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Is Globalisation Good for Africa?

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  • Bigsten, Arne

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Durevall, Dick

    ()
    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

Globalisation or market integration in Sub-Saharan Africa is closely linked to the structural adjustment programmes. In this paper we focus on their dependence on politics and institutional characteristics of the countries concerned. In particular, we argue that one important explanation for the dismal performance of many African countries, in spite of all the measures taken towards market liberalisation, is a lack of willingness or ability on the part of the politicians to respect the restrictions imposed on their behaviour and policy choices by the liberalised markets. The point we make in this paper is that market integration magnifies the effects of policies. We look specifically at the increased exposure to international prices and returns on assets make the economic equilibrium relations, the law of one price (LOP) and uncovered interest parity (UIP), relevant guidelines for economic policy. We illustrate the arguments by presenting the case of Zimbabwe. It is a good example where the lack of respect for the restrictions imposed by international markets has led to an economic crisis with negative growth rates and a process away from globalisation.

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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 67.

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Length: 33 pages
Date of creation: 25 Mar 2002
Date of revision:
Publication status: Published in World Economy, 2003, pages 1119-36.
Handle: RePEc:hhs:gunwpe:0067

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Related research

Keywords: Globalisation; structural adjustment; institutions; economic growth; Law of one price; uncovered interest rate parity; Zimbabwe;

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  1. Jeffrey D. Sachs, 2000. "Tropical Underdevelopment," CID Working Papers, Center for International Development at Harvard University 57, Center for International Development at Harvard University.
  2. Paul Collier & Jan Willem Gunning, 1998. "Explaining African economic performance," Economics Series Working Papers WPS/1997-02.2, University of Oxford, Department of Economics.
  3. Esfahani, Hadi Salehi, 2000. "Institutions and government controls," Journal of Development Economics, Elsevier, Elsevier, vol. 63(2), pages 197-229, December.
  4. Adrian Wood & Kersti Berge, 1997. "Exporting manufactures: Human resources, natural resources, and trade policy," Journal of Development Studies, Taylor & Francis Journals, vol. 34(1), pages 35-59.
  5. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 49(04), pages 803-832, December.
  6. Wood, Adrian & Mayer, Jorg, 2001. "Africa's Export Structure in a Comparative Perspective," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 25(3), pages 369-94, May.
  7. David T. Coe & Alexander W. Hoffmaister, 1998. "North-South Trade-Is Africa Unusual?," IMF Working Papers 98/94, International Monetary Fund.
  8. Bigsten, Arne & Moene, Karl Ove, 1996. "Growth and Rent Dissipation: The Case of Kenya," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 5(2), pages 177-98, June.
  9. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander, 1995. "North-South R&D Spillovers," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1133, C.E.P.R. Discussion Papers.
  10. Natalia T. Tamirisa & Arvind Subramanian, 2001. "Africa's Trade Revisted," IMF Working Papers 01/33, International Monetary Fund.
  11. Bigsten, Arne & Kimuyu, Peter & Lundvall, Karl, 2000. "Informality, Ethnicity and Productivity: Evidence from Small Manufacturers in Kenya," Working Papers in Economics, University of Gothenburg, Department of Economics 27, University of Gothenburg, Department of Economics.
  12. Paul Collier, 2000. "Ethnicity, Politics and Economic Performance," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 12(3), pages 225-245, November.
  13. Bigsten , Arne & Kayizzi-Mugerwa, Steve, 2000. "The Political Economy of Policy Failure in Zambia," Working Papers in Economics, University of Gothenburg, Department of Economics 23, University of Gothenburg, Department of Economics.
  14. Foroutan, Faezeh & Pritchett, Lant, 1993. "Intra-sub-Saharan African Trade: Is It Too Little?," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 2(1), pages 74-105, May.
  15. Englebert, Pierre, 2000. "Solving the Mystery of the AFRICA Dummy," World Development, Elsevier, Elsevier, vol. 28(10), pages 1821-1835, October.
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Cited by:
  1. Amavilah Voxi & Asongu Simplice & Andrés Antonio, 2014. "Globalization, Peace & Stability, Governance, and Knowledge Economy," Working Papers 14/012, African Governance and Development Institute..

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