Globalization and Africa development

Globalization and Africa Development

Oscar Gumiriza Writing 102 Karon Harden 3rd November 2013

Globalization and Africa development

Abstract In the world, people have different belief on the phenomenon of globalization. Some question whether it helps the achievement of global development, while others insist that it really plays a significant role to improve the world. This paper analyzes both positive and negative effects of globalization on Africa development, particularly Sub-Saharan Africa. The paper concludes by suggesting some solutions that could help Africa to cease bearing the negative effects of globalization and benefit from it efficiently. Key words: Globalization, sub-Sahara Africa Introduction Before the Second World War [WW II], the economies of continents were much more independent from one another than today. Each continent produced what her people needed without much thought to international trade. In the 1950s there was a significant acceleration in international trade, which caused by the development of the technology (commercial airplane travel, telephone and TV communication, etc.) that facilitated and attracted many countries to interact together in what is called globalization to improve their economies. Nonetheless, people argue that the world did not enjoy integration entirely Gerard Stoudmann (2006), and some other authors in different articles view globalization positively. Stoudmann acknowledges globalization as phenomena based on integrating all countries of the world to maintain its sustainable development. Thomas Larsson (2001), defines globalization as [a] process of world shrinkage, of distances getting shorter, things moving closer. It pertains to the increasing ease with which somebody on one side of the world can interact, to mutual benefit, with somebody on the other side of the world (p. 9). Like these two authors, Stokes (2011) argues that globalization is a potential and actual movement of interacting nations by breaking down cultural and commercial boundaries to promote free-market in the global world. In Beurais report of 2011, globalization raised the Gross Domestic Production [GDP] of sub-Saharan African countries by 4% and 5% in Asian countries. However, other people view globalization as negative phenomena. They say that globalization benefits rich countries only while poor and developing countries just suffer its negative effects. For instance, Ekanem and Ekefre (2012) view globalization as neo-colonization, and through it, poor countries became dump of non-recyclable products of western world industries. Additionally, Giddens, S.T.Akindele and Gidado (2002) also view globalization as process of frightening and over-exploiting poor and developing countries resources by western industrialized world. According to Obadina (1998), Globalization is the threat to poor instead of being an opportunity for development. In this paper, the aim is to learn more about these different ideas that come from different people about the concept of globalization and how it

Globalization and Africa development

affects developing and poor countries. Furthermore, some objectives of the paper are to know if really globalization favors inequality in development, where the problem is, and what can be done to cease or change the situation. Definition and Historical Perspectives Globalization is defined by the Encyclopedia of New American Nation as the course of incorporating different nations economically, culturally, as well as politically into a bigger society which is capable of leading such nations all over the world to institute an increasingly closer contact. Friedman and Kaplan in preserve article (2012) gave their own view about globalization. They noted it as the act of integrating different geographical economies including market and finance, technologies, especially information and communication technology in such a way that minimize the globe into a minute place which allow individuals from diverse regions to contact each other in a faster way. Furthermore, Anthony Gidden (2012) sees globalization as the amplification of communal relationships across the world that brings together far-away vicinities so as to share activities among themselves.

Historical records across the world about the origin of the idea of globalization indicate that it started decades back though there are lots of variations as to when it actually started. According to an oxford journal European Review of Economic History (2002), some historians believed that globalization started as far back as 1492 in support of Adams Smiths idea of 1492 as being a significant period in world history. Others said globalization started years before 1492 while some historians still believed that the discovery of the water ways by the Europeans in the year 1500 which enable goods to be moved from one nation to another was the beginning of globalization (William, 1999). Bringing us to the modern days, the World Bank reported that globalization started immediately after the Second World War but has stepped up significantly by the 1980s which according to the report, was motivated by two key features. The first entails the technological progress that has lessen the transportation expenses, information and communication technology and computation which to a large extent has made it possible to transact businesses across

Globalization and Africa development

countries. The second feature involves the rise in reform which brought about liberalization especially in trade and commerce. In respective of when globalization starts, it has become a general phenomenon today. According to Jrgen Osterhammel and Niels P. Petersson (2005), the concept of globalization was virtually left inactive over the past decades. It was only seldom used in some special periodicals until during the 1990s when globalization became accepted by more people and was incorporated into the terminology of many. Significance of Globalization Globalization brought about the integration of many nations which resulted in boost of trade and commerce. Nations all over the world are becoming less protective to their economy against the inflow and outflow of goods and services through the removal of many barriers in addition to providing a nontariff business environment. Globalization has promoted the concept of free trading between countries. According to the World Bank report (2009), practical facts such as the increase of GDP and high rate economic development in general proved that the concept of globalization has extensively increased East Asian (China, Korea) trade and economic development of western industrialized countries; nevertheless, as claimed by Abdi (2010), some developing countries engaged in globalization do not enjoy any benefit especially in the sub Saharan Africa which is the focus of this paper. Globalization in Developing and Poor Countries: As important as globalization to the developed countries, developing and poor countries are not favored by the concept. According to Ali Abdi (2010), the concept of globalization does not support Africa. Africa suffers effects of globalization due to low competitiveness of its industries in comparison to western industries. Other developing worlds (Latin America and Asia) also had the same case, but for Africa it is worst. As Sundaram, Schwonk, and Arnim, (2011) points out, Africa failed to compete in global market due to the lateness of getting independence from its colonial masters. According to them, since 1950 there was global industries importation where Latin America and Asian countries got their industries because they were independent already. However, African countries started getting independence in the 1960s,

