You are on page 1of 85

The impact of demographic explosion in N.

Africa on the EU labour market (Prospects and future strategies)

Emmanuel N. Zarogiannopoulos

The impact of
demographic explosion in N. Africa
on the EU labour market
(Prospects and future strategies)

EZ, 2005


Consultancy Project - MBA 2004-2006

The impact of the demographic explosion in N. Africa on EU labor market Prospects and future strategies

Prepared by: Emmanuel Zarogiannopoulos

Supervised by: Dr. Sotiris Karagiannis

Colonel Emmanuil N. Zarogiannopoulos was born in 1960 in
the city of Piraeus, Greece, where he finished the high school and
Lyceum. He was admitted to the Air Force Academy in 1978, and,
after a four year course of studies and a high-graded degree study
(with subject Satellite Systems as an Aid in Air Traffic Control),
he was commissioned as a 2nd Lieutenant of the Hellenic Air Force.
As a junior officer, he was assigned to high-readiness units with the duties of
Air Defense Controller, Fighter Allocator and Master Controller. In 1987, he started
his flight training with T-37 training-jets ending up with his operational phase flight
training with fighter-jet aircraft. In 1988, he was commissioned as a combat-ready
PHANTOM F-4E co-pilot, and started his service in an all-weather & multi-role
Fighter Squadron.
He was promoted to the rank of 1st Lieutenant in 1985 and in 1989 to Captain.
In 1996, he was promoted to the rank of Major, in 2001 to Lieutenant Colonel and in
early 2005 to full Colonel.
He has served in various National and International Units, as well as in Formations in
commanding and staff positions, such as: Controller and Master Controller in various
CRCs and ACCs, Staff Officer of Technology Research Division of the Air Force
General Staff, Current Operations Officer of the Regional Air Operations Center of
the NATO Headquarters in Naples-Italy, Current Operations Officer of the Air Desk
of the International Stabilization Forces Headquarters in Sarajevo, Air Force Chiefs
Executive Officer in the European Air Chiefs (EURAC) forum and International
Relations Section Chief of the Hellenic Air Force General Staff.
During his career, training has been of paramount importance, in both the
operational and academic fields, as follows:
- Air Interception School (Greece, USA)
- Air-to-Surface/Surface-to-Air Operations School (Greece)
- Weapons and Tactics School (Honored graduate, as instructor/1st in
- Escape and Evasion/Evacuation School (Greece)
- Sea Survival School (Greece)
- Electronic Warfare Staff Officers School (USA)
- Air Force Staff Officers School (Greece)
- RADAR expertise training course (MARCONI College/England)
- Command & Control School (NATO training center/Germany)
- ERIEYE Mission Crew Training program (Sweden)
- Air Force Air and Ground Trainers School (Greece)
- AWACS Mission Crew Ground Trainer
- AWACS Mission Crew Air Trainer

He has also participated, in a plethora of International Seminars related to

Air Power Doctrine, Air Power Management, Crisis Management, Global
Air Operations, Humanitarian Operations, Asymmetrical Threat Analysis
(by US training team), the annual ECONOMIST Conferences, etc.

In 2004, he achieved a postgraduate degree from C.E.D.S. (Centre d

Etudes Diplomatiques et Strategiques).

The same year, he started attending an MBA program.

His flight experience is considered remarkable, since he has flown more than
1.200 hours with fast double-jet engine fighter aircraft (PHANTOM F-4E), 150 hours
with EW (Electronic Warfare) aircraft as an EW specialist and, more than 300 hours
with AEWACS as Mission Commander.
During his 27-year career, Colonel Zarogiannopoulos has been decorated with
the following distinctions:
- Knight Commanders High Cross of the Order of Merit (National).
- Knight Commanders High Cross of the Order of Phoenix (National).
- Medal for Military Valor, B Class (National).
- Meritorious Command Commendation Medal, C Class (National).
- Staff Officer Service Commendation Medal, B Class (National).
- Commendation Medal for Operation on Peace Keeping Missions (NATO).
- Medal of Observer of European Union for the United Nations (UN).
Additionally, he has been the official National Representative in several
Working Groups, in the frames of NATO and EUROPEAN UNION.
Colonel Zarogiannopoulos is married to Mary Harrison (Australian) and they
have two daughters, Marietta and Agnes, who are in the 3rd year of Marketing and
Communication Department of the Athens Economic University and the 1st year of
Shipping and Maritime Operations of the University of Piraeus, respectively.
He has dealt with sports, possessing a sixth (6th) position award (Parallel bars)
in the 1977 Pan-Hellenic Gymnastic Games. Until the age of 22, he was an athlete of
the swimming team of ETHNIKOS Piraeus, as well as the swimming team of the Air
Force. For the last ten (10) years he has been daily practicing the art of KUNG FU,
possessing the distinction of the BLACK BELT / 1 DAN. He is a lifetime member of
the WBBB (World Black Belt Bureau).
He plays guitar and enjoys particularly reading, listening to the music and
touring with his motorcycle.
Due to the extreme length of his surname, his friends and colleagues use to
call him ZARO and this has been officialized as his nickname.
In March 2005, he retired from the Air Force and moved to Tirana/Albania,
after the acceptance of MT Construction & MT Fidias Group of companies, proposal
to undertake the responsibilities of the Vice President & Quality Manager.
Updated: May 2006










Global market






Macroeconomic preconditions






Export promotion



Government expenditure



Issues of equity and sustainability






Food security and off-farm activities



Small enterprises and employment creation



Environmental sustainability



Policy and industrial growth



Investment and growth



Sources of demand






Domestic capacity building and productivity



Africa and foreign investment



Policy guidelines



Restructuring industry



Developing agro-industries



Importing technology and attracting foreign investment



Raising agricultural exports' market share



Encouraging savings and investment



Helping the rural poor



Encouraging micro enterprises and SMEs



Ensuring stability to create new opportunities




2.1 Dimensions of global change and culture


2.2 The meaning of modernization


2.3 Modernisation and environment


2.4 The idea of modernization


2.5 Local knowledge and changing technologies


2.6 Social organisation, knowledge and livelihoods




3.1 The Mediterranean Environment


3.2 Mediterranean relations with the EU


3.3 The Migrations phenomenon


3.4 Cooperation in the Mediterranean



4.1 Introduction


4.2 International migration


4.3 International migration in the age of uncertainty


4.4 The case of Africa EU








North Africas performance has always been connected to the one of Europe.
The two sides of Mediterranean are today different in several sectors, such as
economy, development, culture, employment and religion and, at this point, the
demographic perspective of last years plays an important role. North Africa was
demographically stable in the past, but today is characterized by a sudden
demographic explosion, especially in Egypt, Algeria and Morocco. In Europe, we
notice the opposite phenomenon. This differential demographic dynamic in the two
shores of Mediterranean causes an intense phenomenon of migration from the
countries of North Africa to the ones of South Europe. This leads to unemployment,
increase of criminality, explosion of xenophobia and racialism, thus creating the
circumstances for destabilization of the whole area.

Up to today there have been made several efforts for the cooperation of
Mediterranean. According to the declarations of Barcelona and Cairo, Europeans are
willing to provide economic motives in the countries of North Africa and create
cooperation in political, economic and cultural sector. However, these efforts have not
lead to any important results, so it is necessary for Europe to make some emergent
decisions concerning the demographic explosion of North Africa, like creating
investment motives for the companies, providing continuous education to their
workers and performing cultural infiltration in the area.

The demographic explosion passed from Southern to Northern Mediterranean

and its effect in security and stability of the whole area, is a major factor of the
strategic environment of Mediterraneans security:

The geopolitical and strategic center is stably shifting the relations of

the countries of South Europe and the countries of North Mediterranean are the fault
line between these two shores.

Mediterranean countries are characterized by important changes in

political, economic and security systems.


The current strategic environment of Mediterranean is characterized by

unpredictable threats and risks that may not give enough time for mobilization.

Europe has realized the above and thats why is deeply interested in Northern
Africas area. Everything starts from the European countries of Mediterranean that are
in direct connection to the Southern Mediterranean. Egypt is the main country of
Africa that is responding to this interest. Special programs are included in all the
cooperation levels and cover a huge area of economy, like industry, information
technology, energy, tourism, water resources, health and education. By this way,
Europe provides the knowledge and practical experience to the workers of North
Africa, in order to create an effective function of enterprises that invest in these

Except for the last century, migration was without physical borders, and the
movements of individuals from one place to another - were not restricted by national
or regional borders, visa systems, or national security fears. In the past, migration was
restricted by other kinds of borders such as the lack of information, weakness of
migration networks, natural hazards, tribal systems, and the primitive means of
transportation. In the era of globalization, information technology, abundance of
knowledge and information, increasing terrorism threats, the rise of national identities
and the claimed clash of civilizations, migration became a major political issue.
Developed countries regard migration as a threatening factor that affects their
sovereignty and national identities, while developed countries regard it as a possible
escape from their political, economic, and social and overpopulation problems.

Economic imbalances in the international economy, globalization, and free

trade agreements stimulate migration streams - legal and illegal. Given the economic
imbalance between Europe and North Africa, migration streams will continue in the
foreseeable future. The volume of illegal migration is a reaction of restricting legal
migration. Economic aid as a means for reducing the volume of legal and illegal
migration is not sufficient.

Liberating human movements between Europe and North Africa is

advantageous for both parties. In the long run, labour market mechanisms will adjust
the pace and volume of migration flows from the south to the north to reach the
equilibrium point, a point that satisfies the needs of the European services and

industries for labour and relief the economic and demographic burdens in North

In this study we examine several issues that cover the above themes, beginning
with the first chapter, where the performances of North Africa in the global economy
are analysed in terms of exports, competitiveness, firms activities, investment,
savings, and industrial growth and so on. Next, we provide the meaning of global
change and culture, where it is underlined that understanding culture helps us to
interpret how people realise things in different cultures and places. Then, a complete
analysis of the Mediterranean environment and relations between European and
African countries follows and we finally conclude with a detailed presentation of the
phenomenon of migration and how Mediterranean countries deal with it. Several
figures, tables and useful conclusions complete the presentation of the assignment.

Data may be described as Primary or Secondary. The first are collected by the
researcher himself, while the second are collected by others to be "re-used" by the

The kind of primary data collected may be either quantitative or qualitative.

Quantitative data originate from responses to structured questions. Therefore, the
results of quantitative data can be summarized with numbers, like percentages,
averages, or other statistics. Qualitative data consist of in-depth answers and
discussions that come from the kind of open-ended questions asked in focus groups.

Secondary data include sources as Biographies, Newspapers, Literature in

general, Handbooks, Policy Statements, Planning Documents, Reports, Historical &
Official Documents, Articles, Periodicals, Magazines, Electronic Sources and so on.

Secondary Sources can be used at several ways. Firstly, they can be used at
getting ideas about the analysis of a subject, the definitions and the sampling frame of
a research. Also, they can be used as Supplement to Main Research and as main mode
of the research. Finally, they apart a very useful element when Direct Data Collection
is not complete or even impossible.

The data used in this study was mostly secondary information. The content
was extracted from various books, articles, periodicals and magazines that referred to
relevant information for both European and Northern African business relations, the
Mediterranean cooperation and the phenomenon of migration and the way it affects
the future of the Mediterranean environment. The author also used some data from the
Statistical Services of Europe and Africa in order to provide several tables and figures
that amplify the readers will to get a more stable idea on the attitudes expressed
throughout this study.

N.. A


The countries in the world economy, which have grown most rapidly, are
those that have been the most active participants in globalization 1 . East Asian, and
subsequently South-East Asian, economies have accelerated their industrialization
based on manufactured exports. South Asian countries too have become major
exporters of manufactures.

The Uruguay Round Agreement's reductions in trade barriers through the

World Trade Organization are providing a further impetus to the expansion of world
trade. In recent years, globalization has been intensified by technological and
organizational changes, which have allowed international companies increasingly to
integrate their production across national boundaries. Foreign direct investment (FDI)
is now the primary force behind further globalization although this "globalization"
often takes place on a regional basis. International production also involves a proliferation of strategic, non-equity links between companies in different countries.
International capital flows, including flows of portfolio capital, have grown as capital
markets have been deregulated and foreign exchange controls relaxed.

Africa, particularly Sub-Saharan Africa, has been slow to participate in

globalization. Although world trade has been rising faster than world output consistently since the Second World War, this has not been true of Africa. For example,
African exports grew more slowly than gross domestic product (GDP) during the
periods 1980-1985 and 1991-1995 2 . As well as seeing, its share of world merchandise
exports fall from a mere 4.2 % in 1985 to 2.3 % in 1996, Africa has seen its share of
total FDI inflows to developing countries halved over the period 1986 to 1996 3 .

David Dollar, 1992.

African Development Bank, African Development Report 1997.
UNCTAD, World Investment Report, 1997.


However, since the mid-1990s, Africa's economic growth performance has

started to improve. As African countries continue to liberalize their domestic economies under structural adjustment programmes, and as their barriers to imports are
gradually reduced, they will find themselves faced with the need to integrate into the
world economy. Integration offers them the opportunity to join in world economic
expansion, but it has its dangers too. There is little evidence that allowing the free run
of market forces in a low-income developing country is enough to make that country
internationally competitive. Yet without that competitiveness, integration may simply
mean the loss of domestic manufacturing capacity in the face of import competition,
and a continued reliance for export earnings on primary products whose demand
prospects are poor.

There is a need to develop industrial policy, which helps African economies to

utilize their comparative advantages in order to compete in the international market at
the level of enterprises. Macroeconomic stability and competitive real exchange rates
are prerequisites for improved industrial performance, but they are not enough in
themselves. Development of competitiveness and enhancement of technological
capability require a strengthening of the rule of law and of property rights so that
contracts can be enforced, and the creation of market-supportive institutions to ensure
competition and encourage market flexibility. A particularly pressing requirement in
Africa is investment in the extension and rehabilitation of the infrastructure
essential if enterprises are to respond to devaluation and other price incentives.
Government investment in this area can provide a stimulus to investment by the
private sector.

