As we are just entering a new year, let me remind readers that when the idea of globalisation was taking root in the western countries early in the 1980s, little did anybody know that it would later sweep across the world. Today, we live in the age of globalisation. It is an age that is propelled and greatly influenced by technological advances such as information technology, particularly the internet and cell phones, growing mobility of labour, dismantling of artificial borders and trade barriers, all of which are leading to the development of a global village. In fact, globalisation has led to the development of 24- hour financial market, the development of 24- hour working, shopping and banking across the world.
Globalisation will continue to rule business and commerce. It will continue to change the way we work, as more and more companies will be globalised so that they can tap from the advantages of globalisation. It will also change our idea of going to the office early in the morning and returning late in the evening and change our idea of staying on one career all life-long. To cope with globalisation, we must henceforth make ourselves adaptable to acquisition of many professions so that we can change our professions with relative ease.
However, the era of globalisation can be contrasted with the development path pursued many decades ago by the western countries. At that time and prior to 1980, their governments emphasised development through inward-looking economic policies. At that time, western countries deliberately adopted policies that were designed to insulate their economies from the world market in order to give their domestic industries an opportunity to advance to the point where they could be competitive. The Soviet Union and China soon copied the same inward-looking economic
policies.
The policy of development via import substitution, for example, was often associated with protective tariffs and subsidies for key industries. Nigeria too joined other developing countries to embark on import substitution policies. Nigeria embarked on iron and steel complexes like rolling mills in Oshogbo, Jos and Katsina. It also set up a Direct Reduction steel project at Aladja, near Warri. Motor assembly plants were also set up. Volkswagen assembly plant in Lagos (VW) and the Peugeot automobile assembly plant in Kaduna, were among many other factories that were set up to reduce imported varieties of these products and to provide employment opportunities for Nigerians.
In the 1970s, performance requirements on foreign investments were also common. These measures often required foreign investors to employ local workers in skilled positions and to purchase inputs from domestic producers, as ways of ensuring technology transfers.
At that time, it was also common for developing countries to restrict capital flows. This was done for a number of reasons: to increase the stability of currencies, to encourage both foreign corporations and citizens holding large amounts of domestic currency to invest within the country and to use the allocation and price of foreign exchange as part of an industrial or development policy.
In fact, the most industrialised countries in the world actually developed under conditions opposite to those imposed by the World Bank and the International Monetary Fund on African governments. The United States and the other western countries accorded a central role to the state in economic activity. They all practised strong protectionism, with subsidies for domestic industries. But the World Bank and IMF with their programmes often force African countries to cut back or abandon the very provisions, which helped rich countries to grow and prosper in the past.
In fact, every rich nation today has developed because, in the past, their governments took major responsibility to promote economic growth. There was also a lot of protectionism and intervention in technology transfer. There was an attempt to provide some sort of equality, education, health, and other services to help enhance the nation.
China is one of such countries just as many of the Western countries, at one time or the other, in the past, put in place protectionist measures to achieve economic growth and technology transfer.
The industrialised nations understood that some forms of protection allowed capital to remain within the economy, and hence via a multiplier effect, help enhance the
economy.
More significantly, the policies of the World Bank and IMF have impeded Africa’s development by undermining Africa’s health. Their free market perspective has no consideration for the health care of the citizens as an integral component of an economic growth and human development strategy. Instead, the policies of these institutions have caused deterioration in health and in health care services across the African continent.
Joseph Stiglitz, a former Chief Economist of the World Bank, in his book, “Globalisation and its Discontents” highlighted many issues, criticisms and aspects of IMF/Washington consensus ideological fanaticism that have hindered development, and in many cases, as he pointed out, worsened situations. Indeed, it is surprising and also quite illuminating to get an insider illustration of the workings of some large institutions like the IMF/World Bank in this way.
One of the authors of a paper from the IMF admitted the failure of IMF policies for the poorest countries, saying that much of sub-Saharan Africa had been under IMF and World Bank programmes for the past three decades. While a modicum of macroeconomic stability has been achieved, progress has been spotty at best. Another working paper from the IMF suggested that trade liberalisation had crippled some governments of poorer countries; an indication that trade liberalisation in poor countries might be harmful to their economies.
For real free trade to be effective, countries with similar strength economies must reduce and if possible, remove such protective measures when trading with one another. However, it is almost economic suicide for developing countries to try to compete in the global market place at the same level as the more established and industrialised nations.
An example of this can be seen with the global economic crisis of 1997 to 1999 that affected Asian countries in particular. A UN report looking into the economic crisis suggested that such nations should rely on domestic solutions for growth, diversifying exports and deepening social safety nets.
Against the above background, African countries must henceforth hold their destinies in their hands. While trade is important, African countries must shake off their dependence on primary commodity exports, a problem underlying not only their marginalisation from world trade but also their chronic debt problems. Many African countries rely today on a narrow range of agricultural and mineral products as they did some 30 years ago, and suffer the consequences of inexorably declining export earnings. Going forward, they must diversify their economies. They must not only produce primary agricultural products and solid minerals only, they must process and market them.
They must also look for wider markets for these products and focus on becoming global players in the production, processing and marketing of these products. They must seriously consider trade among African countries and copy engineering as the solutions to their reliance on the Bretton woods institutions for solutions to their underdevelopment problem.
