What Africa Needs to Do to Benefit from Globalization

• Author: S. Ibi Ajayi
• Position: Professor in the Department of Economics at the University of Ibadan, Nigeria

Globalization, which is not a new phenomenon, may be defined as the increasing interaction among, and integration of, the activities-especially economic activities-of human societies around the world. This definition contains both a description and a prescription. The description refers to the expansion of international flows of trade, finance, and information into an integrated global market, the prescription to the liberalization of national and global markets in the belief that free flows of trade, finance, and information will produce the best outcome for both economic growth and human welfare.

There are two reasons for the recent popularity of the concept of globalization. The first is the scale and speed with which it is occurring and the way technology (especially in communications and transportation) is changing the world. Second, it is now widely accepted that globalization is not just the latest economic fad but that the international environment is changing in profound ways and that the world is indeed becoming a global village.

Development crisis in Africa

How Africa decides to approach globalization must be determined by its most urgent goals: accelerating economic growth and development and eradicating poverty, which is not only widespread but deep and severe in some countries. At the beginning of the twenty-first century, poverty remains Africa's most pressing problem, and economic growth is the sine qua non of poverty reduction. Thus, Africa needs to achieve, as quickly as possible, growth that is both sustained and rapid.

The main questions Africa has to ask itself about globalization are as follows. First, having escaped the worst effects of the Asian crisis, should it still pursue globalization? Can Africa continue to remain isolated as the winds of change sweep through the global economy? Second, what are the advantages and disadvantages of integration into the global economy? How can the risks of globalization be minimized? What are the most important lessons Africa can learn from the crises and growth experiences of the Asian countries so that it can more successfully manage the unavoidable difficulties of globalization? Third, to what extent is Africa already integrated into the global economy, judging from the various indicators at our disposal, and how can it improve its competitiveness in international trade? Fourth, is globalization the panacea for all of Africa's economic problems? Fifth, what policy measures must Africa put in place to derive maximum benefit from globalization?

Avenues to globalization

There are a number of reasons why many analysts advocate Africa's greater integration with the global economy. The overriding reasons are Africa's poor overall economic...