Industrial policy also needs to focus on how to spread the benefits of industrial
expansion to bring about true economic development. In particular, the incomes of
both the rural and the urban poor must be raised. Food security and employment
opportunities are essential features of the spread of the benefits to the poor. The fastgrowing economies of East Asia all started on their path of accelerated growth with
relatively even income distributions. This creates effective demand and wide markets
for consumer goods; moreover, with growing agricultural incomes absorbing
industrial output, the integration of agriculture and industry is fostered.



Global market

African countries, therefore, are faced with the need to strengthen their
industrial competitiveness to establish a presence in global markets as exporters of
manufactured goods, and at the same time they need to avoid further falls in their
existing shares of world primary commodity markets (table A). They also need to
defend themselves against erosion of their domestic manufacturing as they lower their
trade barriers and integrate into the global economy.

Although structural adjustment programmes have been in operation in Africa

since the early 1980s 4 , economic liberalization has been taking place only to a limited
extent. An index of the speed of integration into the global economy constructed by
the World Bank using an average of the changes in four indicatorsthe ratio of real
trade to GDP, the ratio of FDI to GDP, the Institutional Investor credit rating, and the
share of manufactures in exportscompared changes in individual developing
countries over periods from the early 1980s to the early 1990s. The findings suggested
that 26 out of the 36 sub-Saharan African countries studied were slow or weak
integrators; only two countries in the region were fast integrators 5 . This reflects the
fact that there have been great differences between African countries in their degree
and type of liberalization, and in the extent to which they have implemented the
programmes they have agreed with the World Bank and International Monetary Fund
(IMF) 6 .

One common feature is that many African countries still impose substantial
protection against imports. Nineteen sub-Saharan African countries for which data on
trade barriers were available maintained in the mid-1990s an average unweighted
level of tariff protection of 26.8 % compared with 6.1 % in OECD countries. Over
one-third of the imports into these African countries were also covered by non-tariff
barriers, compared with fewer than 4 % into the OECD. There is little reason to
suppose that those countries in Africa for which data were not available had significantly lower levels of protection.

P. Mosley, J. Weeks, 1993.

World Bank, 1996.
P. Mosley, J. Weeks, 1995.



A major statistical study of the export performance of Sub-Saharan Africa and other
groups of developing countries over the period 1962-1964 to 1991-1993 has
assessed how each country's export growth results from three separate factors:

The growth of demand for the products, which it exported in the initial period:

this shows changes in exports, which would have occurred if there were changes in
demand only.

Changes in its exports of those products other than the changes, which can be

attributed to demand growth: these changes measure competitiveness in the market

for these initially important exports in relation to other producers.

Export diversification, which is equal to the actual change in a country's exports

less the changes, which can be accounted for by demand growth, and changes in

Sub-Saharan Africa's market shares for its major export products fell during the
period studied, and these products experienced a decline in their importance in
world trade, as well. With the exception of North Africa, all other developing
country groupings increased their exports over and above what could be expected, as
a result of growth in demand. Over the same period, sub-Saharan Africa's exports
also became less diversified. Sub-Saharan Africa's disappointing export performance
cannot be blamed on increases in protective measures imposed in its export markets.
The period saw moves from a less to a more favourable tariff environment, with the
implementation of the tariff concessions of the European Union's Lome Convention
and the Generalized System of Preferences schemes in major markets. Sub-Saharan
Africa received more favourable treatment over the period than other developing
countries in respect of both tariffs and non-tariff barriers. The study concludes that
Africa's poor export performance cannot be blamed on external factors but on
inappropriate domestic policies, including the anti-export biases associated with its
high levels of protection against imports.

Table A: Africa's export performance

Source: UNIDO global database.


The longer that many African countries maintain protection against imports,
the longer it will take to their domestic industries to learn how to compete in their
own domestic markets, although in countries with long and porous land borders,
smuggling may circumvent such barriers. Long-run protection against imports makes
for inefficiency but the gradual phasing-in of reductions in tariffs and non-tariff
barriers does give domestic enterprises a vital breathing space. During a managed
phase-in period, governments, in cooperation with the private sector, can focus on
policy to improve the general competitiveness of the economy and encourage the
development of crucial technological capabilities among sectors and firms 7 .

In certain sectors and enterprises, development of export competitiveness does

not need to wait for the general removal of import protection. No developing
countries or territories, other than Hong Kong SAR and Singapore, have expanded
manufactured exports based on the free trade and in the case of Singapore; there
were extensive additional interventions in the economy. Of the South-East Asian
countries that have become important exporters of manufactures, Indonesia in the
mid-1990s retained an average (unweighted) import tariff of 17.0 %, Malaysia 12.8 %
and Thailand 8.5 %. What is important is to free exporters from the anti-export biases
of a protectionist trade regime: they need a competitive exchange rate, and access to
imported inputs at free-trade prices. Even efficient, technologically upgraded African
enterprises will find it difficult to export in the face of significant anti-export bias.



African countries typically have small industrial sectors and a short history of
manufacturing. They have poor physical infrastructure and limited human capital
endowment, with low levels of primary and secondary education, and shortages of
industrial skills. This constitutes a weak basis on which to develop the necessary
competitiveness in manufacturing production that would diversify export earnings
beyond traditional primary commodities. Any comparative advantage for African
countries, therefore, almost inevitably lies in agro-related industries: industries using
either agricultural products as their main raw material, or those producing agricultural

S. Lall, 1992.


inputs. The further processing of agricultural products can also make an important
contribution to the efficient replacement of imports. Over 70 % of total employment
in Africa and 60 % of manufacturing value-added (table B) is in agro-related
industries. These industries include many labor-intensive activities such as sub sectors
within food processing, as well as textiles and clothing, leather processing and

The production of intensive-intensive goods with mature, readily available

technologies has been the point of entry into the world market for manufactured
exports for virtually all developing countries. Production of goods based on
innovative technology and high labor skills requires a degree of technological upgrading which cannot yet be undertaken other than by South Africa (and to some extent
some North African countries).

Mature-technology goods based on abundant natural resources may also be

suitable candidates for export development but they need to be carefully selected.
Since most natural resources can be internationally traded, they are less a source of
comparative advantage than cheap labor unless there are significant cost reductions
for example, as a result of weight lossin using them in the country of origin. Britain
in the eighteenth and nineteenth centuries did not require domestic cotton in order to
become the world's main exporter of cotton textiles. Similarly today, Africa's
prospective exporters of resource-based products are likely to face competition from
developed market economies, which import those materials 8 . For example, the
possession of natural rubber does not generate an overwhelming cost advantage in the
production of tyres: rubber gains in bulk when transformed into tyres. Although many
developing countries produce tyres for their domestic markets, the world export
market is dominated by a handful of multinationals based in developed countries. In
contrast, a group of South-East Asian natural rubber-producing countries have been
successful in exporting specialized rubber products such as sheath contraceptives and
surgical gloves 9 . However, agro-related manufacturing growth and competitiveness
require new investment, not only in plant and equipment, but also in infrastructure
and human capital.

M. Roemer, 1999.
International Trade Centre, 2001.






























































Non-metallic minerals











Table B: Percentage shares of agro-related sectors in sub-Saharan African

manufacturing value-added
Source: UNIDO global database.







competitiveness is by no means simple even in intensive-intensive activities.

Garments, footwear and toys all require high standards of quality and design if they
are to be acceptable on international markets. Nor is the production technology so
easy to acquire. The equipment can be imported, but the technology is often poorly
defined and diffusely distributed among the production team 10 . For this reason, the
development of export competitiveness in garments in China, the world's largest
exporter, was heavily dependent on investment from Hong Kong SAR. Similarly,
Taiwanese investment has been important in developing footwear exports from China,
and Korean investment in sports footwear exports from Indonesia. These investors
bring key organizational and marketing skills, and contacts with retail chains in


H. M. Leung, J. T. Thoburn, E. Chau, S.H. Tang, 1991.


Europe, North America and Asia. Attracting such investment is vital to African export
competitiveness. Non-traditional agricultural exports such as vegetables, fruit and
flowers also require high standards of grading and quality. These have been pioneered
by, for example, Kenya and Zimbabwe in cooperation with retail chains in the United

A more hopeful feature in the development of intensive-intensive exports is

the possibility of selling to regional and sub regional markets. In these markets,
African exporters may find demand patterns similar to those of their own domestic
consumers and, in this sense, regional competitiveness can more easily be based on
experience gained from home market development. Textiles and food processing,
where international competition is especially intense, could be developed in this way,
particularly by countries such as Ethiopia or Nigeria, which have potentially large
domestic markets. In some cases, informal trade has already mapped out local
regional markets, as in the case of Nigeria's exports of agricultural machinery and

The range of intensive-intensive activities in which low-income countries can

hope to be competitive has been narrowed by technical progress, particularly as a
result of generic technologiestechnologies that can be applied to a range of
manufacturing sectors. Information technology and biotechnology have eroded
traditional comparative advantages, and developing countries need to upgrade their
technological level and human capabilities in order to stay competitive even in
intensive-intensive activities. In footwear manufacture, for instance, information
technology allows the realization of completed designs in full colour and texture on
the computer screen and gives accurate costings, while assembly operations now
demand greater accuracy and the use of robots is increasing. Again, low-cost
production based on regional markets for local tastes may partially circumvent these
problems. While footwear demand in OECD countries has almost reached saturation
point at about six pairs per person per year, in Africa, where consumption is far below
this level, there is scope for great increases in demand as income rises.

It is also important to strengthen competitiveness in traditional primary

commodity export products. Africa's comparative advantage in crops such as cocoa,

palm oil and rubber appears clear, yet sub-Saharan Africa's declining share of world
exports since the 1960s can be attributed mainly to a loss of competitiveness in
primary commodities, particularly in comparison with South-East Asia. There is no
incompatibility between strengthening existing commodity exports and developing
other sectors to diversify, away from primary commodities. In this, Malaysian
experience is a guide 11 . Malaysia has increased yields and labor productivity in its
traditional rubber and palm oil exports, and developed new export crops such as
cocoa. The additional export earnings arising from these products, yields foreign
exchange for the capital goods and technology imports necessary for upgrading
domestic manufacturing activities.

Africa's competitive position has suffered from a recent worsening of the

external environment in two respects. Its traditional trade privileges through the
European Union's (EU's) Lome Convention and the Generalized System of
Preferences operated by major industrial countries have been eroded by the multilateral reduction of trade barriers under the Uruguay Round agreement. The buffeting
which the world economy received in 1997 and 1998 as a result of the Asian financial
crisis 12 also has implications for Africa. The crisis has resulted in falls in outward
direct investment by the Asian newly industrialized countries (NICs) such as South
Korea. There have also been large real depreciations, particularly of the Korean, Thai
and Indonesian currencies. These depreciations render Asian manufactured exports
potentially more competitive in world markets and make African entry more difficult.

To these difficulties is added Africas long-term disadvantage of high

transport costs, particularly for its landlocked countries (table C). However, the
United States' new African Growth and Opportunities Act (AGOA) offers improved
market access to African countries, although it is too soon to predict its likely effects
on African manufacturing exports.


World Bank Papers, Africa Technical Department Series, No 310, 1996.

P. Krugman, 1998.



Transport costs in Africa are a greater barrier to exports than the tariffs they face in
importing countries:

Sub-Saharan Africa's average freight costs are more than 20 % higher than those

of other countries. For some goods, such as clothing, textiles and footwear, in which
Africa is potentially competitive, average transport costs are between 15 and 20 % of
the value of output.

Once the terms of the Uruguay Round Agreement are fully implemented, the

average tariff on all imports into the USA is less than 4 %.

For the continent's landlocked countries such as Uganda, Zambia and Zimbabwe,
transport cost barriers to exports are greater still:

Ten landlocked countries in the early 1990s faced net transport and insurance costs

equivalent to up to 42 % of total export costs. For developing countries as a whole,

this ratio was 5.8 %.

Table C: Transport Costs and African Competitiveness

Source: UNIDO global database.


Macroeconomic preconditions



It is hardly in dispute that some degree of macroeconomic stability is

necessary for successful economic performance. High inflation and grossly
overvalued and unstable real exchange rates inhibit growth. So do macro and other
policy instability. Structural adjustment in Africa over two decades has stressed a
combination of stabilization and liberalization, although the degree to which these
measures have been appliedlet alone implementedvaries considerably between
countries. The pressure on governments to withdraw from economic activity can
accompany stabilization from an early stage.


The challenge is how to design stabilization policies in a way to reduce the

conflicts between stabilization and growth, and to reduce the detrimental impact on
the poorest members of society. The early stages of stabilization involve the reduction
of high inflation levels, substantial cuts in budget deficits, and devaluation to correct
current account deficits. Restrictive fiscal and monetary policy can have a drastic
effect on consumer purchasing power and capacity utilization in domestic industry.

Inflation causes the real exchange rate to appreciate and stabilization policies
require the inclusion of a corrective devaluation. The greater the supply response to
devaluation, the less is macroeconomic restriction needed to correct current account
deficits. In this sense, adjustment for a "flexible" economy is less painful 13 . The
freeing of import restrictions can ease the constraint on industrial growth by giving
manufacturers better access to imported spares and intermediate products.

Once initial stabilization has been achieved, policy should center on maintaining a
stable macro environment with a broadly expansionary focus, keeping a stable and
competitive real exchange rate, and adjusting macro policy quickly in the face of any
external shocks.


Export promotion

An important feature of the broader macro framework designed to strengthen

competitiveness is the removal of the anti-export bias that arises in most African
countries as a result of continued protection against imports. Continuing protection
overvalues the exchange rate and leads to a bias against both exports and importcompeting industries in favour of non-tradable such as services. Access to imported
inputs is especially important in Africa since domestic manufacturing often relies
heavily on imports for equipment, spare parts and many raw materials.

