1 Sub-Saharan Africa and Europe in a restructuring world François Bourguignon and Pierre Jacquet Paris School of Economics and Agence Française de Développement AFD-EUDN Conference, December 2009, Paris
Dec 14, 2015
1
Sub-Saharan Africa and Europe in a restructuring world
François Bourguignon and Pierre JacquetParis School of Economics and Agence Française de Développement
AFD-EUDN Conference, December 2009, Paris
2
Sub-Saharan Africa in a multi-polar world
Commodity exports not sufficient to sustain SSA's catching-up: need for diversification.
SSA development handicaps: productivity gaps, population growth, hard and soft infrastructure deficit.
SSA unlikely to become a development pole by itself without outside support
Development prospects depend on relationship with existing and emerging global economic poles
The potentially privileged position of Europe
3
Outline
1. Development performances of SSA and its present global economic integration
2. Inward and outward oriented strategies to accelerate SSA development
3. What European policy towards SSA?
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1. Development performances of SSA and its present global economic integration
i. Aggregate performancesii. Trade integrationiii. Factor flowsiv. Aid to SSAv. Global powers' initiatives towards
SSA
5
i. Aggregate performances
GDP per capita growth rates by world regions: 1970-2008
-6
-4
-2
0
2
4
6
8
1970 1975 1980 1985 1990 1995 2000 2005
Developing countries
Developed countries
Sub-Saharan Africa
6
Sub-Saharan Africa: Terms of trade and GDP per capita growth, 1980-2007
0
20
40
60
80
100
120
140
160
1980 1985 1990 1995 2000 2005
Year
Ind
ex (
2000
=10
0)
-8
-6
-4
-2
0
2
4
6
8
Gro
wth
rat
e (%
)
Terms of Trade (2000=100)
GDP per capita growth
7
Sub-Saharan Africa: Sectoral composition of GDP, 1970-2008
0
10
20
30
40
50
60
1970 1975 1980 1985 1990 1995 2000 2005
Year
Per
cen
t
Services
Industry (inc. Manufactuiring)
Agriculture
8
1970-1978 1979-1994 1995-2007
Sub-Saharan Africa (unweighted mean)2.0 -0.7 1.7
Resource-rich countries 1.6 -1.6 1.9Resource poor countries 2.1 -0.3 1.6
Landlocked countries 2.0 -0.6 1.8Coastal countries 1.9 -0.7 1.7
Fragile countries 1.4 -1.7 1.4Non-fragile countries 2.6 0.4 2.1
Sub-Saharan Africa: mean per capita GDP growth rates by type of country
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ii. Trade integration
Sub-Saharan Africa: Openness and share of world trade
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
% o
f W
orl
d E
xpo
rts
and
Wo
rld
GD
P
SSA ExportsSSA GDP
0
5
10
15
20
25
30
35
40
Openness (X+M)/2*GDP
10
Sub-Saharan African Exports -2008
0%5%
10%15%20%25%
30%35%40%45%50%
ALL SSA Resource Non-resource Coastal Landlocked
Rest of World
Europe
Africa
China
J apan
USA
Subsaharan African Imports - 2008
0%
5%
10%
15%
20%
25%
30%
35%
40%
ALL SSA Resource Non-resource Coastal Landlocked
% o
f S
SA
GD
P
Rest of WorldEuropeAfricaChinaJ apanUSA
Geographical structure of SSA trade
1111
SSA Trade specialization, 2008
Source : Comtrade. The category “non-resource rich” includes South-Africa
-
50
100
150
200
250
Exports Imports Exports Imports Exports Imports
SSA without South Africa Resource rich Non - Resource rich
Curr
ent d
olla
rs, i
n Bi
llion
Fuel Manufactures Agr. Raw Materials Food Ores & Metals
1212
SSA manufactured trade by destination countries: 1998-2008
Source : Comtrade. The category “manufactures” does not include non-ferrous metals.
-
5
10
15
20
25
EU - 27 USA SSA China Other
US$
bill
ion
1998
2008
-
10
20
30
40
50
60
70
EU - 27 USA SSA China Other
US$
bill
ion
1998
2008
SSA exports of manufactures SSA imports of manufactures
14
SSA migration by region of destination
Stocks of SSA migrants outside SSA: 1990-2000
0
0.5
1
1.5
2
2.5
3
3.5
America Europe EU 15 Asia and Oceanis Total
Region of destination
Mil
lio
ns
1990
2000
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iv. Aid to SSA
Official Development Assistance to Africa by donor: 1990-2007
0
5
10
15
20
25
30
35
Multi-lateral EU US Others Total
$ B
illi
on
1990
1995
2000
2005
2007
1616
v. Global powers' SSA initiatives
EU : after 30 years (GSP, Lomé, Cotonou) of a policy based on trade preferences and development finance, shift toward reciprocal trade agreements cum regional integration through the EPAs.
SSA comeback as a strategic stake (access to resources, global politics) since the early 2000s AGOA: Apparel and non-apparel preferences EBA: Preferences open to least advanced countries FOCAC: the China-Africa partnership
Issues Crucial role of rules of origin :AGOA vs. EU's EBA Questions on the impact of preferences Is WTO compatibility an issue ? Is China more or less effective than the West ?
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vi. Partial summary
A region highly diverse but with common problems
A region very open and globally dependent on trade in primary commodities
Dismal growth performances in the 1980s and 1990s. No autonomous growth engine at work
Very strong links with Europe (trade and market access, aid, migrations)
Important role for ODA (programmable aid about 5% of SSA GDP)
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2. Inward- and outward-oriented strategies to accelerate SSA development
i. Limitations of the "business as usual" or the "rentier" scenario
ii. Import substitution through proper regional integration
iii. Diversifying exports through trade preferences
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i. Limitations of the "business as usual" or the "rentier" scenario
Commodity exports' rent and remittances cannot support ambitious development: Fragility; dependency on global demand; non-
tradable bias; demographic growth; weak global prospects
Limited development potential of non-traditional tradable sectors: Low competitiveness; small domestic market size;
lack of hard and soft infrastructure Investing in governance and human capital
necessary but not a substitute to a trade-related 'growth engine'
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ii. Import substitution through proper regional integration
Past SSA experiences with Regional Integration Agreements (SADC, ECOWAS, UEMOA, ..) Free trade areas vs custom unions, overlaps, trade
diversion Transforming present agreements into proper
custom unions: Uniform tariffs and relative protection of a few
sectors; effective regulation of competition; infrastructure investments; foreign investors
Asian development WTO rules
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iii. Diversifying exports through trade preferences
Revisiting AGOA and EBA types of agreements with US and EU economic poles: Extend country coverage, soften rules of origin
Chinese investors using SSA as an export base is not necessarily a problem: Tariffs in US and EU are low anyhow; competition
among foreign investors; spillover effects on domestic markets identical
Present experiences of Special Economic Zones supported by Chinese firms
Combining regional integration and trade preferences
2222
3. European policy toward SSA
Why is SSA strategic ? Access to energy and natural resources Demographics Game of influence through development
effectiveness Why should Europe invest more in SSA ?
Natural geopolitical space EU and SSA are natural markets for each other Labor and personal mobility Laboratory for innovation in sustainable
development
2323
3. European policy towards SSA (2)
Evolving relative position of Europe in SSA Define global, consistent policy toward SSA
Trade preferences, support for regional integration, more flexible rules of origins
Substantial scaling-up in volume and quality of development assistance
Consistent immigration policies Promotion of a conducive global governance
framework: Allowing SSA policy space for economic
diversification (through trade policy, subsidies, forms of “industrial” policies…).