Strangely, what he did not tell us is that allocation of votes at the WTO is a function of economic power and the balance of power at the WTO, as presently constituted, is tendentiously skewed against African countries. It will be nice to go beyond rhetoric and give concrete suggestions on how Africa can actively engage the world to set trade agendas. In a lopsided world where perspectives and interests of economic powers dominate global institutions, it is extremely naïve to think trade concessions will be handed to Africa through mere engagement.
In conclusion, should Africa recoil into isolationism? No. Indeed, it is not feasible. Complete protectionism has never worked and will likely not in future but neither has unregulated liberalization. Nothing can be truer than Dr. Moghalu’s assertion that Africa needs an endogenous growth model that is inside-out in its perspective while constructively engaging with the rest of the world. As Jeff Immelt, CEO of GE, rightly stated in 2006, “even if you put globalisation to a popular vote in the US, it would lose” why should it assume the reign of power in Africa?
Ubohmhe Glenn Olowojaiye