GLOBALIZATION

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GLOBALIZATION
Is it good or bad for developing countries?
Anastasia IKE
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OUTLINE

• Economic globalization
• Economic globalization in Sub-saharanAfrica
• Outcome effects
• Issues affecting Africas development
• Conclusion

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Economic globalization

• Integration of world economy
• through the promotion of free markets to foster
  international competition

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Economic globalization

• 1980s debt crises (Latin America) affected many
  developing countries
• IMF and the World Bank
• Structural Adjustment Policies (SAPS) were
  administered. They included
• Participating in international trade
  (Imports-Exports)
• Encouraging FDI
• Privatization
• Deregulation. . .

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SAPs in Sub-Saharan Africa

• Nigeria, South Africa, Ghana - Up to 100 foreign
  ownership of enterprises is allowed in many
  industries.
• Privatized companies Congo, Cote dIvoire,
  Gabon, Ghana, Guinea, and South Africa .
• Year 1990 - 2006 362 - 2718. (WB annual
  meeting symposium, 1997).
• Reducing trade barriers opening up to external
  competition
• Mali - 50 devaluation of the CFA franc in
  January 1994
• Encouraging FDI.
• But compared to other developing countries, the
  African share of FDI in the world is low

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Economic globalization in Sub-Saharan Africa

• Nigeria
• Top FDI destination in Africa
• Table 1. Summary of FDI (Millions of dollars)

Source Based on tables 3 and 4 and UNCTAD,
FDI/TNC database.
But. . . Most of these investments are in the
petroleum sector!
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Economic globalization - Outcome

• Africa recorded
• GDP growth rate of 5.7 in 2006, compared to 5.2
  in 2004 (Economist Intelligence Unit, 2006)
• Decrease in total debt stock from 35.9 of GDP in
  2005 to 26.2 in 2006 (IMF, 2006)
• However,
• The continents still continues to suffer serious
  development problems
• Twenty countries in Africa (today) have per
  capital income lower than 20 years ago.
• Two-thirds of the LDCs are in Africa.
• A food -surplus continent twenty years ago,
  Africa is now food-deficit
• (UNDP-HDR 19962)
  WHY??

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Source CIA World Factbook 2010 est.
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Issues affecting Africas development

• In his book Neoliberalism, Civil Society and
  Security in Africa. Pádraig Carmody argues that
  free market policies have failed to reverse
  increasing poverty on the continent, due to
• Poor/inadequate infrastructure transport,
  electricity, sanitation. . .
• Poor economic structure, lack of a diversified
  economy (colonial inheritance)
• Weak institutional frameworks
• Political and economic instabilities, high
  inflation rates
• Corruption and lack of transparency
• As a result, Africa has been marginalized by the
  process of globalization (Carmody 2007)

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conclusion
Globalization itself is not a cause of
development or underdevelopment. Certain domestic
factors affect the outcome of globalization for
each country.
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Thank you
QUESTIONS???