Free access for exporters to inputs at world prices does raise the danger that
export activities will develop as enclaves. In fact, this may be desirable at an early
stage of export development. Access to free-trade inputs releases exporters from


C. Morisson, 1991.


domestic supply constraints, and from quality defects in domestic inputs. It puts
pressure on domestic input suppliers to be competitive, while mapping out a market
for them if they eventually become so. In time, however, overseas component suppliers may move to the new location and deepen the economic structure.

Export promotion must work in a speedy and corruption-free manner if it is to

be effective. This raises the question of whether particular African countries have the
institutional capability to operate export-processing arrangements, and highlights the
need to introduce policies in line with capabilities 14 . In the case of North Africa, an
important point is to encourage vertically integrated inward investment from Europe
in clothing.


Government expenditure

The composition of government expenditure is as important as its level. Public

expenditure programmes should be designed with a view to enhancing the
technological and human resource capabilities of the economy that will enable it to
compete 15 . Policy-designed to strengthen the supply responses can improve the
overall competitiveness of the economy. This applies particularly to infrastructural
investment, which encourages rather than crowds out investment by the private sector,
and which increases the likelihood that the price incentives provided by liberalization
will lead to faster growth. Development expenditure on rural infrastructure may be
particularly beneficial, by increasing supply response and reducing transport and
storage costs.


Issues of equity and sustainability



Sustainable development centers on the notion that meeting the needs of the
current generation should not endanger those of future generations 16 . This is a

Levy, 1993.
S. Lall, 1995.
R.M. Auty, K. Brown, 1997.


complex concept, since the preferences of later generations are not known, and nor do
we know what technologies will be available in the future. Raising living standards in
the immediate future will reduce the damage to the environment that results from
pressure on livelihoods when people live in poverty. Social sustainability requires
human populations to continue to function in the face of physical shocks such as
drought or flood and in the face of economic stresses such as fluctuations in crop
prices. The notion of Sustainable livelihoods highlights the interrelation between
sustainability and poverty reduction. Livelihood diversification allows families to
reduce risk and raise incomes. Off-farm employment is a major aspect of rural
households' livelihood diversification.


Food security and off-farm activities

Food security is an essential part of raising the welfare of both the rural and
the urban poor. In Africa, only about 10-15 % of food production is processed
compared with 80 % in developed market European economies. A higher degree of
processing would contribute to food security, as also would improve storage facilities
and increased production of agricultural inputs, especially if food-marketing systems
were strengthened at the same time.

Given agriculture's importance in GDP and its potential linkages to other

sectors, increases in agricultural productivity would be a significant stimulus to the
spread of growth and employment. Off-farm employment, providing diversified
income sources, can contribute to sustainable income growth and food security.

Whether Africa could use agricultural expansion to lead industrial growth,

particularly in rural industries, depends in part on its potential for raising agricultural
productivity (see Table D). In fact, increases in food production are likely to be more
dependent on improvements in infrastructure and market integration than on technical



Livelihood diversification occurs when households set up a diversified portfolio of
economic activities and social support in order to survive and improve their standard
of living. In sub-Saharan Africa, 30-50 % of rural incomes frequently come from nonfarm sources. Rural off-farm employment can be an important contributor to such
income, although in Africa many off-farm income sources are non-rural.
Off-farm employment can be driven by improvements in agricultural output and
productivity, which stimulate industrial and service growth. Yet not all increases in
off-farm employment mutually reinforce agriculture and industry. There are cases
where growing off-farm employment is accompanied by stagnation in agriculture, and
urban firms may come to rural areas simply to gain access to cheap labor. Farm output
may even be damaged by increases in non-farm employment.
Where farm output and incomes rise as a result of agricultural productivity increases,
this generates demand for industrial consumer goods and for farm inputs. Various
empirical studies for Africa suggest that for every additional dollar of value-added
generated in agriculture, non-farm income of between US$0.50 and US$1.90 is
created. In Africa, these multipliers consist mainly of non-farm consumer expenditure
on non-farm products, rather than forward or backward linkages.
Given Africa's diversity of cropping systems, soils and climate, and its more riskprone agriculture, the massive and widespread productivity increases seen in Asian
agriculture are unlikely to take place. Africa also has more widespread seasonal and
locational labor shortages in agriculture than does Asia. Any breakthroughs in African
agricultural productivity are more likely to occur on a narrower front.

Table D: Rural Industrialization, Income Diversification and Sustainable Livelihoods

Source: F. Ellis, Household strategies and rural livelihood diversification, Journal of
Development, Studies, 1998.


Small enterprises and employment creation

Employment growth spreads the benefits of development. However,

developed countries' industrial growth since the mid-1970s has done little to increase


employment and unemployment has risen, particularly among unskilled workers. SubSaharan manufacturing employment started to decline during the 1980s and in many
countries, this is associated with declines in manufacturing value-added. Small and
medium enterprise (SME) development is often seen as a way of generating
employment-intensive industrial growth but SMEs are not, invariably, more intensiveintensive than larger firms 17 .

There is now an accumulation of evidence that SME growth both in industrial

and in some developing countries has been associated with increasing export
competitiveness. The "flexible specialization" model of Piore and Sabel 18 has made
famous the SME clusters and industrial districts of Italy as a means of achieving
competitiveness in garments, footwear and other intensive-intensive exports.
Developing countries have used clustering to maintain export competitiveness;

Many of the small enterprises in Africa are micro enterprises. African firms
with more than 50 workers are often considered as large 19 . Micro enterprises employ
only a handful of workers, who in many cases are family members or relatives. In
Uganda, for example, one survey in 1988 found that enterprises with more than four
workers accounted for only one-quarter of the industrial workforce 20 . Such micro
enterprises face many different constraints than "proper" small and medium firms and
require somewhat different policies. Policies regarding micro enterprises should be
concerned as much with supporting household livelihood diversification as with
supporting industrial development in the more conventional sense (see Table E).


I.M.D Little.
M.J. Piore and C.F. Sabel, 1987.
I. Livingstone, 1991.
Industrial Development Review Series, 1997.



Micro finance has been widely suggested as the key to micro enterprise expansion,
but micro enterprises face many constraints that cannot be relieved simply by
injections of capital. These constraints relate both to the external environment in
which the enterprises operate, and to the characteristics of the enterprises themselves:

Micro enterprises are often more like households than. They may switch between

activities, and be concerned more with household survival than with growth.

Profits may be invested in assets such as land rather than in the enterprise, if such

assets promise better long-term security to the household.

Micro enterprises may hesitate to "grow into formality" if this increases the risk

that they will be subject to burdensome regulation or to the predations of the state.
Much "credit" in Africa takes a non-monetary form, such as the lending of labor
or tools.

Table E: Micro enterprises, Micro finance and Growth Constraints in Africa

Source: G. Buckley, "Micro finance in Africa: is it either the problem or the
solution?", World Development vol.25, no. 7 (July 1997).

A particular issue is that African micro enterprises usually fail to grow

("graduate") into being small enterprises, and small enterprises (say under 10
workers} may not graduate into medium ones. There is a "missing middle" of medium
enterprises. In practice, of course, growth constraints on small businesses are likely to
differ between sectors. For example, some sectors, such as engineering, are
constrained by foreign exchange availability for spare parts or raw materials. Lack of
consumer demand growth is a serious constraint in certain sectors. The availability of
credit to assist growth is probably a more serious factor for small enterprises than for
micro enterprises: there is some evidence that costs for small firms rise in the early
stages of their expansion. A study of garment manufacturers in Kenya found both
consumer demand and the availability of finance to be key factors in the growth of
firms (see Table F).



A study of growth in an original sample of 91 firms in Nairobi in 1989 traced their
subsequent development into the 1990s. The sample comprised firms employing between 4
and 49 workers, and covered custom tailors, contract garment workshops, mini-manufacturers
of garments and mass-producers of garments. Most of the entrepreneurs were female although
this varied between subsectors. Most firms had been started with the owner's own funding,
supplemented from family sources. The survey found:

Larger firms in the 1990s were generally those, which had started with larger capital,

rather than smaller ones that had grown.

The period 1990-93 saw a decline in Kenyan per capita income. This inhibited the growth

of firms selling to urban consumers more than that of firms selling to rural markets.

Firms were more likely to have grown if their proprietor had had some secondary

education. This also gave access to wider support networks.

Many firms had access to credit, but only three of those without credit succeeded in


Although many of the firms studied were situated in the same location within the city,

there was little evidence of "clustering" in the sense of subcontracting or other interfirm
contractual relations although firms did sometimes help each other with repairs and in
preparing designs.

Table F. The Growth of Garment Manufacturers in Kenya

Source: D. McCormick, M.N. Kinyanjui and G. Ongiie, "Growth and barriers to
growth among Nairobi's small and medium-sized garment producers", World
Development, vol.25, no.7 (July 1997).

SMEs offer considerable scope for technological upgrading to judge by the

experience of other developing countries. If at the same time this enables them to
become internationally competitive, it can be an effective way of generating growth in



Environmental sustainability

With increasingly strict environmental regulations being imposed in the

developed world, developing countries are forced to meet higher environmental
standards to gain market access for their exports. What are the determinants of an
environmentally sustainable industrial development path for Africa?

Environmental regulations can affect process standards, product standards and

standards of discharge. The need to comply with international environmental
standards affects the competitive climate because compliance costs are imposed on
enterprises, and regulatory costs on governments. These costs could result in the loss
of share in overseas markets.

Looking at national competitiveness in terms of attracting foreign investment

rather than in terms of effects on exports alone, there is little evidence that developing
countries are becoming "pollution havens" where stricter domestic environmental
standards would deter inward investment. Developing countries attract foreign
investment mostly because of their low labor costs, technological base, and political
and policy stability.

There are some cases, though, where compliance requirements do harm

exports. One is Zimbabwe's export of beef and ostrich to the EU. Quarantine
regulations and expensive blood tests made it costly to export live birds, and EU
requirements that beef should be inspected before it leaves the exporting country
discouraged Zimbabwean exporters. Eco-labeling too is a likely impediment to
African countries' penetration of markets in industrial countries.

Integrating industrial and environmental policies on the purpose to achieve

"ecologically sustainable industrial development strategies" would also help to ease
the detrimental effects on competitiveness caused by environmental compliance. An
important part of such strategies is making enterprises internalize the environmental
and social effects of their production. The traditional regulatory methods used in
industrial countries require effective monitoring and enforcement systems; these are
often lacking in Africa, where fiscal methods may be more effective. The latter

include taxation, accelerated depreciation, effluent charges and administrative

charges, and the use of tradable pollution permits. One particular area where research
and assistance should be directed is that of helping SMEs to adopt cleaner production
processes. This assistance could include demonstrations of the economic and
environmental benefits of such processes. Training programmes and research into
cost-effective solutions to pollution problems would also help.

In Africa at present, industrial pollution is low by international standards. The

continent has yet to rise much on the inverted U-shaped trajectory followed by most
countries during the development process, whereby pollution rises with the level of
industrial development before falling again as the pattern of demand switches away
from manufactured goods towards services 21 . Africa's more pressing environmental
issues concern the depletion of water resources, soil degradation and deforestation.
Poverty alleviation is a crucial dimension in treating these problems, where societywide livelihood improvements are necessary to relieve ecological pressure 22 .


Policy and industrial growth

1.6.1 Investment and growth

Industrial growth in Africa depends crucially on raising the share of

investment in national output. Higher investment allows new technologies to be
embodied in production, and at the same time technological progress drives
investment growth. "Total factor" productivity growthgrowth beyond that which
can be explained by the growth of capital and labor inputs is closely associated with
rises in investment. Manufacturing expansion leads to productivity growth by facilitating learning-by-doing, technical change, economies of scale and inter-enterprise
specialization. In fact, manufacturing value-added actually fell in Africa from 11.3 %
of GDP in 1980 and 11.8 % in 1990, to 10.9 % in 1995 23 , a contraction due in part to
structural adjustment in sub-Saharan Africa.


R. M. Auty, M. Trible, 2000.

J. Cameron, 2000.
Industrial Development Global Report 1999.


The interrelationship between investment and growth can be either a virtuous

circle or a vicious circle. High growth can stimulate investment by raising aggregate
demand and encouraging technical change. Growing incomes allow savings to
increase both absolutely and as a share of GDP so as to finance growing investment.
Yet Africa risks being caught in a trap where poverty limits savings, low demand
limits investment opportunities, and low investment inhibits structural change and
productivity growth. Little structural change has taken place. The share of agrorelated industries in the 1990s remained similar to that in 1980or indeed 1960. It
has been estimated that investment needs to be at least 13 % merely to cover
depreciation of the capital stock 24 . Breaking out of this situation will require efforts to
mobilize domestic savings, improve the effectiveness of financial institutions
channelling funds from savers to prospective investors, improve investment incentives
and enhance the efficiency of investment.







environments with positive real interest rates encourage savings. Macroeconomic

stability and, stability in economic policy more generally, encourage investors to
believe in the credibility of policy and take the long-term view necessary for
industrial investment.


Sources of demand

Investment growth depends on demand. In the case of goods where

international competitiveness can be developed, export growth will stimulate
investment. In other sectors, particularly those where international markets are
exceptionally competitive, such as textiles, clothing and footwear, domestic market
growth too will be crucial. These basic consumer goods, which have low-income
elasticity of demand in industrial countries, still have high-income elasticity of
demand in Africa. Continuing protection of domestic markets will give producers
some breathing space to become more competitive against imports although they
often face fierce competition from imported second-hand goods from Europe. There
will also be some "natural" protection resulting from differences in domestic consumer tastes from those of the international market. African income levels are so low

Industrial Development Global Report 1999.


that even the markets of the most populous countries are small at present. Nigeria's
domestic market in 1995 (in terms of GDP in US dollars at market exchange rates)
was only one-tenth that of Belgium, one of Europe's smallest countries. These small
market sizes compound the need to develop exports.

