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Sub-Saharan Africa and Europe in a restructuring world

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. Sub-Saharan Africa in a multi-polar world.

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Sub-Saharan Africa and Europe in a restructuring world

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  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

  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 • Development performances of SSA and its present global economic integration • Inward and outward oriented strategies to accelerate SSA development • What European policy towards SSA?

  4. 1. Development performances of SSA and its present global economic integration • Aggregate performances • Trade integration • Factor flows • Aid to SSA • Global powers' initiatives towards SSA

  5. i. Aggregate performances

  6. ii. Trade integration Sub-Saharan Africa: Openness and share of world trade

  7. Geographical structure of SSA trade

  8. SSA Trade specialization, 2008 11 Source : Comtrade. The category “non-resource rich” includes South-Africa

  9. SSA manufactured trade by destination countries: 1998-2008 SSA exports of manufactures SSA imports of manufactures 12 Source : Comtrade. The category “manufactures” does not include non-ferrous metals.

  10. iii. Foreign factor flows

  11. SSA migration by region of destination

  12. iv. Aid to SSA

  13. 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 ? 16

  14. 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) 17

  15. 2. Inward- and outward-oriented strategies to accelerate SSA development • Limitations of the "business as usual" or the "rentier" scenario • Import substitution through proper regional integration • Diversifying exports through trade preferences

  16. 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'

  17. 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

  18. 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

  19. 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 22

  20. 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…). 23

  21. END

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