globalization and african development

Globalization and Africa development 1

Globalization and Africa Development

Oscar Gumiriza

Writing 102

Karon Harden

3rd

November 2013


Abstract

In the world, people have different belief on the phenomenon of globalization. Some question

whether it helps the achievement of global development, while others insist that it really plays a

significant role to improve the world. This paper analyzes both positive and negative effects of

globalization on Africa development, particularly Sub-Saharan Africa. The paper concludes by

suggesting some solutions that could help Africa to cease bearing the negative effects of

globalization and benefit from it efficiently.

Key words: Globalization, sub-Sahara Africa

Introduction

Before the Second World War [WW II], the economies of continents were much more

independent from one another than today. Each continent produced what her people needed

without much thought to international trade. In the 1950s there was a significant acceleration in

international trade, which caused by the development of the technology (commercial airplane

travel, telephone and TV communication, etc.) that facilitated and attracted many countries to

interact together in what is called globalization to improve their economies. Nonetheless, people

argue that the world did not enjoy integration entirely Gerard Stoudmann (2006), and some other

authors in different articles view globalization positively. Stoudmann acknowledges

globalization as phenomena based on integrating all countries of the world to maintain its

sustainable development. Thomas Larsson (2001), defines globalization as

[a] process of world shrinkage, of distances getting shorter, things moving closer. It

pertains to the increasing ease with which somebody on one side of the world can

interact, to mutual benefit, with somebody on the other side of the world (p. 9).

Like these two authors, Stokes (2011) argues that globalization is a potential and actual

movement of interacting nations by breaking down cultural and commercial boundaries to

promote free-market in the global world. In Beurais report of 2011, globalization raised the

Gross Domestic Production [GDP] of sub-Saharan African countries by 4% and 5% in Asian

countries.

However, other people view globalization as negative phenomena. They say that

globalization benefits rich countries only while poor and developing countries just suffer its

negative effects. For instance, Ekanem and Ekefre (2012) view globalization as neo-colonization,

and through it, poor countries became dump of non-recyclable products of western world

industries. Additionally, Giddens, S.T.Akindele and Gidado (2002) also view globalization as

process of frightening and over-exploiting poor and developing countries resources by western

industrialized world. According to Obadina (1998), Globalization is the threat to poor instead of

being an opportunity for development. In this paper, the aim is to learn more about these

different ideas that come from different people about the concept of globalization and how it


affects developing and poor countries. Furthermore, some objectives of the paper are to know if

really globalization favors inequality in development, where the problem is, and what can be

done to cease or change the situation.

Definition and Historical Perspectives

Globalization is defined by the Encyclopedia of New American Nation as the course of

incorporating different nations economically, culturally, as well as politically into a bigger

society which is capable of leading such nations all over the world to institute an increasingly

closer contact. Friedman and Kaplan in preserve article (2012) gave their own view about

globalization. They noted it as the act of integrating different geographical economies including

market and finance, technologies, especially information and communication technology in such

a way that minimize the globe into a minute place which allow individuals from diverse regions

to contact each other in a faster way. Furthermore, Anthony Gidden (2012) sees globalization as

the amplification of communal relationships across the world that brings together far-away

vicinities so as to share activities among themselves.

Historical records across the world about the origin of the idea of globalization indicate

that it started decades back though there are lots of variations as to when it actually started.

According to an oxford journal European Review of Economic History (2002), some historians

believed that globalization started as far back as 1492 in support of Adams Smiths idea of 1492

as being a significant period in world history. Others said globalization started years before 1492

while some historians still believed that the discovery of the water ways by the Europeans in the

year 1500 which enable goods to be moved from one nation to another was the beginning of

globalization (William, 1999).

Bringing us to the modern days, the World Bank reported that globalization started

immediately after the Second World War but has stepped up significantly by the 1980s which

according to the report, was motivated by two key features. The first entails the technological

progress that has lessen the transportation expenses, information and communication technology

and computation which to a large extent has made it possible to transact businesses across


countries. The second feature involves the rise in reform which brought about liberalization

especially in trade and commerce.

In respective of when globalization starts, it has become a general phenomenon today.

According to Jrgen Osterhammel and Niels P. Petersson (2005), the concept of globalization

was virtually left inactive over the past decades. It was only seldom used in some special

periodicals until during the 1990s when globalization became accepted by more people and was

incorporated into the terminology of many.

Significance of Globalization

Globalization brought about the integration of many nations which resulted in boost of

trade and commerce. Nations all over the world are becoming less protective to their economy

against the inflow and outflow of goods and services through the removal of many barriers in

addition to providing a nontariff business environment. Globalization has promoted the concept

of free trading between countries. According to the World Bank report (2009), practical facts

such as the increase of GDP and high rate economic development in general proved that the

concept of globalization has extensively increased East Asian (China, Korea) trade and economic

development of western industrialized countries; nevertheless, as claimed by Abdi (2010), some

developing countries engaged in globalization do not enjoy any benefit especially in the sub

Saharan Africa which is the focus of this paper.

