Academic journal article Law and Policy in International Business

Unlocking Africa's Potential: Some Factors Affecting Economic Development and Investment in Sub-Saharan Africa

Academic journal article Law and Policy in International Business

Unlocking Africa's Potential: Some Factors Affecting Economic Development and Investment in Sub-Saharan Africa

Article excerpt

I. INTRODUCTION

Africa is endowed with plenty of natural resources, a pleasant climate, cultural diversity, and a rich historical past, yet it remains marginalized in the economic development process and global political scene. Although Foreign Direct Investment (FDI) to developing countries has been increasing in the last decade, Africa accounted for only about one percent of that investment in 1998.(2)

Africa presents a paradox. Recent positive changes in Africa have brought hope for an African renaissance, evidenced by impressive real growth rates in some countries. Examples of recent positive developments include the end of the civil war and a turn-around in economic development in Mozambique, the promise of a democratically elected government in Nigeria after a long period of military rule, and growing regional cooperation and integration of African economies. On the other hand, there are still major issues threatening this African renaissance. Internal and border conflicts in several countries and regions, heavy debt burdens, and low levels of private investment are still issues of major concern. What must be done to unlock Africa's potential and put it on an irreversible path of economic development?

The answer to this question may be found in the interplay of various factors, including the experiences that Africa has undergone over the years and lessons learned from other countries. More important, however, is the ability and resolve of individual African states to forge ahead and the willingness of the international community to support this effort. This paper addresses some of the factors that have affected economic development and investment in Africa.

II. HISTORICAL FACTORS

Archeological evidence suggests that Africa was inhabited by the ancestors of humankind thousands of years ago. Throughout time, Africa has undergone considerable demographic changes occasioned by contact with the outside world and by internal population dynamics. Formulating effective development policies for Africa requires an understanding of the African culture, peoples, and historical background. Only then can one fully comprehend where each nation comes from, where the nation finds itself today, and where it is heading in the future. Two events that have brought about demographic changes include colonial rule and the Cold War.

A. Colonial Rule

While African countries have achieved their political emancipation, economic success still eludes most of them. Strong trade and economic links with former colonial powers and over-dependence on aid remains a characteristic of most sub-Saharan African countries.

The end of the nineteenth century and the beginning of the twentieth ushered in the main wave of European settlement and influence in Africa, motivated by interests including wealth, religion, and politics. Not only did these European countries introduce new languages into Africa, they brought education, government, and new legal systems. Also, colonial rulers did not adapt to the indigenous African conditions; but rather forced Africa to fit into the colonial rulers' mold.

B. The Cold War

The Second World War brought about at least two major developments in Africa. First, it intensified the struggle for independence and self-determination. It was not long after the war ended that the wind of independence swept across Africa. But, as the new fragile nations emerged, they found themselves caught up in another struggle--the Cold War between the East and West. This superpower conflict would define the course of events in the African continent for many years to follow.

Second, the Cold War shaped post-colonial Africa. The effects of that influence still linger. This era encouraged authoritarian governments to thrive in Africa and caused the economies to fall into an abyss, as the superpowers wrestled for influence. Only after the fall of the Iron Curtain did attention shift to good governance and workable economic policies in Africa. …

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