Maladjusted African Economies and Globalisation

Abstract

The policies of adjustment pursued in the 1980s and 1990s promised African coun- tries not only 'accelerated development' but also a means to end Africa's marginalisation from the process of globalisation by encouraging foreign invest- ment and the expansion and diversification of exports. While for much of the 1980s and early 1990s, the poor performance of African economies was blamed on the failure of African governments to adopt 'the right policies', by the mid-1990s, inter- national financial institutions were saying that the significant adjustments made by African economies had led to economic recovery. However, the performance of African economies with respect to both investment and trade diversification re- mained poor. Since this could no longer be explained away by saying that African economies had not adjusted, other explanations were needed: these included insti- tutions, geography, culture and ethnic diversity. In this paper I argue that it is the deflationary policies under the structural adjustment policies (SAPs) that have placed African economies on a 'low growth path' which has discouraged investments, trade expansion and diversification, by undermining the investment-growth-trade nexus. Indeed, as a result of this, African economies have been so maladjusted that they responded poorly to a wide range of economic stimuli.

Full text

Africa Development, Vol. XXX, Nos. 1 & 2, 2005, pp. 1–33
© Council for the Development of Social Science Research in Africa, 2005
(ISSN 0850-3907)
* The author would like to thank Virginia Rodriquez and Nina Torm for research
assistance.
**Thandika Mkandawire is Director of the United Nations Research Institute
for Social Development (UNRISD).
Maladjusted African Economies
and Globalisation*
Thandika Mkandawire**
Abstract
The policies of adjustment pursued in the 1980s and 1990s promised African coun-
tries not only 'accelerated development' but also a means to end Africa's
marginalisation from the process of globalisation by encouraging foreign invest-
ment and the expansion and diversification of exports. While for much of the 1980s
and early 1990s, the poor performance of African economies was blamed on the
failure of African governments to adopt 'the right policies', by the mid-1990s, inter-
national financial institutions were saying that the significant adjustments made by
African economies had led to economic recovery. However, the performance of
African economies with respect to both investment and trade diversification re-
mained poor. Since this could no longer be explained away by saying that African
economies had not adjusted, other explanations were needed: these included insti-
tutions, geography, culture and ethnic diversity. In this paper I argue that it is the
deflationary policies under the structural adjustment policies (SAPs) that have placed
African economies on a 'low growth path' which has discouraged investments, trade
expansion and diversification, by undermining the investment-growth-trade nexus.
Indeed, as a result of this, African economies have been so maladjusted that they
responded poorly to a wide range of economic stimuli.
Résumé
Á travers les politiques d'ajustement qui ont été menées dans les années 80 et 90,
l'on promettait aux pays africains un «développement accéléré»; mais ces politiques
signifiaient également que l'Afrique ne serait plus en marge du processus de
mondialisation, grâce au système d'encouragement des investissements étrangers et
l'expansion et la diversification des exportations. Au cours des années 80 et au
début des années 90, l'on avait expliqué la pauvre performance des économies
africaines par l'incapacité des gouvernements africains à adopter de «bonnes
politiques», mais, au milieu des années 90, les institutions financières internationales
affirmaient que les ajustements significatifs réalisés par les économies africaines
1.Thandika.p65 13/05/2005, 18:421

2
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
avaient permis une certaine relance économique. Cependant, la performance des
économies africaines concernant les investissements et la diversification commerciale
est restée faible. Comme il n'était plus possible d'expliquer cela par le problème
d'ajustement économique, il a fallu trouver d'autres explications, parmi lesquelles:
les institutions, la géographie, la culture ou encore la diversité ethnique. Je déclare,
dans ce document, que ce sont les politiques déflationnistes des politiques d'ajustement
structurel (PAS) qui ont dirigé les économies africaines vers un «chemin de lente
croissance», décourageant les investissements, l'expansion et la diversification
commerciale, en minant le lien investissement-croissance-commerce. De ce fait, les
économies africaines ont été si mal ajustées qu'elles n'ont répondu que faiblement à
un éventail de stimuli économiques, pourtant assez large.
Introduction
Globalisation is a multifaceted process that defies unique definition. Different
authors emphasise different things about the causes and effects of
globalisation, partly because of differences in the definition of the process;
partly because of differences in focus; and partly because of different
ideological predispositions about the process itself. In this paper I will treat
globalisation as a process whereby national and international policy-makers
proactively or reactively promote domestic and external liberalisation. Africa
illustrates, perhaps better than elsewhere, that globalisation is very much a
policy driven process. While in other parts of the world, it may be credible to
view globalisation as driven by technology and the 'invisible hand' of the
market, in Africa, most of the features of globalisation and the forces
associated with it have been shaped by the BWIs (Bretton Woods Institutions)
and Africa's adhesion to a number of conventions such as the World Trade
Organisation, which have insisted on opening up markets. African
governments have voluntarily, or under duress, reshaped domestic policies
to make their economies more open. The issue therefore is not whether or
not Africa is being globalised, but under what conditions the process is taking
place, and why, despite such relatively high levels of integration into the
world economy, growth has faltered.
The word that often comes to mind, whenever globalisation and Africa
are mentioned together, is 'marginalisation'. The threat of marginalisation
has hung over Africa's head like Damocles' sword, and has been used, in
minatory fashion, to prod Africans to adopt appropriate policies.
1
In most
writing, globalisation is portrayed as a train on which African nations must
choose to get on board or be left behind. As Stanley Fischer, then Deputy
Managing Director of the International Monetary Fund (IMF), and associates
put it, 'globalisation is proceeding apace and Sub-Saharan Africa (SSA) must
decide whether to open up and compete, or lag behind' (Fischer et al. 1998:5).
The Economist, commenting on the fact that per capita incomes between the
1.Thandika.p65 13/05/2005, 18:422

3
Mkandawire: Maladjusted African Economies and Globalisation
United States and Africa have widened states 'it would be odd to blame
globalisation for holding Africa back. Africa has been left out of the global
economy, partly because its governments used to prefer it that way' (The
Economist 2001:12).
Globalisation, from the developmental perspective, will be judged by its
effects on economic development and the eradication of poverty. Indeed, in
developing countries, the litmus test for any international order remains
whether it facilitates economic development, which entails both economic
growth and structural transformation. I shall argue that in the case of Africa,
this promise has yet to be realised. The policies designed to 'integrate' Africa
into the global economy have thus far failed because they have completely
sidestepped the developmental needs of the continent and the strategic
questions on the form of integration appropriate to addressing these needs.
They consequently have, thus far, not led to higher rates of growth and, their
labelling notwithstanding, have not induced structural transformation. Indeed,
the combined effect of internal political disarray, the weakening of domestic
capacities, deflationary policies and slow world economic growth have placed
African economies on a 'low equilibrium growth path' from which the anaemic
GDP growth rates of 3
–4 percent appear as 'successful' performance. I will
illustrate this point by looking at two channels through which the benefits of
globalisation are supposed to be transmitted to developing countries
– trade
and investment.
The paper is divided into three sections. The first section deals with what
globalisation and the accompanying adjustment policies promised, what has
been delivered and what has happened to African economies during the 'era
of globalisation'. The second deals critically with some explanations of Africa's
failure. And the last part advances an alternative explanation of the failure
with respect to trade and access to foreign finance.
The promises and achievements of globalisation
The promise of trade
Expanded opportunities for trade and the gains from trade are probably the
most enticing arguments for embracing globalisation. The promise of
Structural Adjustment Programmes' (SAP) was that through liberalisation,
African economies would become more competitive. As World Bank economist
Alexander Yeats (1997:24) asserts, 'If Africa is to reverse its 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'. Trade liberalisation would
not only increase the 'traditional exports' of individual countries, but would
1.Thandika.p65 13/05/2005, 18:423

4
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
also enable them to diversify their exports to include manufactured goods
assigned to them by the law of comparative advantage as enforced by 'market
forces'. Not only would trade offer outlets for goods from economies with
limited markets, but also, perhaps more critically, it would also permit the
importation of goods that make up an important part of investment goods
(especially plant and equipment) in which technology is usually embodied.
By the end of the 1990s, and after far reaching reforms in trade policy,
little had changed. The few gains registered tended to be 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). Indeed, some increases in exports of manufactured goods even
occurred as the manufacturing sector contracted. According to Francis Ng
and Alexander Yeats of the World Bank.
No major expansion occurred in the diversity of products exported by
most of the Sub-Saharan African countries, although there are one or two
exceptions like Madagascar and Kenya. Indeed, the product composition
of some of the African countries' exports may have become more concen-
trated. Africa's recent trade performance was strongly influenced by ex-
ports of traditional products which appear to have experienced remar-
kably buoyant global demand in the mid-1990s' (Ng and Yeats 2000:21).
Furthermore, recent changes in Africa's exports indicate that no general in-
crease had occurred in the number of industries in which most African coun-
tries have a 'revealed' comparative advantage. Indeed, after decades of re-
forms, the most striking trend, one that has given credence to the notion of
'marginalisation of Africa', is the decline in the African share of global non-
oil exports which are now less than one-half what they were in the early
1980s (Ng and Yeats), representing 'a staggering annual income loss of US$68
billion – or 21 percent of regional GDP' (World Bank 2000).
The promise of additional resources
A persuasive promise made by BWIs was that adhesion to its policies would
not only raise domestic investment through increased domestic savings, but
would relax the savings and foreign exchange constraints by allowing
countries to attain higher levels of investment than would be supported by
domestic savings and their own foreign exchange earnings. One central feature
of adjustment policies has been financial liberalisation. The focus is on the
effects of interest rates on 'loanable funds', and as the price variable that adjusts
to equilibrate the supply of savings to investment. The major thesis has been
that 'financial repression' (which includes control of interest rates and credit
rationing by the state) has discouraged savings and led to inefficient allocation
of the 'loanable funds' (Fry 1988; Shaw 1973). The suggested solution then is
1.Thandika.p65 13/05/2005, 18:424

