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Econ 325

Econ 325

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Published by: antzareattacking on Dec 05, 2008
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07/06/2014

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OpaloKennedy OpaloEcon 325: Economies of Developing Countries
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.Prof. Una Osili
Economic Integration and Monetary Unions in Africa:Hurdles and Possibilities
Introduction:
Sub-Saharan Africa
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(hereafter Africa) continues to lag behind other regions of theworld in terms of economic growth and development. Over the years, a lot of ink hasbeen spilled in trying to explain this fact. Explanations put forward by variousscholars, to mention a few, have included the region’s inappropriate developmentstrategies that are dependent on inward-looking policies meant to capture rentsrather than foster growth (Thomson and Thomson, 2000; Dollar, 1992; Cleaver,1985); external obstacles to trade, especially with regard to policy choices of theGlobal North , such as the much maligned agricultural policies of the EuropeanUnion and the United States of America (Amjadi et al., 1996); undemocraticgovernance that has produced kleptocratic dictators and caused civil strife whichhas diverted valuable resources from the development agenda to war efforts(Collier, 2007; Masson and Patillo, 2005); bad geography (rugged terrain and lack of access to the sea) that renders transport costs, a vital component of trade,prohibitively high (Sachs, 1998); the legacy of colonialism that created unsuitable
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 This paper was originally presented as a fifteen page paper in a class on the economies of developing countries. I have since had to incorporate new material and expand some of thearguments presented for the purposes of submitting it as a sample paper.
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Sub-Saharan Africa comprises of countries on the continent of Africa South of the Saharadesert. This grouping excludes countries from North Africa like Morocco, Tunisia, Libya, Egyptand Algeria.
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Opalopath-dependencies with regard to trade and institutional structures (Nunn, 2007; Young, 2004); or simply bad leadership
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(Achebe, 1985).Naturally, none of the explanations provided can singly explain Africa’sunderdevelopment. Each only provides a partial answer as to why the region haslagged behind others like the Pacific Rim
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which took a meteoric rise towardsbecoming developed economies in the 1980s. Most, if not all, of the existingexplanations for Africa’s underdevelopment have been state-centric. They havemostly implied that solutions lie within the boundaries of the individual countries, if only these countries’ governments can get their act together. While this might betrue, there is a need to look for alternative solutions that are not state-centric,especially in light of the increasing rate of globalization. The increasinginterconnectedness of nations through commerce, not just in the regions withdeveloped economies, but even in Africa necessitates the search for solutions thatlook beyond national borders. It is for this reason that this paper provides ananalysis of two complementary approaches to tackling Africa’s underdevelopment:monetary unions and economic integration in the different regions of the continent. Through a survey of the existing literature on economic integration and monetaryunions, this paper explores the viability of these two approaches in the Africansituation in an attempt to spur economic growth.
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Chinua Achebe’s famous 1985 book criticized the Nigerian political leadership. The samecriticism can be leveled against other leaders on the continent of Africa.
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It is interesting to note that when most African states gained their independence fromWestern Europe in the 1960s, some African countries were at the same level of economicdevelopment as many East Asian countries. To illustrate this point, in 1975 the GDP in Africaand Asia was US $ 713 and US $ 309 respectively. In 2004, these figures were US $ 1,842and US $ 5,331 respectively. This fact is important in dispelling the argument that Asia had ahead-start in the development trajectory. See the Japan Bank for International CooperationInstitute paper on “Experience in Infrastructure Construction in East Asia and Sub-SaharanAfrica:Implications for Infrastructure Aid in Africa.” (2008).
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OpaloHereafter, this paper is divided into four sections. The first section provides a surveyof the conditions in Africa that make it a particularly suitable region forimplementing monetary unions and economic integration. The second section looksat economic integration, focusing on the existing literature on the subject, economictheory and how these apply to the African condition. The third section looks atmonetary unions, again focusing on the existing literature and economic theorybehind it and how it applies to Africa. The fourth section illuminates on some of thechallenges that might hinder successful implementation of the ideas put forth in thispaper. Lastly the conclusion recapitulates the main points presented in this paperand offers suggestions for further research in this area of Development Economics.
Background:
Most African states have neither been strong militarily nor had isolationistnationalism. This can be attributed to the processes that created them and theirexisting eclectic ethnic mix. Unlike older
Westphalian
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nation-states, many of thesecountries did not have to fight for and to maintain their territories since their borderswere arbitrarily drawn by 19
th
century European powers
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. The result was that thesestates did not have the incentives to promote economic activities that generatedrevenue or foster institutions that would sustain them as independent nation-statesas was the case with states founded through wars of conquest (Tilly, 1990). Thisguarantee of territorial integrity after independence, later cemented by the currentinternational regime may explain why most African states lack the ability to projectpower throughout all of their territories (Herbst, 2000). The Delta region in Nigeria,
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 This is a reference to the treaty of Westphalia (in actual sense the treaties of Osnabruck andMuster) of 1648 that is credited by most Political Scientists as having marked the beginningof the nation state as we know it – with clearly defined borders and legally unchallengeablesovereignty.
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 The partitioning of Africa took place in 1884-85 in Berlin, Germany in an attempt topeacefully divide territories in Africa among the imperial European powers at the time.
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