Globalization in Developing and Poor Countries:

As important as globalization to the developed countries, developing and poor countries

are not favored by the concept. According to Ali Abdi (2010), the concept of globalization does

not support Africa. Africa suffers effects of globalization due to low competitiveness of its

industries in comparison to western industries. Other developing worlds (Latin America and

Asia) also had the same case, but for Africa it is worst. As Sundaram, Schwonk, and Arnim,

(2011) points out, Africa failed to compete in global market due to the lateness of getting

independence from its colonial masters. According to them, since 1950 there was global

industries importation where Latin America and Asian countries got their industries because they

were independent already. However, African countries started getting independence in the 1960s,


and they got industries in the 1970s. Unfortunately, in 1980s global market competition started

while African industries were infant which was the main reason of failure.

Obviously, the failure was not good towards africa economic development because most

of her productivity started dropping down gradually. Global income of poorest African countries

declined from 2.3 to 1.4 between 1984 and 1999 while during this period of time five richest

countries development rose from 70 to 85percent (Giddens, 1990). According to Gidado etal

(2002), the worst to Africa is that GDP of twenty Sab-Saharan African countries was lower in

1999 than it used to be in the last 20 years. From World Banks report of 2000/2001, GDP of

developed countries was increasing at rate of 6% and above while it was 5.3% - 4.3% for Asian

and Latin American countries. Sub-Saharan countries growth development was under 2.4 percent

in 1990-1999. Additionally, according to Ortiz and Cummins (2011), developing and poor

countries mainly sub-Saharan Africa have been suffering unequal distribution of global income.

As they explain it in UNICEF Policy and Practice report of 2011, since 1990 - 2007 rich nations

took a considerable ration of global income compare to the poor. The following tables contain

statistical details on global income distribution from 1990 to 2007 and comparison between poor

and developed countries.

Table 1

Comparison of Poorest and Richest Population Quintile in the World and Their Gross

Production Capital

Poorest Richest

Country Quintile

(Qi)

GDP

per

capita

Population Country Quintile(Qi) GDP

per

capita

Population

Dem.

Rep. of

Congo

5 77 12,504,557 Luxembourg 1 136,936 95,999

Liberia 5 113 725,457 Singapore 1 121,781 917,720

Dem.

Rep. of

Congo

4 129 12,504,557 United States 1 109,373 60,316,000

Haiti 5 132 1,944,017 Luxembourg 2 84,096 95,999

Burundi 5 156 1,567,596 Norway 1 81,739 941,831

Niger 5 175 2,827,937 Ireland 1 80,832 871,386

Central 5 178 851,481 Switzerland 1 73,248 1,510,223


African

Rep

Lesotho 5 191 406,335 Canada 1 72,032 6,595,200

Dem.

Rep. of

Congo

3 193 12,504,557 Seychelles 1 70,113 17,006

Liberia 4 199 725,457 Netherlands 5 69,311 3,276,339

Source: Ortiz and Cummins (2011).

Table 2

Summary of Unfair Distribution of Global Income in World Population Quintile (Quintile Qi

Column in the Table Two Is Derived From Table One)

Global income distribution (%)

1990 2000 2007

Q1 75.3 74.4 69.5

Q2 14.9 14.2 16.5

Q3 5.4 6.3 7.8

Q4 3.0 3.4 4.2

Q5 1.5 1.7 2.0

# of observations 99 127 136

% of global

population

86.1 91.1 92.4

% of global GDP 85.3 87.4 88.6

Source: Ortiz and Cummins (2011).

Referring to the data in above tables, Quintile values at Q4-Q5 are commonly owned by

poorest countries (see table 1), and Q1-Q2 are for richest countries. When you look at distribution

of global income distribution in table 2, Q4 and Q5 countries got 1.5% - 4.2% in of the entire

global income in 1990-2007 while Q1-Q2 countries got the share varies between 14.9% and

75.3% .This means that the share of poorest countries on global income varied between 1.5 and

4.2% in this period of time, and the share of rich countries was between 14.9% and 75.3% which

is not fair.

From this unfairness and impacts, most people are not comfortable with the idea of

globalization as its impact appeared to be based on certain factors that include social,

educational, and geographical locations of nations among others. Monga (1996) viewed

globalization in developing countries as been driven by borrowed cultures, interest, politics and

as well the economy itself from European which led to the indigenous African culture, interest,

politics and economy been wiped away.