Domestic demand depends on GDP growth and macro policy. The short-term
credit and other macro restrictions associated with bringing domestic inflation under
control will need to be replaced by steady macro-economic expansion compatible
with maintaining price stability. Such expansion would help to increase capacity
utilization and thereby lower costs and create employment. Capacity utilization would
also be aided by the increased availability of imported spare parts and intermediate
products that would result from the additional foreign exchange earnings generated by
manufacturing expansion. Employment creation would help to create the broad-based
demand necessary to stimulate new investment.



The investment necessary for industrial expansion requires increases in

national savings. Savings come from households', enterprises and governments.
Household savings strongly depend on the level of household income, but they are
also stimulated by greater macro-economic stability and by the soundness of the legal
and financial system, so that savers feel their assets are protected. Enterprise savings
can be encouraged by tax concessions on profits that are used for new investment, and
government savings will increase as government brings fiscal deficits under control.

African savings are low by the standards of other developing countries and,
for most of the 1990s, they were around half those of Asia when measured as a
proportion of GDP 25 .

Using foreign savings can be a valuable way of financing domestic investment

in low-income countries. Africa remains more heavily dependent on external sources


World Development Report, 1999.


of savings than developing countries generally and is heavily dependent on inflows of

official development finance, as well.
Financial intermediation between savers and investors depends in Africa, as in
other low-income areas, mainly on the commercial banking system. Banks have an
obvious preference for lending to large, well-established enterprises; they face serious
information problems in lending to small firms and especially to micro enterprises.
Informal sector financial institutions also have a key role in mobilizing savings. The
provision of savings facilities for the poor in some respects is as important as
provision of credit to micro-enterprises. Savings are a path by which people can
achieve financial independence and micro enterprises self-sufficiency.

Improving the channeling of investments funds to micro and small

enterprises, would improve in principle both growth and equity and these enterprises
could be a key force in the private sector development of manufacturing 26 . The
improved financial access for SMEs is essential and, this is especially because of their
needs for fixed (in relation to working) capital rise as an outcome of expansion.

Informal financial institutions have been important in supporting industrial

investment and growth in SMEs in Asia. In Africa, links between formal and informal
financial sectors are minimal. Informal sector credit providers specialise in an
extremely limited range of services. Many small enterprises are deterred from
approaching moneylenders because of their high charges, and would use them only
for very short-term working capital. There are gaps in provision for small enterprises
whose capital requirements are too substantial for the informal sector but which are
not seen as attractive prospects by banks.

Government policy regarding the promotion of lending to micro and small

enterprises has increasingly acknowledged the need to avoid subsidized interest rates,
which discourage savings and encourage low-return projects and excessive capital
intensity. Charging market-based interest rates helps micro credit agencies to become
self-sustaining, although such sustainability is not necessarily a guarantee of their
effectiveness in promoting the growth of their clients. Credit may also be more


Industrial Development Global Report 1999.


effective if provided along with other services to small businesses, such as business
incubators, small-firm industrial estates, maintenance and training centers and
marketing and procurement assistance. However, the advantages of such
arrangements need to be partially offset against the difficulty of an institution
simultaneously offering help and collecting loan repayments.

For small and medium-sized businessesas opposed to micro enterprises

credit guarantee schemes offer a path whereby commercial bank lending can be
encouraged. These schemes help to familiarize banks with lending to SMEs, while
reducing the risk and transactions costs of doing so.


Domestic capacity building and productivity

Human and technological capacity building is important even for the

development of low technology, intensive-intensive and resource-based industries.
The processing of natural resources needs skills similar to those of general
development of the manufacturing sector. There is no contradiction between
specializing in low-technology activities in the first instance and, in the longer-term,
there should be an evolutionary development of technological capacity, If lowtechnology exports can be developed, they generate foreign exchange for technology
imports and technology embodied in capital goods. This exporting offers contacts
with buyers in industrial countries who can advise on technology. Modification of
imported capital equipment to local conditions facilitates technical learning among
domestic technicians.

Governments can provide a framework for the acquisition of national

technological capability by investments in education and in infrastructure. Human
capital development needs education as its foundation. Secondary education enhances
the effectiveness of in-house labor training by firms. In process industries such as
textiles, short training within firms is sufficient for most jobs and requires only that
workers have a sound elementary education. While North African and some subSaharan African countries such as Zimbabwe have high proportions of children of primary school age enrolled in school, the proportion is still low in a number of
countries. The disparity in growth between primary and secondary enrolments could

be interpreted as a reflection of worsening income distribution. While the benefits of

extending the education system are necessarily long term, training programmes to
develop managerial and engineering skills among secondary school graduates would
have an immediate effect, and are fruitful areas for donor support. They would
provide a cadre of potential managers and technicians whose skills could be further
developed at a later stage by industry-specific training.

Africa's long-term industrial growth and competitiveness is greatly impeded

by its poor infrastructural capacity. Relieving these constraints should be a priority for
government development expenditure. Many sectors have higher costs because of
deficiencies in transport systems. In the case of large firms, costs are raised by the fact
that they typically need to sink their own boreholes and install their own generators.
For small firms, which cannot afford such expenditure, other problems arise. Privatization of infrastructural facilities is an important potential way of raising
investment: Malaysian Telekom's investment in telecommunications in Ghana and in
Guinea is an example 27 .

At industry level, policy designed to foster the growth of technological

capability in larger, formal-sector firms requires that a view be taken on which sectors
have the best potential to be internationally competitive. In addition to static
comparative advantage differences such as the relative intensity-intensity of
production, the ease of acquiring technological capability varies considerably between
sectors. Some sectors, such as the production of complex machinery, use job-shop
production processes requiring high-level skills in production planning on the part of
management and a highly skilled and experienced labor force. Some sectorsagain
such as complex machinerymay also require sophisticated networks of suppliers,
which simply may not be available in a low-income country. In contrast, cotton
textiles can be produced with process technology and relatively small numbers of
skilled technicians. Suitable industries can be fostered by giving them protection
against import competition (or, more usually, continuing existing protection), but with
a pre-announced timetable for removing that protection once they are expected to
have become competitive. Industry-specific training can be provided by government


UNCTAD, World Investment Report, 2000.


and financed by compulsory levies on firms, to avoid some firms free riding on the
training financed by others.

At the firm level, there is scope in the formal sector for bringing the
productivity of existing firms up to the level of the best in 'the domestic economy.
There is considerable evidence of productivity differences between firms using
similar technologies, both within national economies and internationally 28 . Since in
African economies there tend to be fewer of the informal contacts and less skilled
labor mobility between enterprises than is the case in industrial countries, it may be
necessary to import foreign technological skills in the form of foreign technicians to
improve local labor, technical and management practices. There is also an important
role for encouraging multinational FDI in order to establish international best-practice
production methods. There is now little evidence that multinationals use
"inappropriate" capital-intensive technology when they invest in developing
countries 29 .

Fostering the technological capabilities of small and medium firms raises

some different issues. One is the importance of clustering (also important in the
development of competitiveness of geographical concentrations of larger firms too).
Clusters involve specialization, the growth of specialized services, and the
interchange of information and technology. They may be organized around large
firms, which subcontract to smaller ones, or they may involve relations between firms
of similar size. As well as national-level policies for education, training and
infrastructure development, SMEs' development can be aided at the sub-sectoral level.

However, it is important not to be falsely optimistic about such developments,

given that they involve the micro enterprises that characterize so much of sub-Saharan
African manufacturing. For example, these enterprises are highly unlikely to be able
to provide products of sufficient quality to be used as subcontracted inputs by larger
formal-sector firms. Although African micro-enterprises can be encouraged to
mechanize and upgrade technologicallyfor example, through rural electrification
programmesthey are unlikely in the near future to become like the export-oriented

H. Pack, 1990.
R. O. Jenkins, 1990.


SMEs of Brazil or China. They are even less likely to become as the SMEs of Japan,
whose export competitiveness is, in any case, indirect because their growth has been
associated with the Japanese system of highly outsourced "lean production" now
widely copied in the West. Industrial policy towards clustering in Africa should focus
on the more formal small and medium enterprises.


Africa and foreign investment

Inflows of FDI into sub-Saharan Africa more than doubled between 1993 and
1996, rising to US$4.02 billion from US$1.95 billion and increased again by more
than 30 per cent in the following two years to total US$5.29 billion in 1998. Although
this rate of increase is much less than the more than threefold increase between 1993
and 1998 in FDI for developing countries as a wholeand consequently causes a
substantial fall in Africa's relative share of that inflowthe rise partly reflects the
large increase in direct investment in China.

Within Africa, FDI flows tend to

concentrate in a small number of countries. In North Africa, Egypt is the main

attraction taking more than 40 % of FDI to the region in 1998.

Mineral resources continue to attract foreign investment. High-value agricultural products have also attracted the attention of foreign investors and cut flowers,
which can be air freighted to market, are another area, which has expanded. Although
fruit and vegetables can be grown by smallholders, capital requirements for
internationally competitive products can be substantial, and foreign investors have
taken the lead in such developments. Floriculture too has heavy capital requirements.

Foreign industrial investment is likely to be attracted to countries with

potentially large domestic markets, like Nigeria. The rises in sub-Saharan African
GDP growth rates, which started in 1993, enhance the prospects for such investment.
Smaller foreign investors can be attracted to local niche markets in smaller countries
such as Ghana and Uganda where policy reform and political stability have improved
the investment climate. An example is Indian investment in the engineering industry
in Uganda, attracted by the local market for agricultural implements 30 . African


UNCTAD, World Investment Report, 1999.


countries with very small populations and low per capita incomes, offer domestic
markets that are scarcely as large in terms of purchasing power as those of European
provincial towns. They need to attract export-oriented FDI, including FDI in tourism.

Geographical proximity and cultural affinities are also facilitators of FDI

flows. Sub-Saharan Africa has suffered from a lack of such links but its prospects are
improving. Political stability in Uganda has seen the return of Indian investors, and
links with the Indian sub-continent are important throughout East Africa. North
African countries, which have benefited from historical contacts with the EU, may in
the future move intensive-intensive processes to lower-wage locations in sub-Saharan
Africa. Also, there is already evidence of Asian investment in Africa. In the
automobile industry, Hyundai is investing in Botswana and Daewoo in Morocco,
while a company from China has invested in brewing in Ghana 31 .

Another potential source of investment funds for Africa is foreign portfolio

investment. Africa's emerging stock markets may be the final frontier for international
investors, particularly after the 1997-1998 financial collapse in Asia. There are active
stock markets in a number of African countries including Ghana, Kenya, Namibia,
Nigeria, Zimbabwe and, of course, South Africa and several North African countries
also have thriving stock markets. The expansion of stock markets is closely associated
with domestic liberalization and facilitates the privatization of State-owned
enterprises and public utilities. Among the top companies, large multinational
agribusiness companies are heavily represented. Of the top thirty-five, half have
agribusiness interests, including Brooke Bond, Lonrho, Lever Brothers, and Nestle 32 .


Policy guidelines


Restructuring industry

Since the mid-1990s, African economies have started to grow fast enough to
produce a rise in real incomes per head, but there is little sign yet that manufacturing
value-added too is growing consistently. Some de-industrialization during the first 15

UNCTAD, World Investment Report, 1999.

African Development Bank, 2000.


years of structural adjustment was probably inevitable, with the reduction in support
given to inefficient firms that had developed under the import-substituting
industrialization policies of the 1960s and 1970s. More of these firms may have to be
given up in the future. Internationally competitive export and import-competing
industries must be built on African countries' existing industrial base, so that Africa
can prosper in an increasingly open international economy. The industrial base
consists overwhelmingly of agro-related sectors. In a continent where agriculture
employs nearly two-thirds of the workforce but produces less than a quarter of GDP,
the use of industrial development to raise agricultural productivity could accelerate
growth and raise living standards. Agricultural output could be stimulated by the
production of inputs such as fertilizer and simple machinery, and by the further
processing of agricultural products.


Developing agro-industries

Africa's agro-related sectors include a range of industries in which there is

potential comparative advantage. It is unlikely that Africa will become a world-class
exporter of tyres on the basis of its rubber, or of chocolate based on its cocoa, since
there are location advantages to producing these in the consuming countries. Agrobased industrialization must be selective. Nigeria and Ethiopia could follow Brazil's
example and develop exports of leather goods and footwear based on their potentially
abundant supplies of leather. As technology develops, high-value specialized rubber
exports could be developed, as has been done in South-East Asia.


Importing technology and attracting foreign investment

Industrial competitiveness and productivity growth depend on strengthening

technological capability. This has been demonstrated by the rise of East Asian countries, which, despite their recent financial difficulties, remain formidable competitors.
There is no contradiction between acquiring technological capacity and an initial
specialization in intensive-intensive, low-technology products. These exports provide
the foreign exchange with which to import technology. The problem is that to start
such exports often requires foreign investment. Efficient export promotion
arrangements, such as EPZs, are key features, but require bureaucratic efficiency and

a relative absence of corruption. Incentives for textile and garment investment will be
weakened by the phase-out of the MFA by 2007, although low labor costs will remain
an important attraction.


Raising agricultural exports' market share

In the search for export products, it is important not to overlook the need to
raise productivity in many traditional agricultural exports, as this is low by
international standards. Countries like Malaysia and Indonesia, which became
successful exporters of manufactures in the 1980s, also invested in their commodity
exports and have seen their primary commodity market shares rise at Africa's
expense. These shares could be recouped. New agricultural products, such as Kenya's
horticultural exports, face high-income elasticity of demand in industrial countries,
and the markets will become more competitive, with the entry of new producers such
as Zimbabwe. Shrimps are another fast-growing world export market in which Africa
could expand its existing share.


Encouraging savings and investment

Raising the rate of economic growth requires savings and investment to rise.
Rising investment is a vehicle for the embodiment of technical change. To stimulate
domestic savings and investment, macroeconomic stability is needed. Households and
firms must also believe that policies will be sustained. Equally important is the
strengthening of the framework of property rights within the rule of law so that
contracts can be enforced and savers and investors can make long-term plans. An
economic climate, which stimulates domestic savings and investment, is likely also to
attract foreign investment. Industrial "visions are useful frameworks for long-term
policy and are particularly useful if firms and households can be persuaded that they
are credible and use them to form their own long-term plans.