5
Mkandawire: Maladjusted African Economies and Globalisation
that liberalisation of markets would lead to positive real interest rates which
would encourage savings. The 'loanable funds' thus generated would then be
efficiently distributed among projects with the highest returns through the
mediation of competitive financial institutions. Significantly, in this view, saving
precedes investment and growth. After years of adjustment, there is little
discernible change in the levels of savings and investment (See Table 1).
Table 1: Savings and Investment in Africa 1975–2001:
periodical average (as % of GDP)
Indicator 1975–84 1985–89 1990–97 1998 1999 2000 2001
Gross Domestic Savings
SSA 19.9 15.7 16.0 14.5 15.6 18.7 17.4
SSA excl. SA & N 14.8 13.4 12.6 11.6 13.5 15.6 15
Gross National Savings
SSA 18.5 11.6 12.4 12.4 12.7 15.3 14.2
SSA excl. SA & N 15.3 9.2 8.6 10.7 11.3 12.7 12.6
Resource Transfers abroad
SSA 1.5 4.2 3.6 2.1 2.9 3.4 3.2
SSA excl. SA & N -0.5 4.2 4.0 0.9 2.2 2.8 2.3
Gross Domestic Investment
SSA 20.5 12.6 16.4 18.6 18.4 17.5 18.4
SSA excl. SA & N 18.3 12.9 17. 6 20.1 20.5 18.3 18.3
Resource Balance
SSA -1.8 0.4 -0.5 -4.1 -2.8 1.2 -1.3
SSA excl. SA & N -5.2 -3.1 -5.2 -8.4 -7.0 -2.6 -3.8
Source:World Bank Africa Database 2003
Note: Gross Domestic Savings (GDS); Resource Transfers (GDS-GNS);
Gross Domestic Investment (GDI); Gross National Savings (GNS).
Perhaps even more attractive was the promise that financial liberalisation
would lead to increased capital inflows and stem capital flight. Indeed, most
African governments' acceptance of IMF policies has been based on the
claimed 'catalytic effect' of agreements with IMF on the inflow of foreign
capital. Governments were willing to enter the Faustian bargain of reduced
national sovereignty in return for increased financial flows. Even when
governments were sceptical of the developmental validity of the BWIs'
policies, the belief
– that the stamp of approval of these institutions would
attract foreign capital
– tended to dilute the scepticism.
1.Thandika.p65 13/05/2005, 18:425

6
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
To the surprise of the advocates of these policies and to the chagrin of
African policy-makers, the response of private capital to Africa's diligent
adoption of SAPs has, in the words of the World Bank, 'been disappointing'.
The market 'sentiments' do not appear to have been sufficiently persuaded
that the policies imposed by the BWIs have improved their attractiveness to
investors. The much touted 'catalytic effect' of IMF conditionality has yet to
assert itself. The scepticism of private investors about the BWIs' stamp of
approval is understandable in light of the history of 'non-graduation' by any
African country. Indeed, there is the distinct danger that, since economies
under BWIs' intensive care never seem to recover, the IMF presence may
merely signal trouble. The BWIs seem to be unaware of the extent to which
their comings and goings are a source of uncertainty among business
entrepreneurs and evidence of a malaise. This said, there is, nevertheless, a
trickle of foreign investment into Africa, but this has not been enough to
increase Africa's share of global Foreign Direct Investment flows (FDI) (see
Table 2). The rise in foreign direct investment in the latter part of the 1990s
is cited as evidence that globalisation and SAPs are working (Pigato 2000).
2
This celebration is premature. There are a number of significant features of
the financial flows to Africa that should be cause for concern over their
developmental impact and sustainability.
Firstly, there is the high country concentration of investment, with much
of the investment going to South Africa. Secondly, there is the sectoral
concentration on mining. Little FDI has gone into the manufacturing industry.
As for investment in mining, it is not drawn to African countries by macro-
economic policy changes, as is often suggested, but by the prospects of better
world prices, changes in attitudes towards national ownership and sector
specific incentives. Thirdly, there is the problem of the type of investment.
The unintended consequence of the policies has been the attraction of the
least desirable form of foreign capital. Most of the new investment (a) has
taken the form of the highly speculative portfolio investment attracted by
'pull factors' that have been of a transitory nature
– extremely high real
domestic interest rates on treasury bills caused by the need to finance the
budget deficit and temporary booms in export prices which attract large export
pre-financing loans (Kasekende et al. 1997) or (b) has been driven by
acquisitions facilitated by the increased pace of privatisation to buy up existing
plants that are being sold, usually under 'fire sale' conditions. Such investments
now account for approximately 14 percent of FDI flows into Africa.
3
Little
has been driven by plans to set up new productive enterprises. Some of the
new investment is for expansion of existing capacities, especially in industries
enjoying natural monopolies (e.g. beverages, cement, furniture).
1.Thandika.p65 13/05/2005, 18:426

7
Mkandawire: Maladjusted African Economies and Globalisation
Table 2: Foreign Direct Investment inflows 1982–2002
(millions of US $ (rows 1-3) and percentages (rows 5-7))
1982-87 1988-94 1995 1996 1997 1998 1999 2000 2001 2002
1.Developing Countries & SA 19,694 54,540 116,132 150,577 197,041 191,845 230,798 246,944 216,220 162,899
2. Sub Saharan Africa (SSA) 1,059 2,150 3,964 3,815 7,951 6,046 8,663 5,364 13,295 7,452
3. SSA w/o SA 1,034 2,075 2,723 2,997 4,134 5,485 7,161 4,476 6,506 6,698
4. SSA w/o SA & Nigeria 655 966 1,644 1,403 2,594 4,433 6,156 3,546 5,402 5,416
5. Row 2 as a share of row 1 5.4 3.9 3.4 2.5 4.0 3.2 3.8 2.2 6.1 4.6
6. Row 3 as a share of row 1 5.3 3.8 2.3 2.0 2.1 2.9 3.1 1.8 3.0 4.1
7. Row 4 as a share of row 1 3.3 1.8 1.4 0.9 1.3 2.3 2.7 1.4 2.5 3.3
Notes: SA indicates 'South Africa' and SSA indicates ' Sub-Saharan Africa'.
Source: UNCTAD World Investment Report 2003.
Such expansion may have been stimulated by the spurt of growth that caused
much euphoria and that is now fading away. It is widely recognised that
direct investment is preferable to portfolio investment, and foreign investment
in 'green field' investments is preferable to acquisitions. The predominance
of these types of capital inflows should be cause for concern. However, in
their desperate efforts to attract foreign investment, African governments
have simply ceased dealing with these risks or suggesting that they may have
a preference for one type of foreign investment over all others.
Finally, such investment is likely to taper off within a short span of time,
as already seems to be the case in a number of African countries. Thus, for
Ghana, hailed as a 'success story' by the BWIs, FDI, which peaked in the
mid-1980s at over US$ 200 million annually
– mainly due to privatisation,
was rapidly reversed to produce a negative outflow.
4
It should be noted, in
passing, that rates of return of direct investments have generally been much
higher in Africa than in other developing regions (Bhattachrya et al. 1997;
UNCTAD 1995). This, however, has not made Africa a favourite among
investors, largely because of considerations of the intangible 'risk factor'
nurtured by the tendency to treat the contingent as homogenous and a large
dose of ignorance about individual African countries. There is considerable
evidence that shows that Africa is systematically rated as more risky than is
warranted by the underlying economic characteristics.
5
Capital flight
Not only is Africa still severely rationed in financial markets, but during
much of the globalisation, there is evidence that Africa is probably a net
exporter of capital. Paul Collier and associates (Collier and Gunning 1997;
Collier et al. 1999) have suggested that in 1990, 40 percent of privately held
1.Thandika.p65 13/05/2005, 18:427

8
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
wealth was invested outside Africa and that in relation to workforce, capital
flight from Africa has been much higher than in other developing country
groups. In a recent more systematic attempt to measure the extent of capital
flight, James Boyce and Léonce Ndikumana show that for the period 1970
–
96 capital flight from sub-Saharan Africa was 193 billion (in US Dollars)
and with imputed interests the amount goes up to US$285 billion. These
figures should be compared to the combined debt of these countries which
stood at US$178 billion in 1996.
The evidence presented in this essay leads to a startling conclusion: far
from being heavily indebted, many African countries are net creditors vis-à-
vis the rest of the world. This is because their private external assets, as
measured by cumulative capital flight, are greater than their public external
debts. For the 25-country sample as a whole, external assets exceed external
debts by $14.5 billion or $106.5 billion, depending on whether we count
imputed interest earnings on the asset side. The region's assets are 1.1 to 1.6
times the stock of debts. For some individual countries, the results are even
more dramatic. Nigeria's external assets are 2.8 times its external debt by the
conservative measure, and 4.1 times higher when we include imputed interest
earnings on capital flight (Boyce and Ndikumana 2000:32).
So far, financial liberalisation has not done much to turn the tide. In a
World Bank study on the effects of financial liberalisation in nine African
countries, Devajaran et al. (1999) conclude that the effects of liberalisation
on capital flight are 'very small'. In response to this failure to reverse capital
flight, the World Bank economists now argue that the capital flight may in-
deed be good for Africa: 'The much-denigrated capital flight out of Africa
may well have been a rational response to low returns at home…Indeed Af-
ricans are probably better off having made external investments than they
would have been if they invested solely at home!' (Devajaran et al. 1999:15-
16). The conclusion ignores the obvious fact that the social benefits of citi-
zens investing in their own country may exceed the private benefits accruing
to individuals.
All this indicates that financial liberalisation per se may not be the pana-
cea for reducing capital flight. Effective policy measures to reduce capital
flight in the African context may need much deeper and more fundamental
changes in the economic and political systems. One policy implication of
both the reluctance of foreign capital to come to Africa and the huge amounts
of wealth held outside Africa has been the calls for policies intended not so
much to attract foreign capital but Africa's own private capital. While this is
a valid option, the political economy of such attraction and the specific di-
rect policy measures called for are rarely spelled out.
6
1.Thandika.p65 13/05/2005, 18:428

