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Is Globalisation Good for Africa?

Author

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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.

Suggested Citation

  • Bigsten, Arne & Durevall, Dick, 2002. "Is Globalisation Good for Africa?," Working Papers in Economics 67, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0067
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    File URL: http://hdl.handle.net/2077/2841
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    References listed on IDEAS

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    1. Jeffrey D. Sachs, 2000. "Tropical Underdevelopment," CID Working Papers 57, Center for International Development at Harvard University.
    2. Jan Willem Gunning & Paul Collier, 1999. "Explaining African Economic Performance," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 64-111, March.
    3. 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), vol. 2(1), pages 74-105, May.
    4. Natalia T. Tamirisa & Arvind Subramanian, 2001. "Africa's Trade Revisted," IMF Working Papers 01/33, International Monetary Fund.
    5. Esfahani, Hadi Salehi, 2000. "Institutions and government controls," Journal of Development Economics, Elsevier, vol. 63(2), pages 197-229, December.
    6. 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.
    7. 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, vol. 49(04), pages 803-832, December.
    8. Bigsten , Arne & Kayizzi-Mugerwa, Steve, 2000. "The Political Economy of Policy Failure in Zambia," Working Papers in Economics 23, University of Gothenburg, Department of Economics.
    9. Coe, David T & Hoffmaister, Alexander W, 1999. "North-South Trade: Is Africa Unusual?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(2), pages 228-256, July.
    10. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander W, 1997. "North-South R&D Spillovers," Economic Journal, Royal Economic Society, vol. 107(440), pages 134-149, January.
    11. Englebert, Pierre, 2000. "Solving the Mystery of the AFRICA Dummy," World Development, Elsevier, vol. 28(10), pages 1821-1835, October.
    12. Wood, Adrian & Mayer, Jorg, 2001. "Africa's Export Structure in a Comparative Perspective," Cambridge Journal of Economics, Oxford University Press, vol. 25(3), pages 369-394, May.
    13. Paul Collier, 2000. "Ethnicity, Politics and Economic Performance," Economics and Politics, Wiley Blackwell, vol. 12(3), pages 225-245, November.
    14. 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), vol. 5(2), pages 177-198, June.
    15. Bigsten, Arne & Kimuyu, Peter & Lundvall, Karl, 2000. "Informality, Ethnicity and Productivity: Evidence from Small Manufacturers in Kenya," Working Papers in Economics 27, University of Gothenburg, Department of Economics.
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    Cited by:

    1. Amavilah, Voxi & Asongu, Simplice A & Andrés, Antonio R, 2014. "Globalization, Peace & Stability, Governance, and Knowledge Economy," MPRA Paper 58756, University Library of Munich, Germany.
    2. Amavilah, Voxi & Asongu, Simplice A. & Andrés, Antonio R., 2017. "Effects of globalization on peace and stability: Implications for governance and the knowledge economy of African countries," Technological Forecasting and Social Change, Elsevier, vol. 122(C), pages 91-103.

    More about this item

    Keywords

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

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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