Helping the rural poor

If future economic growth in Africa is to generate real development, its

benefits must be widely spread. The rural poor will be helped by greater security of

livelihood, and particularly by strengthened food security. Agriculture-led growth,

with resulting large increases in off-farm employment in rural industries and services,
will be more difficult for Africa to achieve. It is still worth pursuing wherever
possible, however. For one thing, food security will be strengthened by increases in
agricultural processing.


Encouraging micro enterprises and SMEs

The livelihoods of both the rural and the urban poor will depend heavily also
on the employment growth generated by micro enterprises. There are many constraints on the expansion of micro enterprises, and not just the lack of access to credit.
There is also little evidence that micro enterprises are graduating into small and
medium firms. Policy on micro enterprises needs to focus firstly on how to strengthen
livelihood security. In the more "formal sector", SMEs have other concerns, such as
the need for credit for fixed capital investment. Industrial policy at the sector level
could enhance the competitiveness of such SMEs by facilitating their development
into the clusters, which have made developing countries in other continents more


Ensuring stability to create new opportunities

There are many differences in the current performance of individual African

countries and it is likely that their income levels will become more sharply
differentiated. The possibilities exist for rapid advance in those countries, which
achieve political, and policy stability, and which enforce the rule of law. In such
countries, investment in infrastructure, perhaps by foreign investors attracted by
privatization opportunities, could quickly strengthen industrial competitiveness and
productivity once domestic investors show themselves willing to take a long-term
view. Inflows of donor funds can raise industrial growth quickly in the short run by
removing the foreign exchange constraint, which keeps capacity utilization low.
Efficient industrial expansion can cumulate into technological advance. The issue is to
make such expansion sustainable by raising domestic investment and agricultural and
industrial productivity.


R 22

Dimensions of global change and culture

Global has become a popular adjective in recent years. There are two main
reasons for this:
9 The first is simply the lack of an alternative way of indicating the whole
world. The expression 'worldly change' would carry quite different
connotations. A basic one is about the promotion of moral values.
9 The second reason for the choice of the word 'global' relates to this integration.

The use of the expression global change is consciously straightforward.

'Culture' remains a significant part of people's lives. Understanding culture in a broad
conceptual framework can help us interpret what things mean to people and so
investigations into cultural aspects of ways of life can be very significant in assessing
the processes of change.

We recognize that there are ideas and practices that may be main-tamed over
long chronicle periods, from generation to generation, but culture is always contingent
upon historical processes. It is also influenced by, influences and generally interacts
with, contemporary social, economic and political factors. Geography too is
significant. For example, it is not just about where you are on the world map, but
about the ways in which space and place interact with understandings about being a
person. Moreover, any one individual's experience of culture will be affected by the
multiple aspects of their identity - 'race', gender, age, sexuality, class, caste position,
religion, geography and so forth - and it is likely to alter in various circumstances.

Culture is not just about high and low, not about product and audience, not just
about ways of doing things. It is of course all of these things. There needs to be an
inclusive and representative understanding of culture, which becomes part of
development discourse. The ways in which the 'development machine' (Ferguson
1990) analyses the world have to be fundamentally challenged and transformed.


Finally, 'culture' must be understood as the over-arching context in which

development and all forms of social change occur.


The meaning of modernization

For a decade or two after the Second Word War a single theory was dominant
- what was later called 'modernisation theory'. For Rostow economic development
required not only appropriate economic, technological and demographic conditions,
but also appropriate social institutions and value-systems (Rostow I960: 2). Only
when all of these were present would development be possible. Similar ideas were to
be found in the writings of the West Indian and Nobel Prize-winning economist,
Arthur Lewis (Lewis 1954).

Although Rostow and Lewis recognised the importance of ideas and values,
most development practitioners and academics did not pay much attention to this
aspect of it. To the extent that attention was paid to culture, the basic assumption was
that what was needed was to provide ideas and values crucial to modernisation.


Modernization and environment

There is a strong argument that development historically has depended on a

change to a global culture of modernisation. This, the argument continues, is what

underpins the dominance of European-style capitalist industrialisation and to date
there is no alternative route to development.

In the industrialized north, anti-road, anti-nuclear and anti-pollution protests

proliferate alongside lifestyle-change movements such as that towards green
consumerism, while in the 'developing' south, indigenous peoples and others struggle
for control over their own environments (Thomas 1992: 6).

The global environmental movement can be taken to include an international

cadre of expert scientists and officials of international agencies as well as the staff and
activists of environmental NGOs and the people's movements, north and south,
mentioned above. This movement can be seen as promoting a new way of thinking in


which environmental and development concerns are no longer in opposition but need
to be considered together. For many, the 1992 United Nations Conference on
Environment and Development (UNCED) epitomised this new way of thinking.

The cultural basis of dissent is very different for southern as opposed northern
environmentalists. Environmentalism as a global political movement contains
fissures, which weaken its potential as a threat to the European culture of
industrialisation and modernisation. To be politically effective in the long-run, global
movement based on a new concept would have to be built on people's aspirations in
both north and south and would have to communicate across the gap between those
for whom the environment means global habitat and wilderness and those for whom it
is their everyday source of livelihood.


The idea of modernisation

The concept' development' embodies considerable ambiguity. The definition

of development depends on the views of those proposing it as to what constitutes

progress, something never divorced from questions of power and interests.
Development has inevitably involved industrialisation and the process has always
been 'awful' for many at the same time as being necessary for progress.

Of course, those in positions of power in an industrialised world tend to

promote a view of progress, which elevates the value of the products of
industrialisation. The combination of this normative view with the proposition that
industrial development is not only necessary in order to achieve this form of progress
but also historically inevitable creates a dominant ideology of development which
certainly corresponds closely to the interests of those in such powerful positions.

The idea of being or becoming 'modern' finds a place in both the normative
and the analytical approaches to development. In the first place, it implies a whole
bundle of cultural values and attributes likely to appear desirable particularly to those
living in less modern or less 'developed' societies or communities. Obvious examples
range from the ubiquitous Coca-Cola to private motorcars, piped domestic water and
modern curative health care. In this sense, to become modern epitomises a particular,


very widespread and powerful, normative view of development, which goes deeper
than simply a desire for the products of industrialisation to include a rather uncritical
acceptance of the role of science, the market, and urbanisation and so on. In a world
dominated by advanced capitalist economies, all aspects of European society are
elevated to represent the ideal of what development is trying to achieve (Potter and
Thomas 1992: 119).

To say that this view is 'powerful', leads to the place of the idea of modernity
in the other approach. Here it is argued that modern aspirations and the adoption of a
modern approach, for example in turning an informal economic activity into a
'modern' business enterprise, are driving forces, which form crucial parts of the
historical process of development. Thus, one of the central arguments of the European
'modernisation theorists' was that development in the south required the adoption of
more 'achievement motivation' by its people (McClelland 1963).

Modernization theory as such is now rather unfashionable, perhaps because of

its tendency towards racist stereotyping. However, just as the proposition that
industrialization is necessary for development is still to be refuted, it remains the case
that, the trappings and the real benefits of modernization are visible signs of
'development' that tend to define people's aspirations. This means that alternative
views of what constitutes progress are hard to maintain.


Local knowledge and changing technologies

Technologies are seen to be embedded in, and to carry, social values, institutional forms and culture (Andersen 1985: 57).

Socio-economic progress means emancipation from the whims of mother

nature and also from the domination of the already established. Moreover, it seems
that only human-made technology resources can provide the foundation for such
progress ... The African culture prizes respect for the elders/learned and upright
morality. Now, we should add technology orientation, self-discipline, and hard work
to this culture, and get on with the challenge of managing technological change for
improving the quality of life of our people (Sharif 1994: 114).

Technology is not usually thought of as a cultural product. Technology is the

application of knowledge to practical, 'problem-solving' tasks that involve
organisations of people and machines (or other hardware). Moreover, it requires
people in many different ways.

Technology is also about the application of knowledge and, given that,

knowledge is experienced through our shared meanings about the world. This

another way of establishing the link between technology and culture.

Knowledge its self is a cultural construction and what one culture considers valuable,
another may dismiss.

Knowledge is embodied in technology: in the decisions about what constitute

the problems that technology might solve. In addition, because knowledge is experienced through our culture, this also becomes embodied in technology, which explains
the acceptability or otherwise of technological change in a society. It also explains the
dominance of some technologies, which reflect global cultural hegemony, another
feature of which is to describe developing countries as 'technologically laggard'
(Deniozos 1994).

These points are illustrated when we consider the gender consequences that
arise from the adoption of new technologies. A study for the United Nations on the
impact of scientific and technological progress on employment and work conditions
in various trades reported that in every case where machinery was introduced in
activities traditionally done by women, men either completely replaced women or the
activity became sub-divided and men took over the tasks that used the technology and
required greater skill while women were relegated to less skilled, menial tasks. These
shifts were accompanied by loss of income-earning opportunities or marginalisation
and lower income for women (Anderson).

Underlying these processes are assumed beliefs that men work with
technology and women do not, or that men do 'modern' work while women only work
in the subsistence sectors. Nevertheless, the transferred technologies are also 'blind' to
values of the recipient societies, values that may, for example, determine whether
women may work outside of their homes or not.

Clearly, local knowledge, experienced through culture, has important

implications for technological change.


Social organisation, knowledge and livelihoods

The application of knowledge, whether it be to the conception, design,

manufacture or use of machinery, requires organisation, it influenced by social and
moral beliefs. Alien (1992b; 246) makes the point that many Third World societies
maintain values, which contrast with the individualism of European society. Local
farming practices in many parts of Africa, for example, depend on communal (free)
labor at key points in the cycle. Changing livelihood patterns in rural areas, which
usually involve cominoditisation of labor, are leading to individualization. If
communal labor becomes unavailable because of these changes, the most likely result
is the degradation of the farming practice. (Woodhouse 1992a: 182-6).

A study of silk-reeling enterprises in five villages

of North Africa


that an unusually high number of laborers had been able to set up business
themselves and become successful entrepreneurs. The study cites the example of the





and started his reeling career at the age of

seven. In 1986 he set up his own business. Most of his laborers were relatives who
worked for him because of friendship and kinship. (Mayoux 1993).

Networks based on ascribed trust (i.e. those based on kin, caste, ethnicity or
religion) can, however, act as impediments to further economic growth of the
enterprise because of the mutual obligations involved. A manufacturing enterprise
may find it difficult to acquire and use new machinery that will improve productivity
because it may displace workers. This will be particularly difficult if there are kinship
ties between owners and workers, but the issue of whether work is primarily about
productivity or people and their well-being tends to surface wherever there are cooperative forms of work organisation.

The cultural/family networks, so essential for initial trading of an enterprise,

eventually limit it in the sense that they can be exclusive, thus making trading outside

of the network difficult (Holmstrom 1994). One study of garment manufacturing

districts in Nairobi found divisions based on ethnicity (Asians predominating in massproducing firms; Africans in mini-manufacturing), kinship and gender. African
women, many of them rural migrants, owned nearly all the mini-manufacturing firms.
According to this study, the problem is that most of these entrepreneurs are poorly
educated African women whose networks have limited power to uplift a business.
Some lead back to rural markets where competition with second-hand clothes keeps
profit margins extremely low. (McCormick l994:27)

As a result of these limiting factors, more impersonal, professional networks

may appear, although they are often still based on socio-cultural ties. Economic
necessity, rather than socio-cultural ties, becomes the basis of trust and Schmitz
concludes: It seems that operating in the world market has both eroded and created
trust. It has undermined the socio-cultural ties and now demands new ties - from those
who want to succeed in it. Those new ties are based on conscious investment in interfirm relationships.

Schmitz (1995: 559) writes within what is essentially a global modernisation

paradigm. If firms wish to succeed in the 'world market' they have to climb on board
and, in doing so, jettison old and incorporate new relationships. But, even if they want
to, climbing on board is usually not possible for the poor and less powerful who can
remain locked into kinship and other ascribed networks that are themselves poor.
They are thus unable to progress beyond immediate coping and survival, such as the
woman involved in garment mini-manufacturing in Nairobi, 'with only a primary
education whose chief linkages are to a peasant-farming family in a distant rural area'
(McCormick 1994:10).

Knowledge is critical for technology, but its cultural construction raises

questions like:
9 What value is placed on different forms of knowledge (and by whom)?
9 Who has access to, or power to exploit, knowledge?

For poor people, the knowledge is often undervalued, and they have neither
access to, nor the power to exploit, valuable new knowledge. Poor people do react

creatively, using the knowledge that they possess, to changing opportunities and
threats to their livelihoods. Several studies of farming in sub-Saharan Africa showed
how it has changed as economic options for rural people have changed, and in
particular how small-scale farmers have responded to market opportunities: They
have adopted new cash crops (cocoa, groundnuts, maize, vegetables) and new technologies (ploughs, irrigation, hybrid maize and fertiliser), migrated to new areas and
even switched to new foods (maize, cassava and rice) in pursuit of these
opportunities (Woodhouse 1992a: 181).

Appleton draws the distinction between technical changes that are 'defensive'
responses to deteriorating livelihood situations (and which are likely to be risk-averse)
and those that are 'more proactive - creating or taking advantages of opportunities to
improve livelihoods' (Appleton 1995: 301). Nevertheless, whatever the response,
people use and adapt their prior knowledge and assimilate new knowledge, the latter
then becoming part of their body of knowledge. Thus, the distinction frequently made
between 'indigenous' and 'imported' knowledge is blurred. Local knowledge
accumulates over time due to the interaction with one's close environment and with
the rest of the world. (Wilson 1995a, 1995b, 1996).