9
Mkandawire: Maladjusted African Economies and Globalisation
The failed promise of growth
A comparison between Africa's economic performance during the period over
which globalisation is often said to have taken hold
–the last two decades of
the last century
–and earlier periods, shows clearly that, thus far, globalisation
has not produced rates of growth higher than those of the 1960s and 1970s
(See Figure 1). Per income growth was negative over the two decades, a
serious indictment to those that have steered policies over the decades. This
slower rate of growth is not peculiar to Africa, as is suggested by some of the
'Afro-pessimist' literature.
Figure 1: Sub-Saharan Africa – Annual Growth Rates
in GDP per Capita 1965-2003
Source: World Bank World Development Indicators 2003, IMF World Outlook 2004.
During the period of globalisation, economic growth rates have fallen across
the board for all groups of countries. The poorest group went from a per
capita GDP growth rate of 1.9 percent annually in 1960–80 to a decline of
0.5 percent per year (1980
–2000). For the middle group (which includes
mostly poor countries), there was a sharp decline from an annual per capita
growth rate of 3.6 percent to less than 1 percent. Over a 20-year period, this
represents the difference between doubling income per person, versus in-
creasing it by just 21 percent. The other groups also showed substantial de-
clines in growth rates.' (Weisbrot et al. 2000a, 2000b; Weisbrot et al. 2001).
-5
-4
-3
-2
-1
0
1
2
3
1965-69
1970-79
1980-89
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Year
Growth (%) in GDP per capita
1.Thandika.p65 13/05/2005, 18:429

10
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
The global decline in growth is largely due to deflationary bias in orthodox
stabilisation programmes imposed by International Financial Institutions (IFI).
7
Explaining the poor performance: Has Africa adjusted?
The poor performance of Africa with respect to the channels through which
the positive effects of globalisation would be gained
– increased access to
markets and finance
– is now widely accepted. There are, however,
disagreements over the cause of the failure. The BWIs have adhered to two
explanations. The first one is simply that African countries have rather
incomprehensibly persisted with their doomed 'dirigiste' ways and refused to
swallow the bitter, but necessary pills of adjustment. Inadequate
implementation of reforms and recidivism are some of the most common
themes running through the literature on African economic policy. The World
Bank's (1994) view was that adjustment was 'incomplete' not because of any
faults in the design of the programmes but due to poor implementation.
The second explanation was that not enough time had elapsed to reap the
gains of adjustment and, therefore, of globalisation. Coming from the BWIs,
this is a strange position. It was these very institutions which, in dismissing
the structuralist argument on the inelasticity of response of developing
countries to economic stimuli, claimed that liberalisation would elicit
immediate and substantial responses and bring about 'accelerated
development' (the promise of the Berg Report – World Bank 1981). Indeed,
in the early years, the World Bank was so certain about the response to its
policies that it measured economic success by simply looking at the policy
stance and assuming that this axiomatically led to growth (Mosley et al. 1995).
By the second half of the 1990s, neither of the arguments could be made
with a straight face. African countries had made much more far going
adjustments than in any other region. Indeed, the BWIs themselves began to
proudly point to the success of their programmes, suggesting that enough time
had transpired and a large number of African countries had persevered in
their adjustment as to begin to reap the fruits of the adjustment process. IMF
officials talked about a 'turning point' (Fischer et al. 1998) and claimed that the
positive per capita growth rates of 1995
–97 (4.1 percent) 'reflected better policies
in many African countries rather than favourable exogenous developments'
(Hernández-Catá 2000). According to Stanley Fischer and associates:
Important structural reforms have been implemented in many African
economies in this decade: domestic price controls have been abolished or
at least liberalised in several countries; some inefficient public monopolies
have been dismantled; and a large number of state enterprises have been
privatised. In the external sector, nontariff barriers have been eliminated
in most SSA countries and import duties have been lowered in some,
1.Thandika.p65 13/05/2005, 18:4210

11
Mkandawire: Maladjusted African Economies and Globalisation
exchange rates have been freed and unified in most countries (with Nigeria
a major exception); and restrictions on payments and transfers for current
international transactions have been eliminated in 31 out of 54 of SSA
countries. Most countries also have eliminated direct controls on bank
credit and have established market-determined interest rates' (Fischer et
al. 1998)
Meanwhile, the President of the World Bank James Wolfensohn, reported in
his 1997 address to the Board of Governors, that there was progress in Sub-
Saharan Africa, 'with new leadership and better economic policies'
(Wolfensohn 1997). Michel Camdessus, then Managing Director of the
International Monetary Fund, at the 1996 annual meeting of the World Bank
and the IMF, said: 'Africa, for which so many seem to have lost hope, appears
to be stirring and on the move'. The two Vice Presidents for Africa at the
World Bank, Callisto Madavo and Jean-Louis Sarbib, wrote an article,
appropriately titled 'Africa on the Move: Attracting Private Capital to a
Changing Continent' (Madavo and Sarbib 1997), which gave reasons for this
new 'cautious optimism'. The then Deputy Managing Director of the
International Monetary Fund, Alassane Quattara (1997), would say the
following about the good performance: 'A key underlying contribution has
come from progress made in macroeconomic stabilization and the introduction
of sweeping structural reforms'. The major World Bank report on Africa of
2000 stated 'many countries have made major gains in macroeconomic
stabilisation, particularly since 1994', and there had been a turn around because
of 'ongoing structural adjustment throughout the region which has opened
markets and has a major impact on productivity, exports, and investment'.
(World Bank 2000:21). Even the Economic Commission for Africa, a strident
critic of SAPs in the past, joined the chorus.
8
And so by the end of the millennium, African countries had been largely
adjusted. There can be no doubt that there has been a sea change in the
African policy landscape. Africa is very heavily involved in 'globalisation'
and is very much part of the global order, and much policy making during the
last two decades has been designed to deliberately increase Africa's partici-
pation in the global economy. In any case, more devaluations, lowering of
tariffs and privatisation of marketing were imposed in Africa than anywhere
else. By the mid-1980s, with the exception of the Franc zone countries, most
SSA countries had adopted flexible exchange rates policies and there had
been major real exchange rate devaluations. Major reforms in marketing,
including the abolition of marketing boards, had been introduced. Arguments
that African countries had refused or been slow to adjust or that not enough
time had transpired became less credible, especially in light of the celebra-
tory and self-congratulatory remarks by the BWIs themselves.
1.Thandika.p65 13/05/2005, 18:4211

12
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
However by 1997, the growth rates had begun to falter. By 1999, in its
report on global prospects and the developing countries, the World Bank
made a downward revision of the 1999 growth rate 'despite continued im-
provements in political and economic fundamentals'. The report blamed the
poor performance on terms of trade and the Asian crisis. In a sense, we had
been there before. 'Success stories' have been told many times before and
countries have fretted and strutted on this 'success' stage only to be heard of
no more. Twenty-six African countries have been, at one time or other, on
the lists compiled by the International Financial Institutions (See Table 3).
Table 3: ‘Good Adjusters’ 1981–1998
Country Number of times listed
Malawi 7
Uganda 5
Kenya 5
Madagascar 4
Ghana 4
Zambia 3
Tanzania 3
Mauritania 3
Mali 3
Cote d'Ivoire 3
Zimbabwe 2
Togo 2
Senegal 2
Nigeria 2
Niger 2
Mozambique 2
Cameroon 2
Burundi 2
Burkina Faso 2
Zaire 1
Namibia 1
Mauritius 1
Lesotho 1
Gambia 1
Chad 1
Benin 1
Source: Several World Bank Reports.
1.Thandika.p65 13/05/2005, 18:4212

13
Mkandawire: Maladjusted African Economies and Globalisation
The terms used have included 'Strong Adjusters', 'Early Intensive Adjusters',
'Globalisers', etc. Of the 15 countries listed as 'core adjusters' by the World
Bank in 1993, only three (Lesotho, Nigeria and Uganda) appear in the list of
strong performers in 1998 (UNCTAD 1998). As in the past, the new 'success'
or 'recovery' or 'turn around' was of a one-off nature, and attributable to a
whole range of things that have little to do with policies – improvements in
terms of trade, new sourcing strategies of mining conglomerates, the end of
conflicts and favourable climate.
Rather than abandon the deflationary policies, supporters of adjustment
have simply reframed the question to read: 'Why is it that when the recom-
mended policies are put into place (often under the guidance of – and pres-
sure from – the International Monetary Fund and the World Bank) the hoped
for results do not materialise quickly' (Clague 1997:1). The answer was: lack
of 'good governance' and of 'good institutions'. These assertions conceal a
clear loss of certainty and a growing sense of intellectual disarray. This is
most apparent in the World Bank study, 'Can Africa Claim the 21st Century?'
(World Bank 2000). Unlike earlier approaches, the report speaks in a much
more subdued and less optimistic tone, based more on faith than on analysis.
There is an admission, albeit grudging, that policies of the past have not
worked. The new agenda is much more eclectic and more a reflection of
confusion and loss of faith than the discovery of a coherent 'comprehensive
policy framework'. The additional set of reforms is nebulous, eclectic and
largely of a more political and institutional character – good governance,
participation of and consultation with civil society, democracy, etc. Increas-
ingly, the World Bank's new solutions suggest that there is little to be done by
way of reform on the economic front. The World Bank's projection of Afri-
can economic performance in the coming decade is depressing reading:
Despite the growth slowdown of the late 1990s, recent performance
continues to support the view that fundamental structural change and
institutions strengthening will have significant impact on sub-Saharan
prospects. The forecast is for a halt to the region's lengthy decline and
marginalisation and even for moderate reversal: The longer term (2003–
2010) outlook is for sustained GDP growth – 3.7 percent – with per capita
income rising 1.3 percent per year. The primary driving force behind the
outlook remains better governance and ongoing reforms to the policy
environment (World Bank 2001:152).
Africa maladjusted: The low growth path
As we noted earlier, adjustment has not led to the promised 'resource
mobilisation'. The response of the BWIs to the poor performance in resource
1.Thandika.p65 13/05/2005, 18:4213

