Pádraig Carmody: Africa’s economic development and globalisation

Interview

In your book “Neoliberalism, Civil Society and Security in Africa”, you conclude that “Free market policies have…failed to reverse deepening poverty on the continent.” What were your main reasons for this conclusion?

The statistics on poverty from the United Nations, the World Bank and other institutions showed that absolute poverty deepened in Sub-Saharan African in the 1990s and early 2000s. This was despite the fact that free market, or structural adjustment policies had been implemented by most African governments during that time.

The response to the failure of economic liberalization to lift living standards was not to question the model itself, for the most part, but to press for deeper liberalization and some reform of educational, health and administrative systems. The argument was that reform had not been implemented faithfully and that if it had been poverty would have been reduced.

The second line of argument was that economic liberalization was a “necessary but not sufficient condition” for economic development. Market failure in the delivery of public goods such as primary education and health care had to be combated by the universal provision of these, largely irrespective of quality.

The effects of economic liberalization varied by context. In some cases natural resource intensive growth was achieved and the foreign exchange constraint on investment was partially released through increased inflows of concessional loans and aid to “strong adjusters”.

However the environmental and economic sustainability of even the relatively strong performers has been questioned. In other cases, particularly in countries with relatively developed manufacturing sectors liberalization was sometimes disastrous. My fieldwork in Zimbabwe in the mid-1990s focussed on the textile, clothing and footwear industries and the deindustrialization there that accompanied liberalization as firms couldn’t compete with Chinese and other Asian imports.

Why has Africa been “marginalized by the process of globalization” since the 1980s?

Africa was largely marginalized by the process of globalization from the 1980s onwards for a number of reasons.

Firstly, the economic structures inherited from colonialism did not serve the continent well. The emphasis on low-value added cash crop and resource exports trapped the continent in a cycle of unequal trade as the prices of these commodities tended to decline, whereas the prices for manufactured goods which the continent imported tended to rise.

Secondly, much of the import-substituting industry which was built up after independence was relatively inefficient and couldn’t compete with Asian imports domestically or in export markets once economies were liberalized. The rise of Asian actually displaced many African manufacturers reinforcing resource dependence. There were also political economy issues related to the mismanagement of economies, the colonial legacy of authoritarianism and poor governance which hampered economic development.

All of this meant that the sub-continent was poorly positioned to take advantage of the opportunities and economies of scale offered by a globalizing economy. Research and development, and technical capabilities are key to competing in the global economy and the political economy of most African economies meant that they failed to develop national systems of innovation which would allow them to compete.

The emphasis on enclave-based natural resource exports has often been very profitable for domestic political elites and consequently there has been little incentive to try and diversify economies away from this. The “resource curse” can then be thought of as a mode of governance, despite all of the social and economic problems it brings with it.

Dambisa Moyo argues in her recently published book “Dead Aid” that “aid has had no appreciable impact on [Africa’s economic] development.” To what extent do you agree?

I reviewed Moyo’s book and I think the thrust of her argument, despite this quote, is that aid has been actively detrimental to African economic development through distortionary macro-economic effects, enhanced opportunities for political corruption and the fostering of a culture of dependence.

To some extent we really can’t judge the effects of aid as there is a counterfactual involved. We can’t know what the continent would look like in the absence of aid. My overall sense is that while Moyo’s book is engaging and provocative it is polemical. It neglects the positive impacts of aid and focuses almost exclusively on the negatives. In reality the impacts of aid are dialectical: some good and some bad. Aid has remained one of the ways in which Africa remained connected to the global economy. It provides vital foreign exchange for imports and can have real impacts on livelihoods and standards of living, if it is well designed and delivered.

The problem with aid is that it does have some of the effects that Moyo describes, but also that it often comes with negative policy conditions attached. This is one of the issues that Jonthan Glennie deals with in his book “The Trouble with Aid: Why Less Could Mean More for Africa”.

I don’t think that aid has not had an impact, but that it has had both good and bad impacts which often cannot be disentangled. For example, aid has often reinforced authoritarian states. Some statistics show that most American aid goes to non-democracies for example. However, these states, such as Uganda or Rwanda have sometimes been more effective in their development interventions. Uganda famously brought down its HIV prevalence rate for example.

However, reliance on aid is another manifestation of economic extraversion, with attendant negative political implications. For example, Uganda’s dependence on aid meant that when the Bush Administration in the US began to emphasise abstinence this was mirrored in Uganda and HIV prevalence rates began to rise again, despite earlier successes in rate reduction, although there were also many other factor fed into this.

Which local and national factors explain the poor economic development track record of most African countries?

It may not be very fashionable, but I think the impact of political and economic legacy of colonialism is largely responsible. The colonial legacy of authoritarian states, poorly developed markets and civil societies meant there has been a lack of accountability of the state in many cases in the post-colonial period.

Also the shift towards a global informational economy has largely by-passed Africa as a result of its colonial economic structures, although the profusion of mobile phones is changing that to some extent on the continent. The continent though remains largely a receiver rather than a generator of new technology and so even mobile phones will not have the revolutionary economic impacts often ascribed to them.

In that way I don’t think we can causally isolate poor economic performance to national or local factors. Rather the local and national constitute the global and the “global” in turn becomes embedded and reproduced in the “national” and “local”. This is part of the problem with the current “good governance” discourse. It tries to blame national elites for the poor management of African economies without examining how those elites are imbricated in broader global power structures.

I think poor economic performance and lack of diversification result both from technological underdevelopment (a colonial legacy) and the bargain between domestic elites and transnational corporations and powerful states that as long as resources continue to be exported authoritarian elites will continue to be supported, rhetoric on governance notwithstanding.