Connecting Africa and Asia
| Author | Harry G. Broadman |
| Position | Economic Adviser, Africa Region, at the World Bank |
Improved Asian market access can boost Africa's exports, but Africa needs domestic reforms to fully capture the economic benefits
The recent boom in developing country commerce between Africa and Asia epitomizes the explosion of South-South trade. These trade flows are driven by the burgeoning middle classes in Asia's emerging economic giants-China and India-whose appetite for Africa's commodities is growing, and by rising economic growth in sub-Saharan Africa (SSA), which is increasing the demand for Asian manufactured goods.
These trends are fostering trade that is qualitatively different from Africa's traditional North-South commerce with the European Union (EU) and the United States, in which trade flows have been stimulated largely by preferential arrangements. The strengthening South-South complementarities between the two developing regions suggest that the trade we are observing is likely to be sustainable.
As the global marketplace becomes increasingly integrated, much is at stake for the economic welfare of millions of people in SSA. This article explores the evolution of Africa-Asia trade, as well as its developmental, commercial, and policy implications.
Over the past decade, many SSA countries have made significant economic progress. During 1996-2005, 34 percent of the continent's population resided in countries where growth was 4.5 percent or higher-and these were non-oil-producing countries. That there is an emerging class of African economic "success stories," especially outside of the oil producers, is surprisingly little known.
Even so, SSA's trade record remains poor-in no small part because of the continent's numerous small, landlocked countries and high degree of geographic segmentation (see box). World trade accounted for 16 percent of global output in 1991 and 20 percent in 2004. But Africa's export market shares have fallen continuously over the past six decades (Broadman, 2007).
Sub-Saharan Africa comprises a heterogeneous group of countries, each having economies, populations, and surface areas of different sizes, and in which GDP per capita ranges from less than $200 to $7,000. One-third of the world's resource-dependent economies are in Africa.
There are 45 small economies and 2 regional powers (South Africa and Nigeria)-together accounting for 55 percent of the continent's economic activity. Still, 18 countries, accounting for 36 percent of Africa's population, have grown in a sustained manner over the past decade. Another 14 countries, accounting for one-fifth of Africa's population, have experienced little or negative GDP per capita growth over the past decade, and many have been affected by conflict. Among them are Burundi, the Democratic Republic of Congo, and Eritrea.
Africa is also unique in both its physical and its human geography. It has the largest number of countries per square area of any developing region, with each country sharing borders with, on average, four neighbors. A large proportion of Africa's population lives in countries with an unfavorable geographic and economic basis for development. About 40 percent of its population is in landlocked countries, compared with 23 percent in Eastern Europe and the former Soviet Union. Moreover, the low population density is accentuated by high internal transport costs, estimated at nearly twice the levels of other developing regions. The result, except in South Africa and Nigeria, is small and shallow markets. Such conditions make it costly to trade in Africa.
Since 1999, prices for Africa's leading commodity exports have increased...
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