Archive for the ‘Africa’ category

Questions for World Bank Chief Robert Zoellick

April 22, 2010

Duncan Green, over on the P2P blog, publishes highlights from a speech by the President of the World Bank titled The End of The Third World? Modernizing Materializm for a Multipolar World (full text available here). Duncan contributes some useful comments that I hope to extend further.

The part of the speech that I find most intriguing is when Mr Zoellick focuses on development in Africa. Here we gain a partial insight into the former U.S. Trade Representative’s broader views on how today’s LDCs might prompt sustainable growth. Two excerpts standout. The first is on African trade policy:

If Africans remove the barriers to producing goods domestically and to local entrepreneurship, while creating conditions for outside investors to shift production to Africa, then African development could begin to look very different. Unlike past failed efforts to favor import-substitution interests behind protectionism, this approach can capture benefits from regional integration within global markets.

And the second on value chains and China:

Today’s shifts open new opportunities. As the global crisis hit, some Chinese recognized that it was time to move beyond toys and footwear; China could move up the value chain, increase wages and consumption, and expand its “harmonious society.” Chinese companies, in turn, could move lower value-added manufacturing elsewhere, including to Africa, following China’s resource developers and construction enterprises.

Whilst other parts of the speech are less stimulating, the two highlighted above raise a number of questions. So Mr Zoellick if you’re reading, I’d like to hear your answers to the following:

1. To what extent do you perceive sub-Saharan Africa’s underdevelopment to be a result of the policies of individual African governments? In excerpt 1 above, you appear to imply that the trade and industrial policies followed by African nations are one of the key causes of their low growth rates. Do you believe that to be the case, or are you, instead, implying that changes to these policies are the only realistic route to industrialisation despite the causes of underdevelopment being much more complex (colonial history, geography, or other)?

2. When you mention ‘past failed efforts to favor import-substitution’ are you referring solely to the experiences of Latin American economies through the 70s-90s? Or are you unaware that pretty much every country that can be classed as developed (whether it’s the US, Europe, Japan or China) pursued successful forms of import-substitution, with the possible exception of the UK ?

3. How long do you estimate it will take before China is ready to ‘move up the value chain’ as you say? Given the size of domestic demand and continued prevalence of cheap labour in the country, will this not be a matter of a decades? And if so can Africa afford to wait around that long? Further, when viewing the World through this value chain lens, where do you see African countries ending up? If they are the last to ‘step onto the ladder’ will they inevitably be stuck on the bottom rung (i.e. producing low value-added products and not diversifying over time)?

4.Building on the last question, would you directly disagree with Collier’s suggestion that Africa actually needs protection from China as it has missed the boat in terms of becoming the focus of scale economies supplying low-wage labour?

It would be interesting to hear anyone else’ thoughts on this – particularly how you think Zoellick might respond to such questions (as I’m assuming he won’t reply). Despite the critical nature of these questions, I do believe the majority of the speech’s overarching themes were spot on. Thoughts?