Marginalisation of the LDCs
Arnold, Guy, African Business
Few African countries have not yet felt the impact of the globalisation of the world economy. For a very few this represents an opportunity to make the crossover to the ranks of the developed nations; for the rest, this is a process to which they are little more than spectators. But what of the Least Developed Countries? Will they be cast on the scrap-heap of history? Guy Arnold reviews a report from UNCTAD and ponders the issue.
The Least Developed Countries 1996 Report by UNCTAD, the 12th of a ties, makes gloomy reading. The main issues examined are the accelerating speed of both globalisation and liberalisation of the world economy. In a nutshell, this means that business now moves across national boundaries, which are becoming increasingly irrelevant, to set up operations where the biggest markets, the cheapest labour and the best facilities can be found; when these conditions deteriorate or better conditions appear elsewhere, business moves on.
The question raised by this phenomenon is simply: Where does the process leave the least developed countries, or LDCs?
Can the LDCs in fact be integrated into the world economy? If not, what is to happen to them? At the top end of the developing world scale Mexico, perhaps, is providing part of the answer. If its membership of the North American Free Trade Agreement (NAFTA) really means it can make the crossover into the ranks of the developed nations, it will provide a role model for the rest of the South.
Of 48 designated LDCs, 33 are in Africa and the real answer to the questions posed above, despite the carefully balanced language of the report, is that they will be marginalised by the new economic trends. At present, LDC growth rates lag behind those of other countries and their share of world exports and imports continues to fall while the basic gap between top - DAC - countries and LDCs widens steadily.
Most LDCs, under pressure from the IMF or donors, have "liberalised" their economies but it has not done them much good. In the language of the report: "globalisation and liberalisation may do little to alleviate the trend towards their marginalisation from the world economy and may even accelerate it."
That certainly seems to be the case. The report concedes, that LDCs may develop niche markets in horticulture and tourism and sometimes may also attract labour intensive manufacturing exporters to relocate in a particular LDC in order to use cheap labour.
At present LDCs suffer from supply-side constraints such as shortage of capital, a low level of entrepreneurs, and few managerial and technical skills. At the same time they have generally poor infrastructures. This is especially true of landlocked countries and 15 of these are to be found in Africa. …