14
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
mobilisation has been ambiguous, to say the least. At times, they have
expressed concern (and bewilderment) over the decline of investment, but
blamed it on inflation, the low after-tax, risk-adjusted rate of return on capital
which, in turn, has been attributed to macroeconomic instability, loss of assets
due to poor enforceability of contracts, debt overhang, and physical destruction
caused by armed conflicts (Hernández-Catá 2000); at other times, this fall in
investment has been seen as a temporary phase during which efficient use of
existing capacity matters more than accumulation of new capital. Once the
economy is placed on an efficient path, it will begin to accumulate, so the
argument goes.
However, a new twist to the argument is that Africa is 'over-invested'.
The BWIs now reach the conclusion that African economic growth does not
respond to investment, and conclude that it may be that there is 'over-
investment' in Africa. In a World Bank paper entitled 'Is investment in Africa
Too Low or Too High? Macro and Micro Evidence' Devajaran et al. (1999)
argue that they find no evidence that private and public capital are productive
investments in Africa, either in cross-country data or in country case studies.
They conclude:
First, we should be more careful about calling for an investment boom to
resume growth in Africa. Unless some or all of the underlying factors that
made investment unproductive in the past are addressed, the results may
be disappointing. We should also be more circumspect about Africa's low
savings rate. Perhaps the low savings rate was due to the fact that the
returns to investment were so low. Also the relatively high levels of capital
flight from Africa may have been a rational response to the lack of invest-
ment opportunities at home (Devajaran et al. 1999:23).
This patently absurd result comes from the failure to consider the possibility
that given the errors of the past and the maladjustment of the African econo-
mies, a much larger 'Big Push' may be required to get African economies on
a path in which economies respond to investment. It also fails to take into
account that patterns of investment induced by the SAPs may not be the
kinds associated with high economic growth. Although some of the recent
literature modifies the 'capital fundamentalist' argument on the primacy of
investment, it continues to place capital accumulation at the centre of the
growth process. In any case, investment, growth and productivity tend to
move in tandem. Secondly, in the pre-adjustment era, investment was associ-
ated with relatively high growth and significant total factor productivity gains
in a significant number of countries.
9
One would therefore have to explain
what it is in the adjustment process that produced what is patently an atypi-
cal response to investment.
1.Thandika.p65 13/05/2005, 18:4214

15
Mkandawire: Maladjusted African Economies and Globalisation
To understand Africa's poor performance in terms of the two channels of
globalisation
– trade and finance – we have to understand the interactions
between these and economic growth. The usual procedure is to regress growth
on initial conditions, GDP, state variables and policy instruments. In these
models, export performance and investment rates would be determinants of
growth in a unidirectional way. There is a rich theoretical and empirical
literature that points to the potential explanatory power of the reverse direction
by suggesting a more simultaneous process in which the usual 'determinants'
of growth are themselves determined by growth.
Slow growth and resource mobilisation
Let us start with the investment–savings nexus. The earlier literature by
Keynesians such as Michael Kalecki and Nicholas Kaldor suggested that the
causal chain may be from growth to both investment and savings, and not the
other way around. The Kaleckian 'flexible accelerator' view – that capital
needs are essentially determined by expected output (i.e. investment demand
is driven by expected growth) – is a case in point. 'Endogenous growth theo-
ries' have revised interest in this matter by suggesting that some 'determi-
nants of growth' may themselves be dependent on growth.
Norman Loayzaet al. (2000) conclude that private saving rates rise with
the level and growth rate of real per capita income. Furthermore, the influence
of income is larger in developing than in developed countries where a doubling
of income per capita is estimated, other things equal, to raise the long-run
private savings rate by some 10 percentage points of disposable income.
Likewise, a 1 percentage-point rise in the growth rate raises the private savings
rate by a similar amount. In a study of savings transitions, Dani Rodrik argues
that there is strong evidence that 'the story emerges in one that emphasis that
economic growth tends to have a clear positive effect on the savings rate'
(Rodrik 1998). On Africa, ElBadawi and Mwega (2000), and Mlambo and
Oshikoya (2001) reach generally similar conclusions, namely that 'causality
runs from growth to investment and saving'. The important policy conclusion
is that policies that spur development are an indirect but effective way to
raise private saving rates and the 'negative focus on saving performance does
not seem a profitable strategy for understanding successful economic
performance' (Rodrik 2000b: 505).
10
In this neo-Keynesian view, the poor response of private investors–both
domestic and foreign
–should not have come as a surprise, what with con-
tractions of domestic markets through deflationary policies and increased
competition from imported goods, the collapse of public services and infra-
structure and the political uncertainty engendered by policies that have un-
dermined the 'social pacts' that hitherto provided some modicum of social
1.Thandika.p65 13/05/2005, 18:4215

16
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
cohesion. And so, despite the fact that a number of countries had been 'ad-
justed', new credits were not forthcoming. That was mainly because inves-
tors did not have the confidence that the countries' growth performances
would improve and that the potential returns on their investments would
fully materialize, because improvements in the trade surplus were primarily
caused by demand-repression and deflationary policies. For the BWIs, the
major explanation for the poor response of foreign investment is 'risk'
– a not
particularly useful piece of information. But the greatest 'risk' for investors is
investing their money in economies under the grip of policies that seek to
achieve stabilisation by acting in a pro-cyclical manner by lowering savings
and investments during recessions (Bird 2001).
11
It is perhaps this sluggish
growth that accounts for the fact that the Institutional Investor rating for
Africa deteriorated from 31.8 percent in 1979 to 21.7 in 1995 (the range is
1
–100) (Collier and Gunning 1997). It is significant that the two countries
that performed well with respect to this index were high growth economies
which were not under the grip of the deflationary policies – Botswana and
Mauritius. It is on the basis of these theoretical arguments and empirical
observations that there have been calls for an 'investment-led' adjustment
process (Griffin 2001; Mkandawire and Soludo 1999).
Trade, low growth and absence of structural change
The slow growth discussed above has also had an impact on the growth of
exports and diversification by weakening the investment-export nexus crucial
to the process. Here again, the orthodox view has been that increased trade
or openness measured in various ways is a determinant of growth.
Consequently, the major policies with respect to trade have involved trade
liberalization and adjustments in exchange rates largely through devaluation.
Industrial stagnation
Failure on the trade front is linked to the failure in the structural transformation
of African economies so that they could produce new sets of commodities in
a competitive and flexible way. Globalisation in Africa has been associated
with industrial stagnation and even de-industrialization (Mkandawire 1988;
Singh 1987; Stein 1992; Stewart 1994). African economies were the
quintessential 'late, latecomers' in the process of industrialization. I have
argued elsewhere (Mkandawire 1988) that although the writing on African
economies is based on the assumption that Africa had pursued import
substitution for too long, the phase of import substitution was in fact extremely
short
– in most countries it was less than a decade.
12
SAPs have called for
policies that have prematurely exposed African industries to global
competition and thus induced widespread processes of de-industrialization.
1.Thandika.p65 13/05/2005, 18:4216

17
Mkandawire: Maladjusted African Economies and Globalisation
African economies have somehow been 'out of sync' with developments in
other parts of the world. When most economies embarked on import
substitution industrialization, financed by either borrowing or debt default,
much of Africa was under colonial rule, which permitted neither protection
of domestic markets nor running deficits. And even later, when much
industrialization was financed through Eurodollar loans, Africans were
generally reluctant to borrow so that eventually, much of their borrowing in
the 1980s was not for industrialization, but to finance balance-of-payments
problems. Every case of successful penetration of international markets has
been preceded by a phase when import substitution industrialisation was
pursued. Such a phase is necessary, not simply for the 'infant industry'
arguments that have been stated ad infinitum, but also because they provide
an institutional capacity for handling entirely new sets of economic activities.
The phase is also necessary for sorting out some of the coordination failures
that need to be addressed before venturing into global markets. A 'revisionist'
view argues that (a) substantial growth was achieved during the phase of
import substitution industrialisation, (b) even successful 'export oriented
economies' had to pass through this phase and maintain many features of the
Import Substitution (IS) phase, and (c) important social gains were made.
The phase of import substitution did lead the initial phases of industriali-
sation. Significantly, UNIDO notes that African countries were increasingly
gaining comparative advantage in labour intensive branches, as indicated by
revealed comparative advantage (RCA), but then notes:
It is particularly alarming to note that the rank correlation of industrial
branches by productivity growth over 1980–95 and RCA value in 1995 is
very low. Productivity has fallen in furniture, leather, footwear, clothing,
textiles, and food manufacturing. An export oriented development stra-
tegy cannot directly stimulate TFP. Policy must focus on increasing tech-
nological progress within the export industries – many of which have seen
very rapid progress in the application of the most modern technologies
(informatics, biotechnological, etc) to their production and distribution
system (UNIDO 1999:245).
Given the conviction that import substitution in Africa was bad and had gone
on for too long, there was no attempt to see how existing industries could be
the basis for new initiatives for export. The policy was simply to discard
existing capacity on the wrong assumption that it was the specific
microeconomic policies used to encourage the establishment of these
industries that accounted for failure at the macro-level. The task should have
been to extend and not reverse such gains by dismantling existing industrial
capacity. The rates of growth of MVA (manufacturing value added) have
1.Thandika.p65 13/05/2005, 18:4217

