Is Globalisation Good for Africa?

Arne Bigsten () and Dick Durevall ()
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Dick Durevall: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Göteborg University, Box 640, SE 405 30 GÖTEBORG

No 67, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: Globalisation or market integration in Sub-Saharan Africa is closely linked to the structural adjustment programmes. In this paper we focus on their dependence on politics and institutional characteristics of the countries concerned. In particular, we argue that one important explanation for the dismal performance of many African countries, in spite of all the measures taken towards market liberalisation, is a lack of willingness or ability on the part of the politicians to respect the restrictions imposed on their behaviour and policy choices by the liberalised markets. The point we make in this paper is that market integration magnifies the effects of policies. We look specifically at the increased exposure to international prices and returns on assets make the economic equilibrium relations, the law of one price (LOP) and uncovered interest parity (UIP), relevant guidelines for economic policy. We illustrate the arguments by presenting the case of Zimbabwe. It is a good example where the lack of respect for the restrictions imposed by international markets has led to an economic crisis with negative growth rates and a process away from globalisation.

Keywords: Globalisation; structural adjustment; institutions; economic growth; Law of one price; uncovered interest rate parity; Zimbabwe (search for similar items in EconPapers)
JEL-codes: F40 O10 O20 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2002-03-25
New Economics Papers: this item is included in nep-afr, nep-dev and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published in World Economy, 2003, pages 1119-36.

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