South South Cooperation And Regional Integration: The Way Out Of Underdevelopment
The introduction of Africa in the world
market started since the 15th century, could not in
many respects be considered as a positive venture.
Africas backwardness compared to the rest of the world(developed
countries, newly industrialised countries and emerging
countries) which is a paradox due to its enormous
resources and potential, clearly demonstrate that
Africa remain the great loser of the international
economic order. A situation worsened when considered
the policies undertaken by developed countries: the
creation of regional and non regional trade blocs,
the protection of domestic markets through quotas.
According to Gunnar Myrdal, the underdevelopped
countries way of handling their commercial policy
will be one of the most significant factors in determining
whether they will fail or succeed in their drive for
economic development This assertion has the merit
of addressing trade as the dominant economic activity
possible in Africa and other Third World countries.
It therefore takes into account the fact that African
countries could not live in isolation and retrenched
the fact that the growing competition in the production
and distribution of goods and services will render
these countries more vulnerable each day if nothing
is done. As a consequence a reflection needs to be
conducted as concerns industrialisation and trade
for effective development in a context of liberalized
market.
A DISTORTED AND UNFAIR ECONOMIC ORDER
The former American ^president Bill
Clinton observed globalisation is a fact not a policy
option This implies globalisation is more than a mere
creation of human being rather the consequence of
ever increasing contacts among individuals, peoples
and communities. The failure and collapse of the communist
model and its abandon by pioneers countries like China
and Russia are evidences the liberal economic order
was inevitable.
The discussion over a need to reform
the present economic order is as old as the deterioration
of the terms of trade. On the one hand LDCs, as a
result of an international division of labour dating
from the colonial experience produce goods in the
form of raw materials. They have no control over operations
like the transportation, transit and distribution
of these resources, thus they cant determine the prices
of these commodities. On the other hand developed
countries sell these products once manufactured with
such a high added value that there is an enormous
gap between the commodity sold by underdeveloped countries
and the manufactured product sold to the same countries.
Nearly half of third world countries earn more than
50 percent of their exports revenue from one single
primary commodity, such as cocoa, coffee or bananas.
These countries are now confined in production structure
of low value added activities. Not only are third
world countries trapped to deal in a single commodity,
but they are also depending on a few if not a single
foreign market for supply of manufactured products
and trade of their primary commodities.
In Africa about 340 millions people
thats half of the continent population live on less
than a US dollar a day, the mortality rate of children
under 5 is 140 per 1000, while life expectancy at
birth is only 54 years. Only 58 percent of the overall
African population has access to safe water.
As contained in NEPAD document Africas
place in the global community is defined by the fact
that the continent is an indispensable resource base
that served humanity for so many centuries. The underpinning
theory of the current economic order is to large extent
classical and neoclassical trade theories. According
to them, all countries would gain in participating
in international trade. Free trade maximises global
output by permitting each country to specialise in
what it does best. According to the IMF, outward oriented
trade policies are conducive to faster growth for
they promote competition, encourage learning-by-doing,
improve access to trade opportunities and raise efficiency
of resource allocation. In order not to miss this
turning of history and thereby remain loser, Africa
and other LDCs should undergo a deep reflection so
as to gain advantages of globalisation. A challenge
which can not be delayed or neglected in a context
of high risk for these countries to miss the few opportunities
they already had: the protection of recent inventions
and the rush of multinational corporations in the
LDCs markets of goods and services are evident dangers.
The simple liberal approach to trade is not consistent
with the historical experience of many developing
countries. First the theory of trade so applauded
by some is built on assumptions that are violated
in most international markets.
Much of world trade is in oligopolistic
industries such as cars, chemicals, electronics and
steel. The increasing importance of multinational
corporations is a clear indication that imperfect
competition matters. On this point Krugman(1987) states
the insights of new models incorporating imperfect
competition, learning and economies of scale has reduced
the doctrine of free trade from an optimal first best
strategy to a reasonable rule of thumb.
Our aim in conducting this analysis
is to demonstrate regional economic integration and
a more effective South-South cooperation among countries
could enable third world countries to not fall prey
into the dangerous trap of a simplistic participation
in world trade.