Technology blending has been defined as 'the constructive integration of

emerging technologies with traditional, low-income sectors, or for the production of
basic-needs goods and services regardless of scale of operation' (Bhalla and James
1991: 479). Lynchpin projects seek to mechanise 'traditional' methods without
abandoning their fundamental principles, and an example would be the motorisation
of 'traditional' agricultural implements (instead of importing tractors) (Ogbini 1990).

The danger in this part lies in assuming that knowledge (and the shared meanings that
go with it) flows only one way - from the 'knowledge-rich' in the Europe to the largely
'ignorant' poor people in the N. Africa. But this assumption is changing, especially in
Africas agriculture, where farmers have increasingly been recognised as themselves
innovators and experimenters ... and perhaps most decisively, farmers have again and
again been found to be rational and right in behaviour which at first seemed irrational
and wrong to outside professional observers. (Chambers, Pacey and Thrupp \ 989).


Poor people engaging in new enterprises usually have little but their previous
knowledge upon which to draw. They typically enter businesses that require little or
no capital, and which require no new knowledge to start (although a willingness to
learn is crucial if their businesses are to survive). In the communal areas of
Zimbabwe, for example, it has been reported that women predominate in beer
brewing, basket making, tailoring, knitting, crochet and pottery; men in grain milling,
leather tanning and products, brick making, housing construction, carpentry and metal
products (Helmsing 1991: 262-3). Therefore, production driven by what people can
do (rather than by what they can sell) and widespread copying of one another's
products leads to a mismatch between supply and demand. Very little is sold.
The introduction of industrial production methods does require new knowledge, the technical aspects of which arc relatively easy to acquire because of their
repetitive nature, each worker typically performing a single task on a machine within
a strict division of labor. The gender implications of adopting industrial techniques
have been discussed earlier, but even in terms solely of providing technical additions
to knowledge, such techniques are limited. There are few opportunities to develop
and acquire skills that go beyond the specific piece of equipment on which the worker
has been trained (Bhagavan 1990).

Entrepreneurial activity among small-scale, Third World manufacturers often

involves copying technologies. There is general consensus, however, that knowledge
acquired in this way soon hits a ceiling, and that a crucial point is where an enterprise
is able to move from 'learning' by mastering acquired technology to 'understanding' by
engaging in its adaptation (Quingrui and Xiaobo 1991), which enables 'knowledge
accumulation' (Bhalla 1991: 79-84). Such adaptation aims to improve and develop the
technology to its new circumstances, for example, to a smaller scale of production, or
to the available raw materials (Dahlman 1989).
Technological development in enterprises is ultimately predicated on the
European cultural assumption that improving productive efficiency is the prime
function and there is at least notional acceptance of this, even among enterprises in
the least-industrialised countries of sub-Saharan Africa. In sub-Saharan Africa, it is
common to find an important social function for enterprises, as well as their obvious


role in making a living, in that they are meeting places for people engaging in
widespread and varied social interactions.

The Garabwe tailoring co-operative in Zimbabwe is a case in point. This

worker co-operative has twelve women members and, grew out of a social and
savings club that was formed on national independence in 1980. Its main business is
producing school uniforms, which it sells at local schools. Teams of three make a
complete garment and within a team there is division of labor. Thus, a morecompetent member will do the pattern cutting and there is labor division within the
different aspects of tacking and sewing.

From the European rationalist viewpoint, production at Garabwe is a mess. On

another level, however, the enterprise clearly fulfils several, interconnected needs,
some of which are non-material. Actions are also contradictory as when workers are
fined for turning up late hut not for talking on the job. In general, however, the
women seem to exercise considerable autonomy and power within this area of their
working lives, which may be contrasted with the working conditions of their
numerous counterparts engaged in factory garment manufacture throughout the world,
working conditions, which are geared entirely to achieving maximum productivity.

Concerning the Garabwe co-operative, it has to be acknowledged that it has

taken on board many of the trappings of European production methods that we
witness in garment factories in export processing zones in Third World countries, but
often only notionally, and the physical, social and cultural conditions within the
enterprise continually undermine its productive function. What we are witnessing at
Garabwe, in fact, is a process of change in shared meanings where the nature and
function of work is being redefined around its productive and social functions, which
themselves are not fixed in relation to each other.

If we can generalise at all from the Garabwe experience, it is not a matter of

adding technology orientation, self-discipline and hard work to what 'culture prizes',
but more to do with understanding how these attributes exist in the present and are
experienced through culture. It is through such an understanding that technology can
make its valid contribution to development.

R 33

The Mediterranean Environment

The interest of the EU for the countries of the southern Mediterranean is

intense concerning the growing business development of the relationships between
Europe and N. Africa. The awkward development of the EUs Mediterranean policy
and the phenomenon of migration are issues that concern the development of
enterprises employing workers from Europe and N. Africa. The Mediterranean Sea
often appears to form a clear dividing line between Europe to the north and Africa to
the south. It looks like a microcosm of this division, but this is much less simple: the
Mediterranean is better considered as an overlapping set of cultures with the several
sides having something to offer to each other. A concentration of Europe on the
development in the Mediterranean can lead to the long-term development of business

The Mediterranean ideal involves more than a dialogue among states but less
than complete integration. It aspires to a condition of peace, harmony, cooperation
and mutually beneficial exchange throughout the Mediterranean region. The
attractiveness of Mediterranean ideal remains, but can be achieved only in the long

There is no doubt that the rest of Mediterranean union region is economically

dependent on the EU. For small states as Tunisia, over 70% of foreign trade is with
the EU. In the case of Algeria, the share of exports heading for the EU has been
growing significantly over the past ten years 33 . The importance of the EU as an
engine of growth, a source of financial aid, a model of regional cooperation and of
domestic political organisation can hardly be over estimated. Today Europe has
security and oil interests in North Africa. Furthermore, North African security
problems might spill over into Europe in the form of unrest in immigrant
communities. Economically, European multinationals are interested in investing in

Tovias Alfred, The Mediterranean Economy, in Ludlow, P. (ed) Europe and the Mediterranean,


North Africa where labor costs are only a quarter of those in Europe. North Africa
continues its dependence on the EU as a market and source of aid and this
dependency can bring the benefits of economic growth. The Southern Mediterranean
security has been affected by Europe, as well.


Mediterranean relations with the EU

To some Europeans the Southern shore of the Mediterranean seems of little

interest, as the culture elements, the political conflicts and the different religions are
strange and foreign to them. This is basically found in European countries that are
geographically far from the Mediterranean, so they are less influenced by the cultural
elements of it. To many North Africans the division between Europe and Africa is the
Sahara, not the Mediterranean. Despite these difficulties, most of North Africas
countries of the Mediterranean are involved in special trade agreements under the
Communitys Mediterranean policy, like Morocco, Algeria, Tunisia, and Egypt 34 . The
existence of stability in the relations between Europe and North Africa is very
important in the economic growth of enterprises. The European model of unity and
regional political organistion has always been irresistible to North Africans. The
European political, economic and cultural model has been diffused throughout the
Mediterranean by means of trade, education, tourism and so on. Lately, relations
between the two shores of the Mediterranean have experienced considerable problems


European Commission, The European Community and the Mediterranean Countries, Luxembourg,


that have included the poor treatment of immigrant workers from North Africa in
some countries of Europe.

According to the theory of hegemonic stability, having one state act as a

dominant power which makes the rules for the other states of the system is a force for
international peace. This power concerning the Mediterranean region has been France.
This country accounted 44% of the regions GNP in 1990, while the three largest
economies France, Italy and Spain together made up 80% and by nowadays France
continues to be the Mediterranean largest economy 35 .

The generation of the first Mediterranean agreements ran into many problems
over trade. In particular, exports of agricultural products, textiles and processed foods
were troublesome and the Global Mediterranean Policy (GMP) was designed to
improve it. It was supposed to create a free trade area in industrial goods between the
Community and each Mediterranean country by 1977, with Tunisias successful
industrial development policies being based on the expectations created by GMP. The
GMP offered financial aid and the prospect of a common approach to immigrant
labour. Despite the good intentions of GMP, the results were disappointing. Several
continuing agreements added few benefits to the Mediterranean countries and North
Africans were disillusioned with Community threats of restricting migrant workers
entry to the Community. The uncertainty on Community Mediterranean relations,
has been extended beyond the ostensibly economic agreements into the political
sphere. In 1990, new protocols were signed and the New Mediterranean Policy
(NMP) offered 4,405 million ecus grants and loans over five years to eight
Mediterranean countries. Over half of the aid was allocated to Morocco, Algeria and
Tunisia. These funds were to be spent in support of structural adjustment, to
encourage private investment, to increase Community financial aid, to facilitate
access to the European market, to strengthen economic and political dialogue and so
on. By NMP, Europe had increased its aid to the region and developed a more
coherent picture of the types of economies it wishes to support.


Tovias Alfred, The Mediterranean Economy, in Ludlow, P. (ed) Europe and the Mediterranean,


The Barcelona Conference of 1995 brought together 15 European members

states with 11 Mediterranean countries and focused at a greater aid by Europe to
Southern Mediterranean countries and to the control of migration, crimes and drugs,
but potentially most innovative and significant is the plan for free trade in industrial
products by the year 2010. Currently, about 10% of EU trade is with the North Africa
and this could increase, but free trade in industrial products is likely to benefit
European exports more than Mediterranean ones. The EU estimates that 4,000
Tunisias enterprises could be seriously be damaged by this free trade regime and UK
predicts that 40% of Moroccos industry would suffer. To some in the southern
Mediterranean the Declaration was not positive, as it did not provide free access in
Europe for the regions agricultural exports and for the industrial development of the
area. Even the aid applied was limited and several political problems spilled over into
the Barcelona process. The non Mediterranean EU members remained unconvinced of
the importance of Mediterranean cooperation.

One of the main trends of last years is the growth of environmental awareness
in governments, organizations and populations. From 1990, EU tried to establish a
European Environment Agency (EEA) to supply reliable data on the state of the air,
water, soil, flora, fauna, waste disposal, noise and toxic wastes of Europe. A series of
programmes are made up to today and affect the management of Mediterranean.


The Migrations phenomenon

Whereas the Mediterranean countries have been reasonably successful in

recognizing that the Mediterranean Sea is a shared resource, the same realization has
not dawned on the northern shore with respect to human capital of the region. Indeed,
human migration in the Mediterranean region is a source of nightmares for many
European policy makers.

Immigration is an area where the EU has feared an exodus from both

developing countries and Eastern Europe. The movement of workers into the EU is
not free. In fact, EU has adopted some policies to promote family planning in North
Africa in order to stem the tide of potential immigrants. Countries as Italy, Greece,
Spain and Portugal were traditionally countries of emigration. But since the 1970s

they became countries if immigration. Although the worlds main receiving countries
are outside of Europe, the immigrants from the southern Mediterranean consist a real
threat of a sudden influx. The demographic trends in the Mediterranean region
indicate that substantial changes are under way. In 1950 two thirds of the population
lived in the northern side, but by 1995 the majority lived in the south. With continuing
growth, two thirds will live in the south by the end of 2010. These trends could
increase unemployment and poverty in the southern Mediterranean. Even
development aid has been enlisted as a tool to prevent immigration. The major
problems in Mediterranean are political, environmental and social (emigration). Aid
should be increased and refocused on family planning programs. Also, improving the
economic position of developing countries can be a way of easing migratory pressure.

A great deal has been made concerning the changes that should be made in the
south and that could prevent emigration to the north. As well as family planning on
the southern shore, such changes include:

political measures, like making aid more conditional on human rights, with the
effect that southern countries would treat dissenting views more tolerantly

economic measures, like reducing income differentials on the north and the
south, stimulating employment in the south by investing in lab our intensive
industries, opening Europes markets to labour intensive manufacturers and
agricultural products in order to create jobs in the south and finally pressuring
southern countries to open their markets to imports to prevent shortages from
driving emigration.

A matter to examine is why Europe does not want more immigrants,

especially as this free movement of labour could be an economic benefit. Europe is
worrying about its own ageing population and declining fertility rate, but sees
immigration of young people from the southern Mediterranean as an unacceptable
solution. The European policy of closing its doors to immigration, while at the same
time better integrating existing immigrants is self-contradictory. The prospect of
increased migration from southern to northern Mediterranean is considered as a threat
by many Europeans and their policy may be wrong on several counts. Population
growth in that region may naturally decline as development increases, reducing the
push towards Europe. Europes efforts in family planning and economic

development in the service of reducing demographic growth will probably be

ineffective. By excluding the so called would-be immigrants from Mediterranean,
Europe maybe on the one hand will miss a resource and on the other hand will avoid a
potential threat. It is to be hoped that better social scientific understanding of
immigration will feed into a better European policy.


Cooperation in the Mediterranean

It is reasonable to ask whether Mediterranean Sea contributes a bridge or a

barrier between the two shores. According to several opinions Mediterranean Sea has
always been both.

Southern Europeans gained a profound understanding of the Mediterranean

Sea and its geographic function on the one hand as an irreversible link between
Europe, Asia and Africa and on the other hand as a lasting divide between the
numerous, strikingly divergent cultures and political systems evolved in the above
continents. Today it is possible and necessary to build new bridges between Europe
and North Africa. Trends towards democratization and economic liberisation in North
Africa, as well as better understanding of the meaning of culture make the present
time more amenable to political cooperation in the interests of preventing warfare.
There is a plethora of international institutions of North Mediterranean, as EU, the
Conference of Security and Cooperation in Europe, the UNs Economic Commission
in Europe, the Council of Europe. The Southern shore has many fewer regional
institutions, as AMU, which is much less effective. What is important to mention? Is
that there is a need for more intensive cooperation in the Mediterranean basin on
many levels and achieve active and consistent deals, with positive results for both
Europe and North Africa?

Europe is continuing interested in Africas resources, especially in minerals.