Globalization and Africa development

and they got industries in the 1970s. Unfortunately, in 1980s global market competition started while African industries were infant which was the main reason of failure. Obviously, the failure was not good towards africa economic development because most of her productivity started dropping down gradually. Global income of poorest African countries declined from 2.3 to 1.4 between 1984 and 1999 while during this period of time five richest countries development rose from 70 to 85percent (Giddens, 1990). According to Gidado etal (2002), the worst to Africa is that GDP of twenty Sab-Saharan African countries was lower in 1999 than it used to be in the last 20 years. From World Banks report of 2000/2001, GDP of developed countries was increasing at rate of 6% and above while it was 5.3% - 4.3% for Asian and Latin American countries. Sub-Saharan countries growth development was under 2.4 percent in 1990-1999. Additionally, according to Ortiz and Cummins (2011), developing and poor countries mainly sub-Saharan Africa have been suffering unequal distribution of global income. As they explain it in UNICEF Policy and Practice report of 2011, since 1990 - 2007 rich nations took a considerable ration of global income compare to the poor. The following tables contain statistical details on global income distribution from 1990 to 2007 and comparison between poor and developed countries. Table 1 Comparison of Poorest and Richest Population Quintile in the World and Their Gross Production Capital Poorest Country Quintile GDP (Qi) per capita Dem. 5 77 Rep. of Congo Liberia 5 113 Dem. 4 129 Rep. of Congo Haiti 5 132 Burundi 5 156 Niger 5 175 Central 5 178 Richest Population Country

12,504,557

Luxembourg

Quintile(Qi) GDP Population per capita 1 136,936 95,999

725,457 12,504,557

Singapore United States

1 1

121,781 917,720 109,373 60,316,000

1,944,017 1,567,596 2,827,937 851,481

Luxembourg Norway Ireland Switzerland

2 1 1 1

84,096 81,739 80,832 73,248

95,999 941,831 871,386 1,510,223

Globalization and Africa development

African Rep Lesotho 5 191 406,335 Dem. 3 193 12,504,557 Rep. of Congo Liberia 4 199 725,457 Source: Ortiz and Cummins (2011). Table 2

Canada Seychelles

1 1

72,032 70,113

6,595,200 17,006

Netherlands

69,311

3,276,339

Summary of Unfair Distribution of Global Income in World Population Quintile (Quintile Qi Column in the Table Two Is Derived From Table One) Global income distribution (%) 1990 2000 75.3 74.4 14.9 14.2 5.4 6.3 3.0 3.4 1.5 1.7 99 127 86.1 91.1 87.4

Q1 Q2 Q3 Q4 Q5 # of observations % of global population % of global GDP 85.3 Source: Ortiz and Cummins (2011).

2007 69.5 16.5 7.8 4.2 2.0 136 92.4 88.6

Referring to the data in above tables, Quintile values at Q4-Q5 are commonly owned by poorest countries (see table 1), and Q1-Q2 are for richest countries. When you look at distribution of global income distribution in table 2, Q4 and Q5 countries got 1.5% - 4.2% in of the entire global income in 1990-2007 while Q1-Q2 countries got the share varies between 14.9% and 75.3% .This means that the share of poorest countries on global income varied between 1.5 and 4.2% in this period of time, and the share of rich countries was between 14.9% and 75.3% which is not fair. From this unfairness and impacts, most people are not comfortable with the idea of globalization as its impact appeared to be based on certain factors that include social, educational, and geographical locations of nations among others. Monga (1996) viewed globalization in developing countries as been driven by borrowed cultures, interest, politics and as well the economy itself from European which led to the indigenous African culture, interest, politics and economy been wiped away.