SOUTH-SOUTH COOPERATION FOR SELF RELIANCE
As Todaro(1992) pointed out while it
may be possible for many less developed countries
to be self reliant on an individual country to country
basis, some form of trade and economic cooperation
among equals is probably preferable to each country
trying to go alone in a world of unequal trade, technology
dominance, increasing protectionism among developed
countries and various forms of non market price determination.
This means more than ever before, before initiatives
toward south south cooperation should be perceived
as the basement of any sound economic policy undertaken
by a third world country possessing a potential or
a resource to exchange.
The south-south cooperation will accelerate
the pace and render effective the economic independence
of LDCs. The Northern partners of southern countries
would be progressively replaced by southern partners.
For instance, Nestl could rightly face a competition
from Brazilian coffee, South African milk whose industries
in these domains of activities could quickly develop
to satisfy that aim. The result would actually be
a multiplication of vendors which will inevitably
affect the prices of those commodities, in such a
situation its quite sure the customer would soon pay
the real price. In addition, one could believe, the
relative proximity (geographical, cultural and sociological)
makes south partners more suited to provide satisfying
products among themselves. For their needs are relatively
the same. Arthur Lewis (1977) stated that the LDCs
have within themselves all that is required for growth.
They have enough land to feed themselves, if they
cultivate it properly. They are capable of learning
the skills of manufacturing and of saving the capital
required for modernization.
REGIONAL INTEGRATION
A regional organisation could be defined
as a grouping of countries, in most cases neighbouring
countries, into an organisation in order to address
a particular issue: economic development; the management
of their common resources such as lakes, rivers; the
management of plagues with potential consequences
beyond a country. Economic issues constituting the
main problem in almost all societies, it is also the
main stake of regional integration. In fact the world
is slashed into pieces of regional groupings with
membership overlapping at times owing to double membership
of certain members. However this enthusiasm toward
integration can not hide the relative and mitigated
success of regional integration. If excluded the European
Union, ASEAN, NAFTA regional integration has offered
little compared to the fruits awaited. Jarle Moen
distinguishes between once-and-for-all-benefits and
dynamic benefits of integration in third world countries.
For many LDCs especially those with
very small domestic markets, regional economic integration
may offer a valuable experience, helping the transition
to a more balanced economic development and a more
open economy. Within the integrated, both quality
and marketing techniques can improve and promote diversification
and export production at a larger stage without compelling
these countries to face the awkward effects of the
liberalised market as the tendency seems to be. Integration
can also increase the market size and, where economies
of scale are present, reduce the cost per unit. This
could benefit both producers and customers in the
integrated market. For customers, it makes it possible
to purchase goods at their real prices, since a competition
among more than one regional economic actor (producer
or distributor) would have as a consequence the obligation
to offer the best prices possible. Also in a larger
market, partners outside the integrated region would
find it interesting for them to invest in such a region
so as to take advantages of the discriminatory policies
put in place to safeguard the regions industries.
According to Thomsen (1994) host country market size
is one of the strongest determinants of where foreign
firms invest. One has to take into account the fact
that an investment from a developed country in a developing
country is accompanied by a substantial transfer of
technology.
Once achieved, regional integration
will boost the members countries bargaining power
in the international community. A power which can
easily increase with cartelisation. Countries belonging
to a regional organisation tend to present the same
features, for instance they could belong to the same
climatic belt, central Africa for instance and southern
African countries. This geographic situation can enable
such countries to bargain with additional strength
in what they produce best on which they could expect
better returns on sales thereby reach a situation
of absolute gains.
REFERENCES
MOEN Jarle: Trade and Development: is
South South Cooperation a Feasible Strategy? London
School of Economics 1994 MYRDAL Gunmar: An International
Economy, London: Routledge and Kegan Paul TODARO Michael:
Economics for a Developing World, New York: Longman
1992 KRUGMAN Paul Is Free Trade Pass? Economic Perspectives,
vol 1 pp 131-144
Bagneki Hugues is a student in the Yaounde
2 University in Cameroon. He is interested especially
with issues of development