Although Europe is not exclusively reliant on African primary products and fears
rather than seeks an influx of labour, the image of Africa as a reservoir of oil,
minerals, timber and other resources for the future is still attractive to European policy
makers. A Franco-Italian company, like ST Microelectronics, for example, currently
designs chips in the Maghreb and, paradoxically, subsequently produces them in

Europe. This may be understood for an activity in which the R&D element represents
a considerable amount of work - and where the human potential of the young
engineers is an asset - while the production itself - on the basis of heavy capital
investments is largely automated in Europe.


R 44
Y 36


It has been estimated recently that there are currently over 100 million

international migrants in the world today (Castles and Miller, 2004). This means that
nearly two per cent of the world's people do not live in their country of origin. Many
of these are refugees - at least 19 million, according to the UNDP (2004). Migration
across frontiers is nothing new. Many polities were built on migrations from
kingdoms of Africa to the modern republics of the Europe. Yet the volume of national
and international migration is increased greatly, continuing up to the present. Why has
there been this increase, or to put it another way: why too many people are living as
'foreigners' in the world, mostly in the advanced industrial economies? What are the
characteristics of this migration, who are the migrants and where do they come from
and go to? Why do these people uproot themselves to live in an alien, often-hostile
environment? How do they make the move and how do they 'make out' when they
reach their destination?

Recent migration is characterised by large numbers of undocumented workers

and by migrants of all kinds from countries with little or no previous links with the
destination country. In other words, in contrast with older movements, which were
organised or which sprang from agreements, the new migrants typically pre-date,
preempt or ignore official policies and agreements. Migrants are forging their own
destinies outside any formal framework. This fact is all the more remarkable when
one considers that, typically, modern-day international migrants are people with
limited economic resources and without the advantages of formal education and
training. The extent to which migrants respond creatively to given circumstances, and
how they transform latent conditions into real opportunities, is something that should
be examined. The approach it follows treats migration as a series of interactive
relations between migrants, kith and kin, employers, as well as with broader


Chris Martin


circumstances, thereby qualifying conventional views, which have generally treated

the phenomenon as the response of the downtrodden to forces beyond their control.


International migration
The growth of international migration was notable after World War II

principally from the Less Developed Countries (LDCs) to the Developed Market
Economies (DMEs) of Europe, North America and Australia. Workers arrived in
response to active recruitment policies by advanced industrial countries, whose labor
demands outstripped local supply during the post-war period of economic
reconstruction and growth. Some measure of the growth of immigration in Europe is
indicated in the growth of the minority populations of the period. Between 1950 and
1975 the ethnic minority population tripled from 5 to 15 million in Western Europe
(the UK, Belgium, France, West Germany, the Netherlands, Sweden and Switzerland
combined) (Castles and Miller 1993: 87-8).

Underlying the movements of labor is not just the active recruitment for labor
by the DMEs, but also the increasingly precarious living conditions in Third World
agriculture. The growth in markets for land and labor releases workers from
personalised obligations to former landholders but also dispossess these workers from
previous rights to land and its use. In addition, as industrialization and trade increase,
terms of trade for agricultural products decline, impelling the mechanisation of
agriculture, this in turn reduces labor requirements. Increasing people-land ratios
caused by land subdivision accentuates the flight from the land among the smallest
landholders. The exodus of the rural dispossessed or the under-employed provides
industrialists with abundant supplies of cheap labor, if not in the home country, then
across national borders. As Wolf explains, from the migrant's point of view, a sharp
distinction between national and international migration may be irrelevant to the
overriding need to make a living (1982: 361).

The explicit relation between demands for labor from industrialised nations
and its acquisition through labor recruitment from LDCs in the period 1945-75
appeared to corroborate the view among scholars of migration that movement was a
direct response by the poor in the LDCs to economic opportunities in the north. The


basis of this argument is that the disparity between the EDCs and the DMEs is the
pivot of migration flows. These movements are produced by a combination of 'push'
factors such as rural dispossession and urban unemployment in the LDCs, and the
'pull' factors, particularly economic opportunities in the DMEs (see, for example,
Jackson 1969). Some studies within this framework concentrate particularly on
income differentials to assess the strength of migration flows (Lewis 1954). Individual
migrants are thus seen as rational decision-makers responding to the forces of supply
and demand. Todaro (1989) refines this model by adding in the subjective component
of perceptions. Thus migration flows represent expected opportunities, which may
diverge from actual ones.

In summarizing a number of studies on migrations, two broad reasons can

explain the situations (Fortes and Borocz 1989; Castles and Miller 1993; Robinson
1986 and Sassen 1988):

The first is that aggregate demand and potential supply from LDCs are poor predictors of international migration because they obscure changes in the specific types of
occupations taken by immigrants. Secondly, supply and demand factors assume a
notional interrelation between donor and receiver economies, which simply may not
exist because local and subjective economic and non-economic factors influence

As Scott has made clear, the rational economic individual of classical

economics is not always the 'optimiser'. A businessperson may play the stock market
with a designated amount of funds; peasants do not gamble with their livelihoods;
safety first is the rule (Scott 1976). Furthermore, migration decisions are rarely taken
by individuals alone: they are more likely to be co-coordinated household decisions,
in which the support of wider kith and kin networks is expected. For this reason,
migrants may be particularly able to withstand the risks of migration and unconducive
working conditions.

The very flexibility of workers opens up possibilities that indigenous workers

are unwilling or unable to accept. Yet for the same reason, this very flexibility makes


them especially vulnerable to abuse in the workplace (Burawoy 1976; Legassik and
Wolpe 1976).

The non-economic factors, which interfere with the smooth operation of push
and pull, include immigration control, geographical proximity, traditions of
migration and historical ties. One final non-economic influence on migration is the
mismatch between the rhythms of migration and of the labor market. The build-up of
migration experience spans large parts of individual lives and even generations,
increasing the facility for finding work, as educational attainment does. Migration
flows therefore transcend the more immediate staccato rhythms of supply and demand
in the wider economy and sustain themselves for longer time periods through
fluctuations in supply and demand. They can also help redirect that movement into
new areas of demand obscured by aggregate trends, but discernible to those whose
livelihood depends on sensitivity to new opportunities. It is as if labor market signals
are picked up by means of self-made receivers built from the accumulated and updated practical knowledge, relationships and resources of the migrant community.
This counterpoint of experience, social relations and market forces is what guides
action, creating migration flows. Informal knowledge and ties have special
significance in the most recent migrations. Thus, the economic dimension of
migration is embedded in the accumulation and mobilisation of cultural resources;
'cultures of migration' give the specificity to the population movements just outlined.


International migration in the age of uncertainty

According to the predominant views of migration mentioned above, following

the 1973 oil crisis and the subsequent world recession, what should have happened is
for migration from the less to the more developed countries to tail off, as a result of
shrinking labor demand in the DMEs and increased immigration controls in many
countries. In fact, flows to Europe remained fairly steady and slowly increasing
(Harris 1995: 13). Migration movements to the advanced industrial countries have
ridden roughshod over the recessions of the early 1980s and early 1990s.

In spite of the 1973 oil shock, overall growth in the LDCs was high - higher,
in fact, than that of the DMEs. In the 1970s, when recession and unemployment were


especially high in DMEs, the main immigrant-sending countries were growing at

between 5 per cent and 9 per cent (Sassen 1988: 94). Between 1980 and 1991 LDCs
grew at 4.6 per cent compared with DMEs' 3 per cent. In the years between 1980 and
1991, LDCs grew at 4.6 per cent compared with DMEs' 3 per cent (World Bank
1993). Labor has been moving continuously from areas of highest and towards those
of slowest growth - the opposite of what would be predicted by both push-pull and
radical political economic theories.

Recently, industrialization has been the main engine of growth, and industry
tends to create jobs rather than shed them. Yet not only does labor emigration from
the industrialising countries continue, it is women as well as men (with urban
employment experience and with some education} who are migrating and not just
displaced non-literate rural workers.

Why and how are relatively well-endowed workers with reasonable resources
abandoning areas with opportunities for the ever more hostile and restrictive
conditions in the advanced industrial countries? Sassen (1987, 1988, and 1989)
explains the seemingly perverse migration flows by arguing that it is, on the one hand,
the kind of industrialisation occurring in the LDCs and, on the other, the kind of
economic restructuring occurring in the DMEs, which accounts for current labor
flows. The particular nature of export manufacturing is such that it creates sudden,
large demands for labor, much of which is for women. The classic cases are the
Export Processing Zones (EPZs). The loss of labor to the already fast-changing rural
areas dislocates what remains of the household economy - particularly the social
reproduction of the family. Cultural and social bonds with the rural economy are lost.
Given the 'flexible' labor requirements, pay and conditions typical of export
manufacturing, there is a high turnover of the workforce. Departing workers do not
necessarily regard a return to their regions of origin as desirable or even possible.
High turnover not only means departure from jobs, but entry into new hopefully,
better ones.

This restlessness leads to mobility beyond national borders, into the DMEs.
Here, synonymous with the dislocation of workers in the south, is the rise of new
opportunities for migrant workers in the north. Whereas in the 1970s, immigrants

tended to replace indigenous workers in the lowest levels of employment in declining

industries, in the 1980s and 1990s, migrants have begun to enter new sectors, or even
generate them themselves. The new types of employment are noticeable in the
personal services, especially those related to the rising elite of the burgeoning
financial and global management sectors. Typical are catering, domestic service and
cleaning. In addition, migrants have found their way into new industries, either in
capital intensive industries where task fragmentation has occurred, such as in hightech, or in industries where labour-intensive putting out or sweatshop production is
possible, such as in garment making.


The case of Africa EU

Last years there are increasing volumes of African workers from urban

backgrounds, many of them women, traveling to Europe with or without male

companions (Bustamante 1993). Gabayet and Lailson (1992) note both the
diversification of women's roles in migration, including active, unaccompanied labor
migration to the EU and the growing trend for many of these women to have already
worked in export manufacturing before migrating. Given the relatively privileged
position of in-bond workers (workers in tariff-free enterprises, typically in exportprocessing zones -EPZs), earning, as they do, pay above the local average, the authors
ask why they should want to move on. The answer given is that the high turnover and
insecurity created by this situation leads women to move on. On the other hand, 'since
these positions are thought to be privileged, companies demand a higher educational
level for work that in the end turns out to be repetitive and uncreative'. This,
combined with the lack of incentives and promotions, 'produces discontent among
workers, particularly the more educated and skilled - precisely those most likely to
migrate to find better jobs in the Europe (Gabayet and Lailson 1992: 198).

If responses to structural economic changes in the sender country help explain

emigration, this is no guarantee of success in the destination country. What happens
there? In the Africa - EU case what has been widely recognised is a shift in
occupational destinations from agriculture into services and sweated industrial labour.
African employment in Europe exemplifies these features. Europe is one of the chief
urban destinations for African migrants, boasting also a well-established African-


European community, and also one of the major industrial areas in the world.
Immigrant labour suited some of the new labour demands of the region, particularly in
the high-tech assembly plants, where female workers were considered particularly
able (Soja 1987: 192). Apart from the attributed dexterity and patience of women in
performing fiddly but repetitive tasks, they were not unionised, and adapted more
easily to the labour-saving, part-time and casual 'flexible' requirements of the hightech companies (Storper and Scott 1990: 587).

Contrasting with low-paid labor in the capital-intensive high-tech industry, the

other main industrial sector employing African labor is the down-graded, intensiveintensive jobs in garment and toy factories, either in sweatshops or in the home. The
third area of immigrant employment in which African workers have been conspicuous
is in the expanding service sector. This sector of course encompasses a wide variety
of employment, and a particularly large polarisation in job statuses and income levels.
African workers are found especially in the low-wage levels of catering, domestic
service and cleaning. Many of these jobs, though they are tied to the formal growth of
the service sector are informal in that they are unregulated or undocumented
(Fernandez-Kelly and Garcia 1989).

African undocumented workers, in common with many other immigrant

groups, (though to a greater extent because of the history and geography of European
migration) are much more adept at taking advantage of the increasingly deregulated
working conditions of contemporary economies than are most indigenous workers.

African workers do not only respond to external demand, they also help form
it. One of the characteristics of the rise of the high-paid jobs in business services finance, insurance and real estate - is that they have spawned a demand for
customized personal services. These services are being provided, often informally, by
immigrants, the goods and services of who have become increasingly attractive and
status conveying among the upwardly mobile. In addition, ethnic undocumented
workers are unable to barter over pay and terms; yet they can rely on some degree of
social support from family and friends at home and abroad. What this means is that in
the context of an increased potential demand for customised services, Africans are not


simply replacing existing labor, much less displacing it, but are creating new

Research on sender African communities reveals that future migrants have a

detailed knowledge, a mental

map of their


destination, communicated to

them through friends and relations. Migration has both generated, and has been
generated by popular culture. It is also notable how the culture of migration is planted
in the deepest layers of personal relationships in family and friendship groups. Family
ties are the most important source of information and support for migrants, but
friendship groups are the foundation for other basic networks. This is how they form
and operate. Initial neighborhood groups of friends eventually get pared down to tiny
'trust groups' of two or three lifelong friends. Today they help prepare the young for
the contemporary endeavour of adulthood - international migration. This is achieved
through the intra-generational bonds formed among the young people, in concert with
the inter-generational ties with adults and older generational groups.

What migrants lack in formal education and training (human capital), and
material and financial resources (economic capital), they make up for in social capital,
which is the 'know-how' necessary to make a living and possibly even a business
success. Fortes and Zhou (1992) identify two main relational characteristics of
migrant 'social capital', explaining small business success in the EU. The first is
'bonded solidarity' - the sense of common nationhood and cultural identity, which
helps focus the groups resources. The second is 'enforceable trust' which controls the
mutual assistance supplied and demanded, permitting a higher degree of resource
sharing than would be conceivable through more informal channels.