18
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
fallen continuously from the levels in the 1970s. UNIDO (1999) estimated
that MVA in sub-Saharan Africa was actually contracting at an annual average
rate of 1.0 percent during 1990
–97. UNIDO shows that for Africa as a whole,
in ten industrial branches in 38 countries, labour productivity declined to an
index value of 93 in 1995 (1990 = 100). Increases in productivity were
registered only in tobacco, beverages and structural clay products. In many
cases, an increase in productivity has been due to a fall in employment growth
(UNIDO 1999). The decline in total factor productivity of the economy as a
whole is due to de-industrialization which it defines as 'synonymous with
productivity growth deceleration'. Output per head in sub-Saharan Africa
manufacturing fell from US$7,924 in 1990 to US$6,762 in 1996. The
structural consequence is that the share of manufacturing in GDP has fallen
in two thirds of the countries. The number of countries falling below the
median increased from 19 during 1985
–90 to 31 during the 1991–98 period
(figure 2). While admitting such poor performance in manufacturing during
the era of structural adjustment, supporters of SAPs argue that (a) such decline
in industrialisation is a temporary and welcome process for weeding out
inefficient industrialisation (Jalilian and Weiss 2000) and (b) not enough time
for adjustment has passed to see the benefits from globalisation through the
establishment of new industries. Considering that this argument has been
repeatedly deployed since 1985, Africa may have to wait for a long time
before the gains from globalisation materialise.
Students of historical structural changes of economies inform us that struc-
tural change is both cause and effect of economic growth. As Moshe Syrquin
(1994; 1995) observes, a significant share of the measured rate of aggregate
total factor productivity is due to resource shifts from sectors with low pro-
ductivity to sectors with high productivity. We have learnt from the 'new
trade theories' and studies on technological development how countries run
the risk of being 'locked' in a permanently slow growth trajectory if they
follow the dictates of static comparative advantage. To move away from such
a path, governments have introduced policies that generate externalities for a
wide range of other industries and thus place the economy on more growth
inducing engagement with the rest of the world.
For years, UNCTAD economists have pointed to the importance of growth
for trade expansion. They have argued that it is the absence of growth, or
more specifically an investment-export nexus that accounts for the failure of
many countries to expand and diversify their export base. Rapid resource
reallocation may not be feasible without high rates of growth and investment.
13
1.Thandika.p65 13/05/2005, 18:4218

19
Mkandawire: Maladjusted African Economies and Globalisation
Figure 2: Sub-Saharan Africa Comparative Rates of Growth
of Manufactured Value Added
Source: World Bank, 2000, World Developpment Indicators (CD-Rom).
Note: The axes are drawn to pass through the median of the 1985–90 period.
The principal means for effecting export diversification is investment. Many
empirical tests of 'causation' have been conducted, suggesting that there are
good theoretical and empirical grounds for taking this reverse causation seri-
ously as the dynamics of high growth lead to even greater human and physi-
cal investment and greater knowledge formation, which, by Verdoon's Law,
leads to more productivity and therefore greater competitiveness. Studies of
successful export drives clearly show a strong relationship between rates of
structural change and rates of growth in value added in manufacturing and
rates of growth of exports.
Lessons from countries which have embraced trade liberalization and
achieved some degree of success suggest clearly that such liberalisation should
be in conjunction with policies that ensure that relative prices will be
favourable to export industries (and not just to nontradables) and that interest
rates will support investment and economic restructuring. Successful export
promotion strategies have required deliberate design of an investment-export
nexus. Diversification of exports that is developmental needs to go beyond
the multiplication of primary commodities and to include industrial products.
-10
-5
0
5
10
15
- 15 - 10 - 5 0 5 10 15 20
1985-90
1991-98
1.Thandika.p65 13/05/2005, 18:4219

20
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
This requires not merely the redirection of existing industrial output to the
external, but also the expansion of such output and investment in new activities.
There is a need to design a system of incentives that favours investments
that open up new possibilities or introduce new technologies to the country.
In this respect, infrastructure and human resource development are impor-
tant preconditions for the success of pro-export policies. The instruments
used to promote investment have included not only public investment, but
also provision of subsidised inputs by public enterprises, direct subsidies
through tax incentives including exemptions from duties, and industrial policy
which, in turn, has meant selective allocation of credit and encouragement of
investment by cheapening imported investment goods (often by manipula-
tion of exchange rates in favour of the import of plant and equipment and
export sector) (Akyüz 1996; Bradford Jr. 1990). While 'diversification' has
always featured in virtually all adjustment programmes, there has been no
clear spelling out of how this was to be achieved. In most cases, the need for
diversification was overshadowed by short-term pressures to exploit static
'revealed' comparative advantage and reduce public spending. The failure to
stimulate new economic activities (especially industry) has meant not only
sluggish growth in exports but also failure to diversify.
Under SAPs, all these instruments have been off limits. Evidence that more
successful cases have had some kind of 'industrial policy' has been dismissed
on the grounds that African countries have neither the type of government
nor the political acumen to prevent 'capture' of these policies by rent seekers
and patron-client networks. Governments have been left with no instruments
for stimulating investment and industrial development directly or for crea-
ting an environment for robust demand and profitability in which investment
could thrive with complementary public inputs such as infrastructure, R &
D, education, and training. It is this passivity that has led to the failure of
structural transformation and the establishment of an investment-export nexus
that would have led to the increase and diversification of exports.
Thus, the name given to the policy packages of the BWIs notwithstanding,
the structural adjustment process has not led to structural changes in Africa.
At first glance, one can see signs of structural change, especially in the
decreased shares of industrial and agricultural sectors in overall GDP and
the significant increase in services. Such change would seem to be following
the norms established by Simon Kuznets and other observers of structural
change in the process of economic development. However, in the case of
Africa, such an interpretation is misleading because the transformation taking
place is perverse, reflecting, as it does, stagnation of the economy, de-
industrialisation and poor agriculture performance, rather than structural
change induced by differential productivity gains and changing demand
1.Thandika.p65 13/05/2005, 18:4220

21
Mkandawire: Maladjusted African Economies and Globalisation
structures induced by increasing incomes (by way of Engel's Law). The
expansion of the service sector is evidence of growing informalisation,
pauperisation of the middle classes and 'compradorisation' of African
economies. Structural adjustment in Africa has thus far meant reversing some
of the structural changes that African governments sought to induce as
countries are driven back to the production patterns of the colonial era through
'back to the future' adjustment of African economies and 'de-industrialization'
(Mkandawire 1988; Singh 1987; Stein 1992). Ghana is back as the 'Gold
Coast', Zambia is desperately trying to cling to its copper belt, etc.
One should add here that the negative effects of this deflationary process
also work through the trade mechanism. For African economies, terms of
trade have enormous effects on the performance of economies, a fact that the
World Bank now increasingly recognizes as unfavourable trade conditions
scuttle its programmes. World Bank economist, William Easterly (2000), in
an article tellingly entitled 'The Lost Decades: Developing Countries Stagna-
tion in Spite of Policy Reform, 1980
–1998' reaches conclusions that would
warm the heart of any member of the 'Dependence School'. He considers the
following factors as possible explanations of the poor performance of devel-
oping countries: (1) good policies that did not achieve desired results, (2)
bad economic policies, or (3) some third factor like shocks? Based on his
evidence
– cross-country regressions and comparison of turning points that
relate events in the rich countries to those in the developing countries
– his
conclusion is that the most likely explanation was point (3) i.e. 'some third
factor like shocks'. The principal shock he finds is the 'growth slowdown in
the industrial world'.
In conclusion, in a situation of generalised low growth rates, Africa is
unlikely to experience much diversification. General policies such as 'marked
liberalisation' or exchange rate devaluations, while perhaps supportive of
diversification, are unlikely to induce the shifts in resources essential to
tangible diversification.
14
This is because there are structural factors that
attenuate responsiveness to new opportunities. The decline of Africa's share
in world trade is thus closely related to low levels of growth which in turn is
related to de-industrialisation. Or as Gerald Helleiner (2002a:4) succinctly
states, 'Africa's failures have been developmental, not export failure per se'.
Hence, failure in trade cannot be explained by simply looking at trade policies.
One has to look at the overall growth of the economies and the ensuing
structural change. As Dani Rodrik (1997) notes, Africa's 'marginalisation' is
not due to trade ratios (relative to GDP) that are low by cross-national
standards: Africa trades as much as is to be expected given its geography and
its level of per-capita income.
1.Thandika.p65 13/05/2005, 18:4221

22
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
Indeed, there is evidence that suggests that 'Africa overtrades 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).
15
The marginalisation of
Africa in world trade is the consequence of two factors: first, Africa's GDP
per-capita has grown slower than other regions'; and second, the output
elasticity of trade exceeds unity, so that as other countries have grown, their
trade volumes have expanded more than proportionately. The dismissal of
deliberate, strategic industrial and trade policies to shape Africa's position in
the global trading system has left Africa on the low-productivity, low-growth
path. The policy implications of this perspective are to stimulate growth, as
well as invest in infrastructure and human capital.
WTO context
Africa is the only continent for which it was explicitly predicted that the
advent of the WTO trade regime would entail losses. Most of these losses
related to trade issues-most specifically the loss of preferential treatment
from its erstwhile colonial masters and the European Union under the Lomé
Convention. There is one feature of globalisation that Africa's industrialisa-
tion aspirations will have to confront
– the restrictive policy context of the
global financial and trade regimes. Much of the industrialisation that has
taken place elsewhere has been supported by explicit or implicit industrial
policy. Both the import substitution and export promotion of the post-World
War II period have been products of industrial policy.
New trade arrangements, of which the WTO is emblematic, have changed
the environment for industrial policy. There is considerable debate as to what
globalisation entails in terms of individual states' capacity to pursue their
own development strategies. From one end, it is argued that during much of
the post World War II era, the global order allowed states considerable room
for manoeuvre to pursue such national goals as full employment or growth
and development. The current wave of globalisation has significantly reduced
the leverage of governments over the economy.
The institutional arrangement said to signal this changed environment for
industrial policy is the WTO, which restricts policy options in promoting
industry and trade in a manner comparable to pulling up the ladder. A whole
range of policies that have been central to virtually every strategy of industri-
alisation is now off-limits (Adelman and Yeldan 2000; Panchamukhi 1996;
Rodrik 2000a). In other words, while the new world order clearly demands
highly intensive involvement by the state in industrialisation, the regulatory
regimes deny the state the means for such intervention. For the 'late, late
industrialisers' such as African countries, it is clear that the international trade
1.Thandika.p65 13/05/2005, 18:4222

