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Comparative Institutional Advantage and the Appropriate Development Model for Sub-Saharan Africa

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  • Geoffrey Schneider

Abstract

The theory of comparative institutional advantage posits that certain types of firms locate production facilities in a particular location and avoid other locations due to unique institutional advantages and disadvantages. In sub-Saharan Africa, neoliberal policies, weak and corrupt states, and Transnational Corporations have created a particularly destructive variant of capitalism. African capitalism generates little in the way of economic growth, rewards mainly the TNC and the African elites, and undermines Africa’s economic future via activities that are utterly extractive in nature. African capitalism is facilitated directly by the WTO, the structural adjustment policies of the IMF and the World Bank, and the institutional structures of African economies. After outlining the problems with African capitalism as currently structured, the paper goes on to suggest an alternative to this model involving experimental, embedded, grass roots development efforts that build on domestic cultural institutions that would generate significantly more positive outcomes for the people of sub-Saharan Africa. By abandoning neoliberal policies, it might be possible to create a better economic model that would build on community-centered institutional strengths to benefit a greater proportion of the population.
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  • Geoffrey Schneider, 2008. "Comparative Institutional Advantage and the Appropriate Development Model for Sub-Saharan Africa," Forum for Social Economics, Springer;The Association for Social Economics, vol. 37(2), pages 115-124, August.
  • Handle: RePEc:spr:fosoec:v:37:y:2008:i:2:p:115-124
    DOI: 10.1007/s12143-008-9015-8
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    References listed on IDEAS

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    1. Geoffrey E. Schneider, 2003. "Globalization and the Poorest of the Poor: Global Integration and the Development Process in Sub-Saharan Africa," Journal of Economic Issues, Taylor & Francis Journals, vol. 37(2), pages 389-396, June.
    2. Geoffrey E. Schneider, 2007. "Sweden’s Economic Recovery and the Theory of Comparative Institutional Advantage," Journal of Economic Issues, Taylor & Francis Journals, vol. 41(2), pages 417-426, June.
    3. Hall, Peter A. & Soskice, David (ed.), 2001. "Varieties of Capitalism: The Institutional Foundations of Comparative Advantage," OUP Catalogue, Oxford University Press, number 9780199247752, Decembrie.
    4. Geoffrey Schneider & Paul Susman, 2008. "Trade, People and Places: A Social Economic-Geographic Approach to Comparative Institutional Advantage," Review of Social Economy, Taylor & Francis Journals, vol. 66(4), pages 469-499.
    5. P. Sai-wing Ho & Geoffrey Schneider, 2002. "African Drama: Myrdal and Progressive Institutional Change in South Africa," Journal of Economic Issues, Taylor & Francis Journals, vol. 36(2), pages 507-515, June.
    6. Marcel Fafchamps, 2004. "Market Institutions in Sub-Saharan Africa: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062364, December.
    7. Dell P. Champlin & Janet T. Knoedler, 2004. "Embedded Economies, Democracy, and the Public Interest," Journal of Economic Issues, Taylor & Francis Journals, vol. 38(4), pages 893-907, December.
    8. Geoffrey E. Schneider, 1999. "An Institutionalist Assessment of Structural Adjustment Programs in Africa," Journal of Economic Issues, Taylor & Francis Journals, vol. 33(2), pages 325-334, June.
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