Globalization's Challenges for Africa

• Pages: 177-178

Page 177

Following are excerpts of a May 21 address by IMF Deputy Managing Director Alassane D. Ouattara, at the Southern Africa Economic Summit in Harare, Zimbabwe.

The trend toward more integrated world markets offers a wide potential for greater growth and presents an unparalleled opportunity for developing countries to raise their living standards. At the same time, the Mexican crisis has focused attention on the downside risks of this trend, and concerns have arisen about the risks of marginalization of countries.

The globalization of the world economy amounts to the integration of economies throughout the world through trade, financial flows, the exchange of technology and information, and the movement of people. The extent of the trend toward integration is clearly reflected in the rising importance of global trade and capital flows. Economic success in today's world is less a question of relative resource endowments or geography and more a question of the market's perception of the orientation and predictability of economic policy.

Challenges of Globalization for Africa

Globalization will continue to reinforce interdependencies between different countries and regions. It can also deepen the partnership between the advanced countries and the rest of the world. And to support this partnership in a mutually beneficial way, the advanced countries could help to further open their markets to the products and services in which the developing world has a comparative advantage. In addition, the reform efforts of the African countries will need to continue to be supported by adequate financing on concessional terms. In this regard, the IMF has put the enhanced structural adjustment facility [ESAF], our concessional lending facility, on a permanent footing. Moreover, the IMF and the World Bank have recently begun implementing the initiative to resolve the external debt problems of heavily indebted low-income countries (HIPCs). Three African countries-Burkina Faso, Côte d'Ivoire, and Uganda-are among the first to be considered under the initiative.

The challenge facing the developing world-and Africa in particular-is to design public policies that maximize the potential benefits from globalization and minimize the downside risks of destabilization and/or marginalization. Most African countries have been implementing these policies for some time. In...