Diversification: towards a new paradigm for Africa's development
Mustapha Jallab2006
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Abstract
A weaker position for Africa in international trade… Africa's place in international trade declined sharply in the last two decades, particularly since the 1980s and the onset of the debt crisis, which led to deep economic recession. The continent's share of world trade declined from 7.6 percent in 1948 to 2.2 percent by 2003, a clear indication of its marginalization. If you take the figures for global exports, Africa's share has fallen from 7.3 percent to 2.4 percent over the same period. Clearly, reforms implemented during the second half of the 1980's bore fruits and were at the origin of international trade recovery. But this recovery showed its fragility in the 1990's with high volatility. The second major characteristic concerns the composition of traded goods, where Africa is caught in the revenue trap with agricultural and mine products represent 70 percent of total exports. Furthermore, exports of manufactured goods are concentrated in limited numbers of countries among which are North African countries, South Africa, and Mauritius. For imports, more than 70 percent of the total constitute manufactured goods. This structure of African foreign trade is very representative of the traditional North-South divide. It also signifies failure of the attempts to diversify and modernize African economic structures begun in the 1960's and 1970's. Indeed, the debt crisis put an end to African countries' efforts at industrial development and local transformation of cash products. Finally, African external trade is geographically concentrated in Western Europe. This geographical composition is connected to the composition of traded products by African countries, reproducing the traditional integration scheme with Africa exporting raw materials and agricultural products to European countries and in return importing manufactured goods from these countries. The import-substitution strategies adopted by African countries in the 1960's and 1970's were geared towards putting an end to this scheme by locally manufacturing goods that were in the past imported from colonial powers. The failure of these strategies and the explosion of the debt crisis led to the abandonment of import-substitution policies and the agro-export model. More recently, North America has increased its share of trade with Africa following the adoption of AGOA by the United States and preferential agreements by Canada in favour of African exports. Asia's share of trade with Africa is also growing rapidly. 1.3 When prices of primary commodities decline Africa has been subjected to trade shocks from the fall in prices of raw materials due to the domination of traditional integration arrangements in its external trade. For many years, prices had been characterized by a downward trend and strong volatility and many recent studies concur on the tendency of this structural decline of real prices of primary commodities 6. 8 World Bank and Economic Commission for Africa, Can Africa claim the 21 st Century? Washington, 2000. 9 UNCTAD, Economic development in Africa. Trade results and dependency with regard to primary commodities, Geneva 2003.