Kenyan example illustrates the negative effects of globalization. In 2004, the government

of Kenya opened doors for international investment in the name of globalization. Consequently,

western industrialized countries over imported sugar in the country and it caused undercut of

price of sugar produced in Kenya. Sugar cane farmers and Kenyan sugar producing industries

suffered loss as the result of the over-importation of sugar (Ekanem S. , 2004). According to

Ekanem and Ekefre (2012), Nigeria also met many cases about impact of globalization. In 1989,

Nigeria suffered the sale of toxic mosquito coil that was brought by Chinese. Later, in 1998

china sold also more toxic drugs and beef in Nigeria again that affected environment and people

as well. Many of tools brought from western industrialized countries destroy the environment

due to toxic air that they release when they are dumped. Oil exploration in Niger delta has been

done by force of globalization. Consequently, it affected agriculture productivity and fish

framing in the area and caused deprivation in population (World Bank, 1995). From those

negative effects that underdeveloped countries face, globalization is taken like the expansion of

new form of capitalist or re-colonization of poor and developing countries (Aina, 1996).

Positive Effects of Globalization

Though globalization was seen by poor and developing countries as a major

developmental challenge with lots of authors writing about the negative aspect of it; nonetheless,

the good aspect of globalization cannot not be over looked. Not just to the developed countries

alone, globalization has impacted positively to the poor and developing countries as well. It has

impacted in diverse areas of development that includes economic, social, educational,

agricultural, and even religiously.

The Economic Positive Impact of Globalization on Poor and Developing Countries

According to Lee and Vivarelli (2006), globalization has connected and integrated the

worlds economy including that of the poor and developing countries since as far back as the

1980s. It has led to a more free trade among countries which perhaps is one of its positive

impacts to both poor and developing countries. Home-based industries have seen trade

limitations fall providing free access to global markets. Not only has it brought about

integration, globalization has also significantly reduced the cost of transportation especially in


regards to goods and services thereby eliminating the concept of distance while boosting

economic activities drastically.

Prasad, Rogoff, Wei and Kose (2003) have showed that globalization has assisted in

raising the rate of growth in these developing countries by directly affecting those factors of

economic development like increase savings, more capital, technology especially Information

and Communication Technology, just to mention but a few. According to them, globalization has

also impacted positively on the developing countries by encouraging and increasing

specialization in production an impact which cannot be over looked.

The Educational Impacts of Globalization on Poor and Developing Countries

Globalization has equally led to the spread of education internationally with the poor and

developing countries also benefiting. According to Etim (2013) Globalization creates

spectacular opportunities for increasing the dissemination of information and dialogue (p. 7).

He added that through the fast transfer of information, Globalization has bridge the gap between

countries making it easy for the exchange of knowledge.

Chinnamai (2005) said Through globalization of education, which is being knowledge

transfer from the western countries into developing countries, is intended to improve the skills

and capability of the people receiving it (p. 9). Chinnamai further explained that globalization

has made education in developing countries to pass through series of changes especially in

Information Technology in addition to the rapid exchange of knowledge and values among

participating countries.

Chinnamai added that because the concept of globalization requires knowledge to

actively benefit from it, countries especially poor and developing countries are presently

refocusing their educational sectors and putting more efforts towards the expansion of that

sector. Furthermore, the internet is an example of globalization and it has become an integral part

of both the poor and developing countries. Dowling (2006) emphasized that the impacts of the

internet on education is vast and has totally transformed the manner education is conveyed, event

aught more effort is still needed to distribute internet connection everywhere.


Solutions

Cleary from the above discussion, Africa has had lot of obstacles in her development, and

many of them were caused by the dominance of industrialized countries (Sundaram, Schwonk, &

Arnim, 2011). This caused Africa to fail in global market competition which gradually increases

poverty in the continent; nevertheless, Africa economy needs to develop. Industries and

technology are highly needed to improve peoples lives. The problem is how this technology,

industries and other essential factors of development will be achieved. As it was clarified by

Ajayi (2001) to solve this problem, Africa needs to answer the following questions: Should

Africa isolate itself completely from global competitionin order to develop?, what are negative

and positive effect of global integration on her development? And what can be done to minimize

those negative effects of globalization?

The answer of any of the above questions depends on the answer of its preceding one. So,

before knowing if Africa should isolate itself, Africa needs to know and balance both negative

and positive effects of integrating with other continent in the global market. Africa also needs to

look at examples of other nations that integrated in globalization, and how it affected their

economies. Afterward, to set up policies that can be used and put those polices into action to

minimize negative effects will be the final study that leads to the appropriate decision.