23
Mkandawire: Maladjusted African Economies and Globalisation
regime to which they are now tethered makes it extremely difficult for these
economies to capture the potential gains from global markets.
This view has been challenged by some authors who argue that the WTO
regime still leaves room for catching up and that developing countries can
still embark on deliberate industrialisation by exploiting some of the special
provisions reserved for them in the WTO arrangements. Alice Amsden (1999),
who has written extensively on the role of industrial policy in the East Asian
context, argues that the WTO regime still leaves room for industrial policy
initiatives. For Peter Evans, the WTO is something still in the making and
there is, therefore, the possibility that it can be shaped to serve the interests
of developing countries. Irma Adelman and Erinc Yeldan (2000), who list
the major constraints imposed by the WTO on development policy, argue
that, paradoxically, the new regime allow direct government investment in
new activities, and non-market pressures on individual private firms to develop
new types of comparative advantage. This may lead to greater intervention
and more targeted discretionary activities by governments wishing to develop
their economies (Adelman and Yeldan 2000).
This debate may ultimately be a fruitless one, given the multiplicity of
fora in which 'negotiations' on global issues takes place. Often, concessions
made in one forum are eroded or nullified by the conditionalities imposed in
another forum. Thus, even the interventionist measures which Adelman points
to as policy options not disallowed by the WTO, may simply be off limits
under IMF and World Bank adjustment programmes and conditionalities. A
country cannot refuse to open all its markets, as demanded by the BWIs, by
appealing to WTO exemptions. Pressures for trade liberalisation and the anti-
industrial stance of the BWIs have whittled away the positive effects of the
provisions that would allow the poor countries to protect their infant industries.
This has been particularly so for sub-Saharan Africa, which was undoubtedly
subjected to more conditionalities per capita than any other region
16
and
where structural adjustment has tended to make it impossible to exploit the
special concessions made to African countries in international agreements
such as the WTO or Lomé Conventions.
Concluding remarks
The African policy landscape has changed radically during the last two
decades. Liberalisation of trade, privatisation as well as reliance on markets
have replaced the widespread state controls associated with import
substitution. One would expect to see some signs of the 'accelerated
development' promised by the Berg report in 1981 by now. That adjustment
has failed as a prerequisite for development, let alone as a 'strategy for
accelerated development', is now widely accepted.
17
These failures can, in
1.Thandika.p65 13/05/2005, 18:4223

24
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
turn, be traced to the displacement of developmental strategic thinking by 'an
obsession' with stabilization
– a point underscored by low levels of investment
and institutional sclerosis. The key 'fundamentals' that policy has sought to
establish relate to these financial concerns, rather than to development. The
singular concentration on 'opening' up the economy has undermined post-
independence efforts to create, albeit lamely, internally coherent and
articulated economies and an industrial structure that would be the basis for
eventual diversification of Africa's export base. The excessive emphasis on
servicing the external sector has diverted scarce resources and political
capacities away from managing the more fundamental basis for economic
development. Even the issue of 'poverty' has received little attention except
perhaps when it has seemed politically expedient to be seen to be doing
something to mitigate the negative effects of adjustment. SAPs, due to their
deflationary bias, have placed African economies on such a low growth
trajectory, which has then conditioned the levels and types of Africa's
participation in the global economy.
Over the last two decades, Africans have been faced not merely with a set
of pragmatic measures made on programmatic grounds but with a full-blown
ideological position about the role of the state, nationalism and equity, against
which many neo-liberals, including Elliot Berg, had ranted for years.
18
It is
this ideological character of the proposals that has made them impervious to
empirical evidence including that generated by the World Bank itself, and it
is that which has made policy dialogue virtually impossible. The 'true believers'
insistence on the basic and commonsensical message they carry has made
dialogue impossible. The assumption that those on the other side are merely
driven by self-interest and ignorance that might be remediable by 'capacity
building' has merely complicated matters further. Things have not been made
easier by the supplicant position of African governments and their obvious
failures to manage their national affairs well. These policies were presented
as finite processes which would permit countries to restore growth. With this
time perspective in mind, countries were persuaded to put aside long-term
strategic considerations while they sorted out some short-term problems. The
finite process has lasted two decades.
There are obvious gains from participation in increased exchange with
the rest of the world. The bone of contention is: what specific measures should
individual countries adopt in order to reap the benefits of increased exchange
with other nations. With perhaps the exception of a few cases, developing
countries have always sought to gain from international trade. Attempts to
diversify the export base have been a key aspect of policy since independence.
Import substitution was not a strategy for autarky, as is often alleged, but a
1.Thandika.p65 13/05/2005, 18:4224

25
Mkandawire: Maladjusted African Economies and Globalisation
phase in eventual export diversification. However, for years, the integration
of developing countries into a highly unequal economic order was considered
problematic, characterised, as it is, by unfavourable secular terms of trade
for primary commodities, control of major markets by gigantic conglomerates,
protectionism in the markets of developed countries together with 'dumping'
of highly subsidised agricultural products, volatile commodity and financial
markets, asymmetries in access to technology, etc. From this perspective,
gains from trade could only be captured by strategising and dynamising a
country's linking up with the rest of the world.
It is ironic that while analysis in the 'pre-globalisation' period took the
impact of external factors on economic growth seriously, the era of
globalisation has tended to concentrate almost exclusively on internal
determinants of economic performance. Today, Africa's dependence on
external factors and interference in the internal affairs of African countries
by external actors are most transparent and humiliating, and yet such
dependence remains untheorised. Theories that sought to relate Africa's
economies to external factors have been discredited, abandoned or, at best,
placed on the defensive. The focus now is almost entirely on internal
determinants of economic performance
– economic policies, governance,
rent-seeking, ethnic diversity, etc. While the attention on internal affairs may
have served as a useful corrective to excessive focus on the external, on its
own, it also provided a partial view of African economies and can be partly
blamed for the pursuit of policies that were blind to Africa's extreme
dependence and vulnerability to external conjuncture
–a fact that the BWIs
have learnt as the exogenous factor that scuttled their adjustment programmes.
Indeed, unwilling to discard its essentially deflationary policies, and faced
with poor performance among many countries which have been 'strong
adjusters', the World Bank's explanations have become increasingly more
structural
– deterministic and eclectic. Even the IMF's World Economic
Outlook explains Africa's poor performance in surprisingly structuralist
language. As it notes, the 'resilience' of growth in recent years 'partly reflected
more favourable developments in nonfuel commodity prices, which did not
contract as much as in earlier global slowdowns, as well as debt relief under
the HIPC initiative'. The IMF also notes that despite 'the trend toward improved
macroeconomic policies in many African countries, 'external current account
deficits in many countries in sub-Saharan Africa remain relatively high,
reflecting in part continued high debt levels but also low savings rates related
to low per capita incomes and structural impediments to economic
diversification'.
Today, there is recognition that the axiomatic mapping of policies into
performance was naïve and misleading. There are admissions, albeit grudging,
1.Thandika.p65 13/05/2005, 18:4225

26
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
to having underestimated the external constraints on policy and the
vulnerability of African economies to them, to having overestimated the
responsiveness of the economies and the private sector, to having wrong
sequencing of policies, to inadvertently having eroded state capacities and
responsibilities ('policy ownership'), etc. However, it is still insisted that the
passage of time will do its job and the posture recommended to African
countries has been to sit tight and wait for the outpouring of gains. There is
no recognition that the accumulated effects of past policy errors may have
made the implementation of ‘market friendly’ policies in their pristine form
more difficult.
Economists increasingly use the concept of hysteresis, a phenomenon
observed in some physical systems, by which changes in a property lag behind
changes in an agent on which it depends, so that the value of the former, at
any moment, depends on the nature of the previous variation of the latter.
They use the concept to account for any 'path dependence' of the state of
economic variables on the past history of the economic system or policies. In
explaining the failure of their policies, the BWIs argue that past (before-
adjustment) policy errors have a lasting effect through hysteresis. Strangely,
no such hysteresis is entertained for policies pursued by the BWIs in the
recent past. Policy failures, especially those as comprehensive as those of
SAPs can continue to have effects on the performance of the economy long
after the policies are abandoned. It may well be that the accretions of errors
that are often perfunctorily admitted have created maladjusted economies
not capable of gaining much from globalisation. Both the measures of 'success'
used for African economies and the projections for the future suggest that,
essentially, the BWIs have put Africa's development on hold. This clearly
suggests the extreme urgency for Africans themselves to assume the task of
'bringing development back in' in their respective countries and collectively.
To benefit from interacting with the rest of the world, African policy-makers
will have to recognise the enormous task of correcting the maladjustment of
their economies. They will have to introduce more explicit, more subtle and
more daring policies to stimulate growth, trade and export diversification
than hitherto.
Notes
1. There is something illogical about juxtaposing globalisation and
marginalisation. Either the process is 'global' and encompasses all spaces on
the globe or is only partial, marginalising certain sections of the planet.
Globalisation does not necessarily mean that everyone gains; it entails gains
and losers, core and periphery, top and bottom etc. African economies are
encompassed by and subordinate to the global economy. Indeed it leaves open
1.Thandika.p65 13/05/2005, 18:4226

