Making Globalization Work in Africa

• Author: G.E. Gondwe
• Position: Director of the IMF's African Department

Making globalization work in Africa is one of the most urgent tasks facing the region's policymakers. There is no doubt that economic growth rates in sub-Saharan Africa have lagged far behind those of other regions and that Africa is the region least integrated into the global economy. A growing body of opinion also suggests that the odds for Africa's integration are so unfavorable that its marginalization is inevitable. Our view at the IMF, however, is that African countries can and must integrate themselves into world markets if they wish to succeed. For Africa, an important intermediate step toward integration into the world economy is promoting regional integration at home. The IMF is fully committed to playing an active role in this effort. Indeed, the importance of regional integration featured prominently in the discussions that Horst Köhler, the Managing Director of the IMF, and James Wolfensohn, the President of the World Bank, had with African heads of state during their joint trip to Africa in February 2001.

Globalization's impact

Our globalized world offers many benefits. Over the past fifty years, trade has been a major force driving economic growth, with global trade expansion far outstripping global GDP growth. In the 1990s alone, world trade grew at an annual average rate of 6.8 percent, more than double the annual world output growth of 3.2 percent. For developing countries as a whole, the benefits have been greater. During the 1990s, developing countries' trade increased 8.3 percent a year while annual real GDP growth increased 5.5 percent.

The benefits of globalization, however, have not accrued equally across countries. Africa's share in world trade has actually decreased sharply in the past decade. As an illustration, consider that the non-oil exports of sub-Saharan Africa amounted to $69 billion in 2000. If the region's countries had merely maintained their export market shares of 1980, their 2000 exports would have amounted to $161 billion-more than double the actual outcome. This is a huge loss that has seriously impaired Africa's growth performance.

At the same time, the crises of the mid-to-late 1990s in Asia and other emerging markets have overshadowed the advantages of outward-looking, liberalized economies, shifting the focus of discussion to the risks inherent in an increasingly integrated world economy. Critics have tried to blame the general advance of economic globalization for continuing poverty around the world, including in Africa. Leaders of countries in Africa and elsewhere that are not yet fully integrated into the world economy may therefore rightly question whether it is in their best interests to further expose their countries to the risks of a global economy. Is globalization really good for small...