In this section, it has been suggested that migrants do indeed react to

circumstances, but creatively and interactively rather than according to the pre-set
terms of a supposedly given market. Through planting the roots of labour mobility
deep in the heart of the communities of origin, while cultivating a wide variety of
social relations, they create a dynamic of migration which over-reaches temporal and
spatial fluctuations in labour markets. In this manner they have been able to
compensate for their disadvantages in education and bargaining power. In their
flexibility, they are the archetype of the 'flexible' labourer of the late twentieth

century. They are in the economy but not of it; they define themselves not by their
working lives, but according to the world beyond, in the migrants' case, in the
traditions, which their family and friendship networks perpetuate.


Some aspects of human existence are more 'cultural' than others and all
behaviour and relationships are informed by ideas and beliefs, in any society,
anywhere, at any time. We can say that culture is either a discrete sphere or a residual
category. In this kind of thinking, behaviour is thought of as governed by economic or
political principles, or by cultural 'factors' (for example, people's religious beliefs or
their conceptions of their own ethnicity and that of others). This is a trap - we should
not fall back on this concept of culture as a separate sphere only to be resorted to
when we find that other kinds of explanation, economic, political etc., prove
inadequate. Rather, we need to see culture as a dimension of all social action,
including economic and political.

In particular, the complex phenomenology of cultural identity in a globalised

world requires extensive treatment and it is important to offer a glimpse of alternative
ways of thinking about the complex cultural issues forced by the globalization
process. Nothing in this is meant to deny the continuing economic power of Europe,
nor even that particular, limited sense of 'cultural' power that proceeds from this - the
power of European transnational capitalism to distribute its goods around the world.
In the short term at least, Africa will probably continue to be marginalized by global
sing technologies. But, to look beyond this, these reflections do suggest that the global
future is much more radically open than the discourses of homogenization and
cultural imperialism suggest.

Technology can be regarded as a cultural product, embodying shared

meanings about knowledge. This has implications for the acceptance and assimilation
of technology into societies. The application of technologies requires organisation and
this too depends on changing shared meanings. In agriculture, practices based on
extended based on shared interest are appearing. In urban contexts, small enterprises
may be dependent on kinship and friendship networks, but these can inhibit further
development of an enterprise. There are cases where local knowledge is sometimes of
technological value in a wider arena and there are unresolved issues concerning the
ownership of this knowledge. Small-scale enterprises often accept industrial
production methods, but then subtly modify them to reflect shared meanings about the

nature and function of work. Productive efficiency may be lost because of the need to
accommodate nonproductive functions, or it may sometimes be enhanced because the
changes introduce cooperative flexibility into labor processes. Europeans who decide
to establish themselves in Mediterranean countries can offer technological know-how.
The spread of technology, in fact, plays an essential role in increasingly competitive

All the players in the Euro-Mediterranean partnership are aware of it: success
of integration constitutes a key component of success for the whole of the region,
especially because it would be likely to create scale economies which would
compensate the small size of the local markets (taken separately) and which would in
this way favour the entry of investments to the Southern shore of the Mediterranean.

A key stake in North-South cooperation is how to manage more effectively a

redistribution of the industrial activities on the two shores: relocations certainly to the
benefit of the South for the sectors which cannot bear the salary costs of the North and
also true sustainable co-development, in certain domains where the South may be

The increasing demographic phenomenon of North African population

consists a problem for these countries. This affects the Mediterranean cooperation in
social, political and economic ways through the migration that appears.

The efforts of Europe for the approach of Europe and North Africa have not
solved the problems that the demographic explosion of Southern Mediterranean has
created. Not all European countries have dealt by the same way concerning this
phenomenon. Countries of Europe that are not directly interested in Mediterranean
cooperation are creating a barrier of rules and laws in order to make impossible for
North African migrants to enter into European countries of Mediterranean. Several
countries of North Europe consider this migration as a threat. On the other hand,
African countries believe that African migrants are necessary in order to replace the
working force of EU, which is believed to decrease in the next 50 years. In fact,
French experts predict that in the next 35 years Europe will need about 56 million
migrant workers.

In order to avoid the entrance of economic migrants, Europe should create

employment motives for enterprises in North Africa. In fact, investment motives
should be given in private forces in order to expand their activities in North Africa.
Multiethnic companies should take advantage of the low cost of labor force and of the
great size of North African market. In addition, smaller European firms should follow
an investment policy in North Africa. Additionally, special motives should be given to
domestic African businesses in order to strength the economic development of North
Africas market. By this way, migration will not be the only solution for African
workers who can finally have equal opportunities in comparison to European workers
for employment conditions and benefits.

European Union should take seriously in mind the education level of African
labor force. Special educational programs can increase the low level of knowledge in
order to make easier the entrance of migrant workers in European countries, as then
they will be viewed as equal labor members and not as a threat. Science, art and other
sectors can be a focus concerning this point.

North African countries are involved into political situations that require great
amount of budget for military expenses and so it is difficult to create an environment
of stability and security. Thats why the stable environment of European Union is
desirable in this point.

Finally, we conclude that even if European Union has not achieved to manage
with this situation in an effective way, today is trying to follow a strategic direction
that would help both shores of Mediterranean.



Production of main cultured species in North Africa, 1995 (mt)

Figure 1: Production of main cultured species in North Africa, 1995 (mt)

Trends in production of main cultured species in North Africa

Figure 2: Trends in production of main cultured species in North Africa


Trends in production of main cultured species in North Africa

Figure 3: Trends in production of main cultured species in North Africa

Undernourished population by region, 1999-2001 (millions)

Figure 4: Undernourished population by region, 1999-2001 (millions)


Number of undernourished people in developing countries, by region

Figure 5: Number of undernourished people in developing countries, by region

Percentage of population undernourished in developing countries, by region

Figure 6: Percentage of population undernourished in developing countries, by



Share of world agricultural exports, by region

Figure 7: Share of world agricultural exports, by region

External assistance to agriculture per agricultural worker (at constant 1995


Figure 8: External assistance to agriculture per agricultural worker (at constant

1995 prices)


Agricultural capital stock per agricultural worker (at constant 1995 prices)

Figure 9: Agricultural capital stock per agricultural worker (at constant 1995 prices)
*Not including South Africa


Figure 10: North Africa: Durum production, consumption and imports

North Africa Tops Subregional Economic Performance in 2003

Figure 11: North Africa Tops Subregional Economic Performance in 2003


Rates of Economic Growth, North and Sub-Saharan Africa, 2001-3

Figure 12: Rates of Economic Growth, North and Sub-Saharan Africa, 2001-3

Unemployment Rates, 19902000 (Percentage of labor force)









Iran, I.R. of


















Sources: National authorities and World Bank.

Table 13: Unemployment Rates, 19902000 (Percentage of labor force)


Employment, Labor Force, and Working-Age Population, 19912001

Algeria, Egypt, Islamic Republic of Iran, Jordan, Morocco, Pakistan, and Tunisia.

Figure 14: Employment, Labor Force, and Working-Age Population, 19912001

(Average annual growth in percent)

Government and Public Sector Employment, 19962000 (Percent)

General Government Employment

Public Sector Employment

Percent of

Percent of

Percent of

Percent of

















































Source: World Bank, Public Sector Employment database, 2002.

Table 15: Government and Public Sector Employment, 19962000 (Percent)


Employment, Non-Oil GDP and Labor Productivity, 19912001

(Average annual growth in percent)

Source: IMF, World Economic Outlook (WEO) database.


Algeria, Egypt, Islamic Republic of Iran, Jordan, Morocco, Pakistan, and


Figure 16: Employment, Non-Oil GDP and Labor Productivity, 19912001

(Average annual growth in percent)
FDI inflows to Africa, top 10 recipients, 2003, 2004 (Billions of US dollars)

Figure 17: FDI inflows to Africa, top 10 recipients, 2003, 2004 (Billions of USD)


Figure 18: Global GDP Growth and Net Financial Flows from the private sector

Figure 19: Composition of migrants to the EU15 and the US by education


Figure 20: Main regularization periods of immigrants in irregular situation in the EU

Table 21: Estimated number of persons from Maghreb living in major receiving
European countries circa 2000


Table 22: Basic data on Egypt and the Maghreb countries: demographic, economic
and social indicators


Percentage of foreign population in Europe

Figure 23: Percentage of foreign population in Europe


1. African Development Bank, African Development Report 1997.
2. Auty R.M., Brown K., 1997, Approaches to Sustainable Development,
London: Pinter.
3. Auty R. M., 2000, Trible M., Pollution Paterns In The Industrializtion Process,
Industrial Development Issues in Africa.
4. Buchan, David, Europe: The Strange Superpower, Aldershot, Dartmouth,
5. Buckley G., 1997, "Micro finance In Africa: Is It Either The Problem Or The
Solution?", World Development vol.25, no. 7, pp. 1081-1093.
6. Cameron J., 2000, Labor Force Analysis As A Means To Understand The
Livelihood Dimension Of Sustainability, Industrial Development Issues in
7. Chan, Elaine, Gaurav Datt van de Walle, and Martin Ravallion. 1991.
"Quantifying the Magnitude and Severity of Absolute Poverty in the
Developing World in the Mid-1980s." Working Paper, World Bank, Policy
Research Department, Washington, D.C.
8. Chen, Shaohua, Gaurav Datt, and Martin Ravaillion. 1993. "Is Poverty in the
Developing World?" Working Paper, World Bank, Policy Research
Department, Washington, D.C.
9. Collinson, Sarah, Europe and International Migration, London, Pinter and
Royal Institute of International Affairs, 1993.
10. Dollar David, 1992, Outward-oriented Developing Economies Really Do
Grow More Rapidly: Evidence from 95 LDCs, 1975 1985, Economic
Development and Cultural Change.
11. Ellis F., 1998, Household Strategies and Rural Livelihood Diversification,
Journal of Development Studies.
12. European Commission, Background Report: The European Environment
Agency, London, SEC, 1994.
13. Eurostat, Europe in figures, Brussels and Luxembourg, 2000.
14. Fabre, Thierry, The Birth of the Mediterranean, Contemporary European
Affairs 4, part 2-3, 1991.


15. Gardner, David, EU Turns Strategic Eyes to South, Financial Times, May
16. Goldman R. H., Asia and Africa: Legacies and Opportunities In Development,
San Francisco: Contemporary Studies Press, pp. 195 232.
17. Green R.H, The NIEO and North-South Relations, in Kiljunen K., Region to
Region Cooperation Between Developed and Developing Countries,
Aldershot, Avebury, 1998.
18. Humphrey J., 1995, Industrial Reorganization In Developing Countries, World
Development, vol.23, No.1, pp 149 - 162.
19. Industrial Development Global Report, 1999.
20. Industrial Development Review Series, 1997.
21. Jenkins R. O., 1990, Comparing Foreign Subsidiaries and Local Firms In Less
Developed Countries: Theoretical Issues and Empirical Evidence, Journal of
Development Studies, 26.
22. Killick T., 1995, The Flexible Economy: Causes and Consequences of the
Adaptability Of National Economies, London: Routledge, p.179.
23. Lall S., 1992, Technological Capabilities and Industrialization, World
Development, vol.20, No 2, pp. 165 186.
24. Lall S., 1995, Structural Adjustment and African Industry, World
Development, vol.23, No 12.
25. Levitsky J., 1997, Credit Guarantee Shemes for SMEs An International
Review, Small Enterprise Development, vol.8, No.2.
26. Levy B., 1993, An Institutional Analysis Of The Design and Sequence Of
Trade and Investment Policy Reform, World Bank Economic Review.
27. Little I. M. D, 1987, Small Manufacturing Enterprises In Developing
Countries, World Bank Economic Review, vol.1, No 2.
28. Livingstone I., 1991, A Reassessment Of Kenyas Rual and Urban Informal
Sector, World Development, vol.19, No.6.
29. McCormick D., Kinyanjui M.N. and Ongiie G., 1997, "Growth and Barriers to
Growth among Nairobi's Small and Medium-sized Garment Producers",
World Development, vol.25, no.7.
30. Morisson C., 1991, Povetry and Income Distribution during Adjustment:
Issues and Evidence from OECD Data, World Development, vol.19, No 11.


31. Mosley P., Weeks J., 1993, Has Recovery Begun? Africas Adjustment in the
1980s Revisited, World Development, vol.1, No 10, p.1585.
32. Pack H., 1990, Productivity, Technology and Industrial Development, New
York: Oxford University Press.
33. Pomfert, R., The European Communitys Relations with the Mediterranean
Countries, London, MacMillan 1992.
34. Roemer M., 1999, Resource based Industrialization: Journal of Development
Economics, vol.6.
35. Schlie, Ulrich, The Mediterranean Challenge: Europe and North Africa,
Libertas Europaische Zeitschrift 1-2, Stuttgart 1992.
36. Thoburn J. T., 1997, Enterprise Reform, Domestic Competition and Export
Competitiveness, Journal of the Asian- Pacific Economy, vol.2, No.2, p.168.
37. UNCTAD, World Investment Report, 1997, Traditional Corporations, Market
Structure and Competition Policy.
38. Willem Van Eeghen. 1995. "Poverty in MENA." World Bank, Washington,
39. World Bank, Global Economic Prospects and the Developing Countries, 1996.
40. World Bank Papers, Africa Technical Department Series, No 310, 1996.
41. World Bank, China: Foreign Trade Reform, 1994.
42. World Bank. 1993. Poverty Reduction Handbook. Washington, D.C.
43. World Bank. 1993. Tunisia: The Social Protection System. Washington, D.C.
44. World Bank. 1994. Poverty, Adjustment and Growth of Morocco.
Washington, D.C.
45. World Bank. 1995a. Claiming the Future: A Long-Term Perspective Study
for the Middle East and North Africa. Washington, D.C.
46. World Bank. 1995b. Egypt: Social Welfare: Strengthening the Social Safety
Net. Washington, D.C.
47. World Bank. 1995c. The Social Impact of Adjustment Operations.
Washington, D.C.
48. World Bank. 1995e. Tunisia: Growth, Policies and Poverty Alleviation.
Washington, D.C.
49. World Economic Outlook, 2000.