27
Mkandawire: Maladjusted African Economies and Globalisation
the possibility of adverse globalisation and as Stanley Fischer, discussing capital
flight, states: '…in spite of capital controls, African capital has de facto been
globalised – albeit in the wrong direction' (the poor performance at the level
of macroeconomic outcomes), and high levels of connectivity at the levels of
policy and institutional reform. In other words, if one focuses on policy and
institutional reforms, Africa is highly integrated into, and not marginal within,
the world system (Bangura 2001).
2. This paper seeks to refute the 'old tales' claiming that except for the natural
resources sector, African countries fail to attract significant FDI. The author
claims that reforming countries do not seem to suffer from the unfavourable
image and pessimistic perceptions about the continent. And yet, the paper
clearly shows the resource bias of the investments, the preponderance of South
Africa and it being privatization driven. Even for South Africa, only 16 percent
of investment was in 'green-field' activities. The paper is apparently part of
the 'awareness initiative' sponsored by the World Bank and the United Nations
to 'help boost SSA's image as an investment location' (Pigato 2000:2). This
may explain the positive image that is painstakingly extracted from a set of
data that points in the opposite direction.
3. UNCTAD reports that in 1998 alone, foreign direct investment through
privatisation triggered a total of US$684 million in foreign exchange reserves
in sub-Saharan Africa. This is a one-off affair and may explain the jump in
FDI in more recent years. Already by 1999, we witnessed a slowdown in
privatisation-related FDI.
4. The 'rise and fall' of Ghana as a pupil of the BWIs is recounted in a number of
publications. (See, especially, Aryeetey et al. 2000; Hutchful 2002).
5. A study by the World Bank's International Financial Corporation in which
managers were asked questions about specific obstacles to doing business
and their interactions with government conclude:
The first striking finding is that ten out of the fifteen questions elicit the same
responses in Africa as is the case worldwide, suggesting that the business
environment is no different in these respects: respondents see few problems
with regulations for starting new business, price controls, labour regulations,
safety or environmental regulations and perceive little threat of terrorist acts.
They do find financing problematic, think, unsurprisingly, that taxes are high
and/or tax regulations cumbersome; they also find that policy instability and
general uncertainty about the cost of regulations pose serious problems to
doing business. In all these respects, conditions in Africa are about the same
as the world average. This is a very encouraging finding.
6. In most cases, such a reversal of flows may call for 'amnesty', given the illicit
nature of the accumulation of much of the expatriated capital. This raises a
host of questions including those of the morality of seeming to reward
kleptocracy and the credibility of the 'amnesty'. The credibility of the amnesty
will ultimately depend on the legitimacy of the government pronouncing the
1.Thandika.p65 13/05/2005, 18:4227

28
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
amnesty and on the adhesion by the domestic class to what is a clearly national
and popular development project. 'Amnesty' imposed by outsiders and by
officials who belong to the kleptocracy are unlikely to be convincing to either
private capital or the general public.
7. In a view of the long inconclusive literature on the IMF Adam Prezeworski
and James Vreeland (200) find that IMF programmes lower annual economic
growth by 1.5 percent for each year that a country participates in its programmes.
8. According to ECA,
After two decades of stagnation, from the mid-1990s, African economies
started showing evidence of a turnaround. There is now convincing
evidence of improved economic performance in a wide range of African
countries, with recorded gross domestic product (GDP) growth rates in
excess of 6 percent in several of them. The progress has been largely due
to improved policy performance, particularly the adoption of less-distorted
macro-economic frameworks, and the improvement in governance in many
countries (UNECA 1999).
9. Countries such as Côte d'Ivoire, Kenya, Tanzania, and even Zaire experienced
higher total factor productivity growth than most East Asian countries (Rodrik
2001).
10. One consequence of the orthodoxy is fixation with austerity not as a
programmatic concern over careful use of limited resources, but as an
ideologically driven clamp on state driven activities, since in most cases, these
measures are often accompanied by removal of constraints on private
borrowing, leading to profligacy and reduced private savings. In more concrete
terms, this has resulted in strengthening the finance ministry and other 'austerity'
and debt management institutions at the expense of the 'spending' ministries
so crucial to a growth focused process.
11. And as McPherson and Rakovski (2001: 11) observe,
Without growth to provide some dynamism, particularly the expectation
among investors that growth will continue (and probably accelerate), there
has been no incentive for anyone to invest. Thus the slow growth has fed
on itself to produce the ‘tragedy’. African regional organizations and
research institutions have argued for decades that SAPs were anti-
developmental because of their deflationary thrust. The 'fundamentals' that
SAPs pushed may have been adequate to address stabilization, but they
were definitely not the 'fundamentals' for development involving growth
and structural change (Mkandawire and Soludo 1999).
12. I have argued this in Mkandawire (1988).
13. One reason why the contribution of investment to growth in Africa is
underestimated may be precisely because its contribution to increasing the
flexibility of the economy is ignored.
14. This is a recurring message in the collection of papers edited by Helleiner
(2002b), especially Mwega (2002) and Ndulu et al. (2002).
1.Thandika.p65 13/05/2005, 18:4228

29
Mkandawire: Maladjusted African Economies and Globalisation
15. For a contrary view, see the IMF paper by Subramanian and Tamarisa (2001).
There is an intriguing suggestion in the paper that, at least among Anglophone
countries, intra-African trade has been much more dynamic than trade with
the rest of the world. Subramanian suggests that this is no good for Africa as
it means weakening the links with the technologically more dynamic North.
He provides no evidence that Africa's import of plant and equipment from the
North, the goods most important for technological acquisition, has suffered
as the result of increased intra-Africa trade.
16. As Tony Killick noted, the spread of SAPs has 'given the BWIs an historically
unprecedented leverage over the economic policies of sovereign developing
country governments, to an extent that would be unimaginable among OECD
states' (Killick 1996: 221).
17. None less than the Chief Economist of the World Bank, Joseph Stiglitz (1998),
has called for the transcendence of the Washington consensus in order to place
development back on to the agenda. The World Bank has proposed that each
country prepare a 'comprehensive development framework' which considers
'structural, social and human aspects' of development (Wolfensohn 1999).
18. On the state see Bauer (1981; 1984). On nationalism see Johnson (1967).
Green characterises Elliot Berg's thinking on the economic world view as 'of
a more robust and free competitive market-oriented, comparative advantage-
led, neoliberal political economic world than that portrayed in the AD (Agenda
for Development)' (Green and Allison 1986: 63).
References
Adelman, I., & Yeldan, E., 2000, ‘Is This the End of Economic Development?’
Structural Change and Economic Dynamics, 11, 95–109.
Akyüz, Y., 1996, ‘The Investment-Profit Nexus in East Asian Industrialisation’,
World Development 24 (3), pp. 461-470.
Amsden, A., 1999, ‘Industrialisation Under New WTO Law’, UNCTAD X High
Level Round Table on Development: Directions for the Twenty-First Century,
Bangkok.
Aryeetey, E., Harrigan, J., & Nissanke, M., 2000, Economic Reforms in Ghana:
The Miracle and the Mirage, London: James Currey.
Bangura, Y., 2001, ‘Globalisation and African Development’, in R. Suttner (Ed.),
Africa in the New Millennium, Oslo: Nordiska Afrikainstitutet.
Bauer, P., 1981, Dissent on Development, London: Weidenfeld and Nicolson.
Bauer, P., 1984, Reality and Rhetoric: Studies in the Economics of Development,
London: Weidenfeld and Nicolson.
Bhattachrya, O., Montiel, P., & Sharma, S., 1997, ‘Can Sub-Saharan Africa Attract
Private Capital Flows?’, Finance and Development, 3-6.
Bird, G., 2001, ‘IMF Programmes: Do They Work? Can They Be Made to Work
Better?’, World Development, 29, 1849–1865.
1.Thandika.p65 13/05/2005, 18:4229

30
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
Boyce, J. K., & Ndikumana, L., 2000, ‘Is Africa a Net Creditor? New Estimates
of Capital Flight from Severely Indebted Sub-Saharan African Countries,
1970–1996’, Political Economy Research Institute, University of
Massachusetts, Amherst, Massachusetts.
Bradford Jr., C. I., 1990, Policy Interventions and Markets: Development Strategy:
Typologies and Policy Options, in G. Gereffi and D. Wyman (eds.)
Manufacturing Miracles: Paths of Industrialisation in Latin America and
East Asia, Princeton NJ, Princeton University Press:32-51.
Clague, C., 1997, ‘Introduction’, in C. Clague (Ed.), Institutions and Economic
Development: Growth and Governance in Less-Developed and Post-Socialist
Countries, Baltimore, MA: Johns Hopkins University Press, pp. 1–9.
Coe, D., & Hoffmaister, A., 1999, ‘North-South Trade: Is Africa Unusual?’ Journal
of African Economies: 8, 228-256.
Collier, P., & Gunning, J. W., 1997, Explaining African Economic Performance,
Oxford: Centre for the Study of African Economies.
Collier, P., Hoeffler, A., & Patillo, C., 1999, Flight Capital as Portfolio Choice,
Washington DC: International Monetary Fund.
Devajaran, S., Easterly, W., & Pack, H., 1999, ‘Is investment in Africa Too Low
or Too High? Macro and Micro Evidence’, Working Paper 2519, Banque
mondiale, novembre.
Easterly, W., 2000, ‘The Lost Decades: Developing Countries Stagnation in Spite
of Policy Reform’, 1980–1998, Journal of Economic Growth, 6.
Elbadawi, I., & Mwega, F. M., 2000, ‘Can Africa's Saving Collapse Be Reversed?’
The World Bank Economic Review, 14, 415-43.
Fischer, S., Hernàndez-Catà, E., & Khan, M. S., 1998, Africa: Is this the Turning
Point? Washington DC: World Bank.
Foroutan, F., & Pritchet, L., 1993, 'Intra-Sub-Saharan African Trade', Journal of
African Economies, 74–105.
Fry, M., 1988, 'Models of Financially Repressed Developing Countries', World
Development, 10.
Green, R. H., & Allison, C., 1986, 'The World Bank's Agenda for Accelerated
Development: Dialects, Doubts and Dialogues', In J. Ravenhill (Ed.), Africa
in Economic Crisis, London: Macmillan, pp. 60–84.
Griffin, K., 2001, 'Macroeconomic Reform and Employment: An Investment-Led
Strategy of Structural Adjustment in Sub-Saharan Africa', in T. McKinley (Ed.),
Macroeconomic Policy, Growth and Poverty Reduction, London: Palgrave.
Helleiner, G. K., 2002a, 'Introduction', in G. K. Helleiner (Ed.), Non-traditional
Export Promotion in Africa: Experience and Issues, New York, NY: Palgrave,
pp. 1–20.
Helleiner, G. K., 2002b, Non-traditional Export Promotion in Africa: Experience
and Issues, New York, NY: Palgrave.
1.Thandika.p65 13/05/2005, 18:4230