According to Omotola (2010) in Africana, globalization is a tool for development even

though it may have negative effects when one of members of interaction is dominated. As this

paper explored its negative and positive effects, globalization is a best tool for improving

economy of poor nations and their peoples lives as well, if it is done properly. The matter is that

as it is a new method of international collaboaration, it has challenges and opportunities

(Intriligator, 2003). In January 1999 the former secretary-general of United Nations, Kofi Annan

called on international business community to interact and strive for world sustainable

development. Entrepreneurs from different parts of the world joined together and shared their

experience about economic development. As Murphy (2001) explains it, countries that joined by

that time benefited from the interaction. Additionally, from the data interview Murphy collected

in South Africa, Tanzania, Nigeria and Senegal about whether Africa should cease global

economic interaction, his opinion is that Africa has no reason to isolate itself from other


continent in global market; however, Africa must work hard to be able benefit from this process

of globalization which requires being active and participating in interaction (Murphy, 2001).

Therefore, what does Africa need to do to successfully benefit from globalization? To

answer this question, let us take Singapore and Japan as typical examples and see what they did

to cease negative effects of globalization on their development. Starting with Singapore, it is a

small country with area of 710km2. It does not have natural resources, but since its independence

it has been developing at a remarkable rate, 8.3% (Thangavelu, 2010), (Lai-To, 2000). As Lai-To

wrote it, Singaporean government considered and invested in human capital, information

technology and education to make deference en development and improve her peoples lives. It

also distributed financial institutions all over the country to support small businesses and provide

them investment capitals. Additionally, the government emphasized on cultivating good relations

with multiple national corporations and cooperation between private and national businesses.

One of the most important strategies of globalization that Singapore applied is promotion of

foreign investments and free trade that enables and favors importation and exportation of goods

in Singapore (Thangavelu, 2010).

In East Asia, Japan also has almost as the same situations as Singapore. It does not have

natural resources, but it is among most industrialized countries in the world. According to

UNESCOs report of 2000, development history of Japan shows that it developed due to its

quality education that has been developing day to day since 1950s. The report says that Japanese

government established technology in education and gave equal educational opportunity to all

citizen of the country which made them to be creative and innovative and brought the country at

the level of adopting other poor and developing countries. In Asia, Japan helped several

countries including Korea, Vietnam, Philippine, etc. in their development by providing them

manpower to create infrastructures. It does this under its long term projects called Initiative for

Development in East Asia (IDEA) and Official Development Assistance (ODA) (Sunaga, 2004).

From the above discussion about Japan and Singapore, countries that do not have natural

resources we can suggest some strategies that Africa can pick form there for her development.

The common strategy for both Singapore and Japan is education. Quality education opens

peoples minds to think creatively of what can improve their lives even in lack of the natural

resources or any other facilities. Additionally, from Mandelas famous quote, he observed that


education is the most powerful weapon which you can use to change the world. Then, since

Africa does not have to isolate from global market and must work hard and participate in

interaction to benefit from it (Murphy, 2001), Africa needs to improve quality of education that

will enable her citizen to be creative and active in global development. Laboratories for

applicable sciences like chemistry, physics and biology are awfully needed to help people think

to creatively and apply what they think to discover new things that society needs.

Furthermore, distribution of microfinances is also another good strategy that Africa can

learn from Singapore to improve Africans life. If this is done successfully, it may help in

increasing GDP and GNP and enable people to produce more than they need themselves and

used extra yields for international trading. The strategy is based on building microfinances

institutions in villages closer to people and teaching them how to save money regardless of how

small their incomes are. Moreover, people learn to borrow money in those microfinances (banks)

to start small businesses and of course as long as the institutions are closer to people, they assist

them in running their businesses and to pay back loans efficiently. This strategy is already started

in some African nations (Rwanda and Uganda for instance) and it is really making good changes.

Nevertheless, it still need to be enhanced where it is, and initiated where it not started yet.

Finally, Africa need to invest in producing what it can produce better than others

regarding to her natural resources such as fertile soil for agriculture, production of jewelry

(because it has mineral resources in DRC, South-Africa, etc.) and produces as much as possible

for use and for international trade as well. This is better than producing different products in

lower quantity due higher cost to the lack of specialization. The theory that approves this

relationship was invented by British economist, Ricardo in 1809. He said that specialization and

free trade will benefit all trading parties, even when some are more efficient producer than

others (p. 52) (Karl, Fair, & Oster, 2008).

Conclusion

Africa had a lot of challenges in her development. Some caused by her people (cultural,

ethnic) and others caused by foreigners who want to take advantage of Africa natural resources

through international business relationship. Some African citizen think that developed countries

will give favor to Africans and help them to improve their lives freely. Nevertheless, in a


business relationship everyone seeks his/her own benefit. Africans need to strive for self-reliance

and improve their lives themselves and develop the continent as well. Thus, Africa should take

advantage of globalization and interact to seek benefits. This will easily be achieved only if

Africa has qualified people to interact in the relationship. Helpful methods such as facilitating

foreign investments and specialization in the production process are also needed to compete in

international markets with other continents.


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