Globalization and Africa development

Kenyan example illustrates the negative effects of globalization. In 2004, the government of Kenya opened doors for international investment in the name of globalization. Consequently, western industrialized countries over imported sugar in the country and it caused undercut of price of sugar produced in Kenya. Sugar cane farmers and Kenyan sugar producing industries suffered loss as the result of the over-importation of sugar (Ekanem S. , 2004). According to Ekanem and Ekefre (2012), Nigeria also met many cases about impact of globalization. In 1989, Nigeria suffered the sale of toxic mosquito coil that was brought by Chinese. Later, in 1998 china sold also more toxic drugs and beef in Nigeria again that affected environment and people as well. Many of tools brought from western industrialized countries destroy the environment due to toxic air that they release when they are dumped. Oil exploration in Niger delta has been done by force of globalization. Consequently, it affected agriculture productivity and fish framing in the area and caused deprivation in population (World Bank, 1995). From those negative effects that underdeveloped countries face, globalization is taken like the expansion of new form of capitalist or re-colonization of poor and developing countries (Aina, 1996). Positive Effects of Globalization Though globalization was seen by poor and developing countries as a major developmental challenge with lots of authors writing about the negative aspect of it; nonetheless, the good aspect of globalization cannot not be over looked. Not just to the developed countries alone, globalization has impacted positively to the poor and developing countries as well. It has impacted in diverse areas of development that includes economic, social, educational, agricultural, and even religiously. The Economic Positive Impact of Globalization on Poor and Developing Countries According to Lee and Vivarelli (2006), globalization has connected and integrated the worlds economy including that of the poor and developing countries since as far back as the 1980s. It has led to a more free trade among countries which perhaps is one of its positive impacts to both poor and developing countries. Home-based industries have seen trade limitations fall providing free access to global markets. Not only has it brought about integration, globalization has also significantly reduced the cost of transportation especially in

Globalization and Africa development

regards to goods and services thereby eliminating the concept of distance while boosting economic activities drastically. Prasad, Rogoff, Wei and Kose (2003) have showed that globalization has assisted in raising the rate of growth in these developing countries by directly affecting those factors of economic development like increase savings, more capital, technology especially Information and Communication Technology, just to mention but a few. According to them, globalization has also impacted positively on the developing countries by encouraging and increasing specialization in production an impact which cannot be over looked. The Educational Impacts of Globalization on Poor and Developing Countries Globalization has equally led to the spread of education internationally with the poor and developing countries also benefiting. According to Etim (2013) Globalization creates spectacular opportunities for increasing the dissemination of information and dialogue (p. 7). He added that through the fast transfer of information, Globalization has bridge the gap between countries making it easy for the exchange of knowledge. Chinnamai (2005) said Through globalization of education, which is being knowledge transfer from the western countries into developing countries, is intended to improve the skills and capability of the people receiving it (p. 9). Chinnamai further explained that globalization has made education in developing countries to pass through series of changes especially in Information Technology in addition to the rapid exchange of knowledge and values among participating countries. Chinnamai added that because the concept of globalization requires knowledge to actively benefit from it, countries especially poor and developing countries are presently refocusing their educational sectors and putting more efforts towards the expansion of that sector. Furthermore, the internet is an example of globalization and it has become an integral part of both the poor and developing countries. Dowling (2006) emphasized that the impacts of the internet on education is vast and has totally transformed the manner education is conveyed, event aught more effort is still needed to distribute internet connection everywhere.

Globalization and Africa development

Solutions Cleary from the above discussion, Africa has had lot of obstacles in her development, and many of them were caused by the dominance of industrialized countries (Sundaram, Schwonk, & Arnim, 2011). This caused Africa to fail in global market competition which gradually increases poverty in the continent; nevertheless, Africa economy needs to develop. Industries and technology are highly needed to improve peoples lives. The problem is how this technology, industries and other essential factors of development will be achieved. As it was clarified by Ajayi (2001) to solve this problem, Africa needs to answer the following questions: Should Africa isolate itself completely from global competitionin order to develop?, what are negative and positive effect of global integration on her development? And what can be done to minimize those negative effects of globalization? The answer of any of the above questions depends on the answer of its preceding one. So, before knowing if Africa should isolate itself, Africa needs to know and balance both negative and positive effects of integrating with other continent in the global market. Africa also needs to look at examples of other nations that integrated in globalization, and how it affected their economies. Afterward, to set up policies that can be used and put those polices into action to minimize negative effects will be the final study that leads to the appropriate decision. According to Omotola (2010) in Africana, globalization is a tool for development even though it may have negative effects when one of members of interaction is dominated. As this paper explored its negative and positive effects, globalization is a best tool for improving economy of poor nations and their peoples lives as well, if it is done properly. The matter is that as it is a new method of international collaboaration, it has challenges and opportunities (Intriligator, 2003). In January 1999 the former secretary-general of United Nations, Kofi Annan called on international business community to interact and strive for world sustainable development. Entrepreneurs from different parts of the world joined together and shared their experience about economic development. As Murphy (2001) explains it, countries that joined by that time benefited from the interaction. Additionally, from the data interview Murphy collected in South Africa, Tanzania, Nigeria and Senegal about whether Africa should cease global economic interaction, his opinion is that Africa has no reason to isolate itself from other