31
Mkandawire: Maladjusted African Economies and Globalisation
Hernández-Catá, E., 2000, 'Raising Growth and Investment in Sub-Saharan Africa:
What Can Be Done?,' Finance and Development: A Quarterly Magazine of
the IMF, December, Volume 37, No. 4.
Hutchful, E., 2002, Ghana's Adjustment Experience: The Paradox of Reform,
Geneva and London: UNRISD/James Currey.
IMF, 2004, World Economic Outlook, Washington DC: IMF.
Jalilian, H., & Weiss, J., 2000, 'De-industrialisation in sub-Saharan: Myth or Crisis?'
In H. Jalilian, M. Tribe & J. Weiss (Eds.), Industrial Development and Policy
in Africa, Cheltenham, UK: Edward Elgar.
Johnson, H. G., 1967, 'A Theoretical Model of Economic Nationalism in New
and Developing Countries', in H. G. Johnson (Ed.), Economic Nationalism in
Old and New States, Chicago: University of Chicago Press, pp. 1–16.
Kasekende, L., Kitabire, D., & Martin, M., 1997, 'Capital Inflows and
Macroeconomic Policy in Sub-Saharan Africa', in G. K. Helleiner (Ed.), Capital
Account Regimes, London: Macmillan, pp. 141–183.
Killick, T., 1996, 'Principals, Agents and the Limitations of BWI Conditionality',
World Economy, 19, 211–219.
Loayza, N., Schmidt-hebbel, K., & Servén, L., 2000, 'Saving in Developing
Countries: An Overview', The World Economy Review, 14, 393–414.
Madavo, C., & Sarbib, J.-L., 1997, 'Africa on the Move: Attracting Private Capital
to a Changing Continent', The SAIS Review, 7, 111–126.
McPherson, M. F., & Rakovski, T., 2001, ‘Understanding the Growth Process in
Sub-Saharan Africa: Some Empirical Estimates’, African Economic Policy,
Boston, Mass: John F. Kennedy School of Government, Harvard University;
Belfer Center for Science & International Affairs.
Mkandawire, T., 1988, ‘The Road to Crisis, Adjustment and de-Industrialisation:
The African Case’, Africa Development, 13.
Mkandawire, T., & Soludo, C., 1999, Our Continent, Our Future: African
Perspectives on Structural Adjustment, Dakar/Trenton, NJ: CODESRIA/
IDRC, African World Publications.
Mlambo, K., & Oshikoya, T. W., 2001, 'Macroeconomic Factors and Investment
in Africa', Journal of African Economies, 10, 12–47.
Mosley, P., Subasat, T., & Weeks, J., 1995, 'Assessing Adjustment in Africa',
World Development, 23, 1459-1473.
Mwega, F. M., 2002, ‘Promotion of Non-traditional Exports in Kenya’, in G. K.
Helleiner (Ed.), Non-traditional Export Promotion in Africa: Experience and
Issues, New York, NY: Palgrave, pp. 159–191.
Ndulu, B., Semboja, J., & Mbelle, A., 2002, 'Promotion of Non-traditional Exports
in Kenya', in G. K. Helleiner (Ed.), Non-traditional Export Promotion in Africa:
Experience and Issues, New York, NY: Palgrave, pp. 159–191.
Ng, F., & Yeats, A., 2000, On the Recent Trade Performance of Sub-Saharan African
Countries: Cause for Hope or More of the Same? Washington DC: World Bank.
1.Thandika.p65 13/05/2005, 18:4231

32
Africa Development, Vol. XXX, Nos. 1 & 2, 2005
Panchamukhi, V., 1996, WTO and Industrial Policies, Geneva: UNCTAD.
Pigato, M., 2000, Foreign Direct Investment in Africa: Old Tales and New
Evidence, Washington DC: World Bank.
Przeworski, A., & Vreeland, J., 2000, 'The Effects of IMF Programs on Economic
Growth', Journal of Development Economics, 62, 385–421.
Quattara, A., 1997, 'The Challenges of Globalisation for Africa', Southern African
Economic Summit Sponsored by the World Economic Forum, Harare.
Rodrik, D., 1997, Trade Policy and Economic Performance in Sub-Saharan
Africa, Stockholm: Swedish Foreign Ministry.
Rodrik, D., 2000, ‘Saving Transitions’, The World Bank Economic Review 14(3):
481-507.
Rodrik, D., 2000a, 'Can Integration into the World Economy Substitute for a
Developing Strategy?', World Bank's ABCDE-Europe Conference, Paris.
Rodrik, D., 2000b, 'Saving Transitions', The World Bank Economic Review, 14,
481–507.
Rodrik, D., 2001, The Global Governance of Trade as If Development Really
Mattered, Cambridge, MA.
Shaw, E. S., 1973, Financial Deepening in Economic Development, Oxford:
Oxford University Press.
Singh, A., 1987, 'Exogenous Shocks and de-Industrialisation in Africa: Prospects
and Strategies for Sustained Development', Africa Economic Development:
An Agenda for Future.
Stein, H., 1992, 'De-industrialisation, Adjustment and World Bank and IMF in
Africa', World Development, 20.
Stewart, F., 1994, 'Are Short-term Policies Consistent with Long-Term
Development Needs in Africa?, in G. A. Cornia & G. Helleiner (Eds.), From
Adjustment to Development in Africa: Conflict, Controversy, Convergence,
Consensus? London: Macmillan, pp. 98–128.
Stiglitz, J. E., 1998, More Instruments and Broader Goals: Moving toward the
Post-Washington Consensus, Helsinki: The United Nations University/WIDER
(World Institute for Development Economics Research).
Subramanian, A., & Tamarisa, N., 2001, Africa's Trade Revisited, Washington,
DC: International Monetary Fund.
Syrquin, M., 1994, 'Structural Transformation and the New Growth Theory', in L.
L. Pasinetti & R. M. Solow (Eds.), Economic Growth and the Structure of
Long-Term Development, New York: St. Martin's Press, pp. 3-21.
Syrquin, M., 1995, 'Flexibility and Long-Term Economic Development', in T.
Killick (Ed.), The Flexible Economy: Causes and Consequences of the
Adaptability of National Economies, London: Routledge, pp. 34–63.
The Economist, 2001, Globalisation and its Critics: A Survey of Globalisation,
Economist (Special Supplement).
1.Thandika.p65 13/05/2005, 18:4232

33
Mkandawire: Maladjusted African Economies and Globalisation
UNCTAD, 1995, Foreign Direct Investment in Africa – 1995, Geneva: United
Nations.
UNCTAD, 1998, Trade and Development Report, 1998, Geneva: United Nations.
UNECA, 1999, The ECA and Africa: Accelerating a Continent's Development,
Addis Ababa: UNECA.
UNIDO, 1999, 'Domestic Capacity-Building for Enhancing Productivity and
Competitiveness in Africa', in A. Sall (Ed.) Africa. The Future Competitiveness
of African Economies, Paris: Karthala.
Weisbrot, M., Baker, D., Kraev, E., & Chen, J., 2001, The Scoreboard on
Globalisation 1980-2000: Twenty Years of Diminished Progress, Washington
DC: Center for Economic and Policy Research (CEPR).
Weisbrot, M., Baker, D., Naiman, R., & Neta, G., 2000a, Growth May Be Good
for the Poor - But are IMF and World Bank Policies Good for Growth?,
Washington, DC: Center for Economic and Policy Research (CEPR).
Weisbrot, M., Naiman, R., & Kim, J., 2000b, 'The Emperor Has No Growth:
Declining Economic Growth rates in the Era of Globalisation' http://
www.cepr.net/images/IMF/The_Emperor_Has_No_Growth.htm: Center for
Economic and Policy Research (CEPR).
Wolfensohn, J., 1999, 'A Proposal for a Comprehensive Development Framework',
Washington DC: World Bank.
Wolfensohn, J. D., 1997, The Challenge of Inclusion, Address to the Board of
Governors, Hong Kong, China, pp. 5.
World Bank, 1981, Accelerated Development in Sub-Saharan Africa: An Agenda
for Action, Washington, D.C.: World Bank.
World Bank, 1994, Adjustment in Africa: Reforms, Results and the Road Ahead,
Washington, D. C.: World Bank.
World Bank, 2000, Can Africa? Washington DC: World Bank.
World Bank, 2001, Global Economic Prospects, Washington DC: World Bank.
World Bank, 2003, World Bank Africa Database, Washington DC: World Bank.
World Bank, 2003, World Development Indicators, Washington DC: World Bank.
Yeats, A.J., A. Amjadi, et al., 1997, Did Domestic Policies Marginalize Africa in
World Trade, Washington DC, World Bank.
1.Thandika.p65 13/05/2005, 18:4233