Open economies work better! did Africa's protectionist policies cause its marginalization in world trade?
In the mid-1950s sub-Saharan Africa accounted for 3.1 percent of global exports. By 1990 this share had fallen to 1.2 percent. The authors of this report find that Africa's extensive loss of competitiveness played a key role in its decline in world trade. If Africa had merely retained its 1962-64 OECD (Organization for Economic Cooperation and Development) market shares, its exports now would be 75 percent higher. Africa's problem was two-pronged: (1) it experienced declining market shares for its major export products, which, in turn, were of declining relative importance in world trade; and (2) it was unable to diversify its export base. Empirical evidence developed by the authors shows that external protection has not played a major role in this decline; in fact, OECD trade preferences gave Africa an advantage over many exporters. Trade restrictions and domestic policy interventions often create a bias against tradables, especially exports, that prevents the achievement of otherwise attainable growth rates. Import barriers in Africa are far higher than in developing countries with faster export growth, and appear to work against potential export products. If the region is to reverse its unfavorable export trends, it must adopt trade and structural adjustment policies that help make it competitive and help African exporters capitalize on foreign trade opportunities.
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- Jong-Wha Lee, 1993. "International Trade, Distortions, and Long-Run Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 40(2), pages 299-328, June.
- Rozanski, Jerzy & Yeats, Alexander, 1994. "On the (in)accuracy of economic observations: An assessment of trends in the reliability of international trade statistics," Journal of Development Economics, Elsevier, vol. 44(1), pages 103-130, June.
- Jong-Wha Lee, 1992. "International Trade, Distortions and Long-Run Economic Growth," IMF Working Papers 92/90, International Monetary Fund.
- Jeffrey Sachs & Andrew Warner, 1995.
"Economic Reform and the Progress of Global Integration,"
Harvard Institute of Economic Research Working Papers
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- Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
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