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continent in global market; however, Africa must work hard to be able benefit from this process of globalization which requires being active and participating in interaction (Murphy, 2001). Therefore, what does Africa need to do to successfully benefit from globalization? To answer this question, let us take Singapore and Japan as typical examples and see what they did to cease negative effects of globalization on their development. Starting with Singapore, it is a small country with area of 710km2. It does not have natural resources, but since its independence it has been developing at a remarkable rate, 8.3% (Thangavelu, 2010), (Lai-To, 2000). As Lai-To wrote it, Singaporean government considered and invested in human capital, information technology and education to make deference en development and improve her peoples lives. It also distributed financial institutions all over the country to support small businesses and provide them investment capitals. Additionally, the government emphasized on cultivating good relations with multiple national corporations and cooperation between private and national businesses. One of the most important strategies of globalization that Singapore applied is promotion of foreign investments and free trade that enables and favors importation and exportation of goods in Singapore (Thangavelu, 2010). In East Asia, Japan also has almost as the same situations as Singapore. It does not have natural resources, but it is among most industrialized countries in the world. According to UNESCOs report of 2000, development history of Japan shows that it developed due to its quality education that has been developing day to day since 1950s. The report says that Japanese government established technology in education and gave equal educational opportunity to all citizen of the country which made them to be creative and innovative and brought the country at the level of adopting other poor and developing countries. In Asia, Japan helped several countries including Korea, Vietnam, Philippine, etc. in their development by providing them manpower to create infrastructures. It does this under its long term projects called Initiative for Development in East Asia (IDEA) and Official Development Assistance (ODA) (Sunaga, 2004). From the above discussion about Japan and Singapore, countries that do not have natural resources we can suggest some strategies that Africa can pick form there for her development. The common strategy for both Singapore and Japan is education. Quality education opens peoples minds to think creatively of what can improve their lives even in lack of the natural resources or any other facilities. Additionally, from Mandelas famous quote, he observed that

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education is the most powerful weapon which you can use to change the world. Then, since Africa does not have to isolate from global market and must work hard and participate in interaction to benefit from it (Murphy, 2001), Africa needs to improve quality of education that will enable her citizen to be creative and active in global development. Laboratories for applicable sciences like chemistry, physics and biology are awfully needed to help people think to creatively and apply what they think to discover new things that society needs. Furthermore, distribution of microfinances is also another good strategy that Africa can learn from Singapore to improve Africans life. If this is done successfully, it may help in increasing GDP and GNP and enable people to produce more than they need themselves and used extra yields for international trading. The strategy is based on building microfinances institutions in villages closer to people and teaching them how to save money regardless of how small their incomes are. Moreover, people learn to borrow money in those microfinances (banks) to start small businesses and of course as long as the institutions are closer to people, they assist them in running their businesses and to pay back loans efficiently. This strategy is already started in some African nations (Rwanda and Uganda for instance) and it is really making good changes. Nevertheless, it still need to be enhanced where it is, and initiated where it not started yet. Finally, Africa need to invest in producing what it can produce better than others regarding to her natural resources such as fertile soil for agriculture, production of jewelry (because it has mineral resources in DRC, South-Africa, etc.) and produces as much as possible for use and for international trade as well. This is better than producing different products in lower quantity due higher cost to the lack of specialization. The theory that approves this relationship was invented by British economist, Ricardo in 1809. He said that specialization and free trade will benefit all trading parties, even when some are more efficient producer than others (p. 52) (Karl, Fair, & Oster, 2008). Conclusion Africa had a lot of challenges in her development. Some caused by her people (cultural, ethnic) and others caused by foreigners who want to take advantage of Africa natural resources through international business relationship. Some African citizen think that developed countries will give favor to Africans and help them to improve their lives freely. Nevertheless, in a

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business relationship everyone seeks his/her own benefit. Africans need to strive for self-reliance and improve their lives themselves and develop the continent as well. Thus, Africa should take advantage of globalization and interact to seek benefits. This will easily be achieved only if Africa has qualified people to interact in the relationship. Helpful methods such as facilitating foreign investments and specialization in the production process are also needed to compete in international markets with other continents.

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Globalization and Africa development Obadina, T. (1998). Globalization human right and development. Africa today, 32-63. Omotola, J. S. (2010). Globalization, new reginalism and the challenge of development in Africa. Africana, 87-129. Ortiz, I., & Cummins, M. (2011). Global inequality: Beyond the bottom billion. New York: Social and Economic Policy Working Paper.

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