Rapid economic growth has pushed living standards to astounding heights in many industrialized countries of the world. Low-income nations, and especially those in sub-Saharan Africa, have not experienced this phenomenon and remain far behind in terms of living standards. Decades of economic and political mismanagement and isolation have left lingering legacies of weakened, highly disarticulated, under-capitalized, and uncompetitive economies. To date, Africa’s economic history of the past four decades fits the classical definition of “tragedy” or of unfulfilled potential with disastrous consequences. There is, currently, broad consensus on the major policy issues of contemporary African development such as governance and accountability, peace and security, macroeconomic stability and liberalization, entrepreneurship and private sector growth, export diversification, debt reduction, poverty eradication and human development, gender equality, institutional capacity building, infrastructure and related supply side matters, food security, environment, sustainable development and so on. Indeed, current policy reform programmes in most African countries encompass action on several of these major issues.

 

Given the many development challenges, Africa’s development agenda for the 21st century, of successful growth based on sustained creation and equitable distribution of wealth must be predicated on a new paradigm of political management, deliberate and creative re-engineering of national institutional structures, strategic integration at regional and global levels and promotion of competitive productive capacities.

 

ACEG’s Research Agenda, which is derived from priority issues in Africa’s development agenda, comprises the following five thematic areas: (i) regional integration; (ii) democracy and good governance; (iii) poverty, equity and sustainable growth; (iv) private enterprise development; and (v) globalization, trade and localization. In addition to the above thematic areas, there are cross-cutting themes such as gender, institutions, and environment that are also very important. The five thematic areas are selected because they are at the core of accelerated growth in Africa.  ACEG also wishes to build on previous and on-going research work in the areas of regional integration, democracy and governance, and private enterprise development.

1. Regional Integration

Over the past few years many countries have stepped up efforts to achieve regional economic integration. There is new and deepened regional integration among industrialized countries as cases of the European Union and the North Atlantic Free Trade Area demonstrate. The successful conclusion of the Uruguay Round and the creation of the World Trade Organization have strengthened the multilateral trading system in a manner that renders regional economic integration and multilateralism mutually reinforcing.

 

For close to four decades, there have been numerous regional integration initiatives on the African continent, which include Southern Africa Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), Economic Community of West African States (ECOWAS), the East African Community (EAC), the Arab Maghreb Union (AMU), and the African Union (AU), among others. Until recently, regional integration proceeded in an ad hoc and evolutionary manner in terms of substance, architecture and pace, with complex, duplicative and costly systems. Almost every sub-Saharan African country belongs to two or more of these regional entities. Regional integration as the basis of economic transformation is dictated by peculiar geographic characteristics, extreme balkanization of the continent and small country markets. It is no longer a matter of choice, but of necessity and survival. The basic problem remains how best to proceed with the exercise. 

 

Current integration efforts, though backed by political enthusiasm, remain characterized by overlaps in space, duplication of efforts, paying of lip service and emphasizing ceremonial aspects of integration such as signing of protocols, reluctance to allow the institutions of integration to function as they were intended, and failure to honor attendant financial obligations. Organizational capacity and economic structures remain weak and incapable of supporting regional trade development and other bilateral or multi-lateral links as part of a wider strategy to promote equitable growth. Much still remains to be done to increase competitiveness, reduce private transaction costs, enable firms to exploit economies of scale, encourage foreign investment and facilitate macroeconomic policy coordination.

 

This research track hopes to generate incremental knowledge that can promote the rapid integration of the region and lead to an improvement in the well being of all the affected population. ACEG considers the following issues as important for collaborative research: (i) analysis of the measures agreed upon in the framework of integration protocols and the extent of their implementation; (ii) prevailing intra-regional trade, investment and payments of participating countries; (iii) effects of regional blocs on trade flows, employment, public finance and economic growth; (iv) the best methods of creating and assuring regional public goods such as peace and security, food security; health of the population, and science and technology, among others; (v) major constraints to intra-regional economic activity in each member country and the type of approaches to overcome national level constraints; (vi) forms of regional cooperation that are most relevant in different parts of the continent and the common programmes of action that can be implemented on a reciprocal basis by participating countries; (vii) facilitation of broad based societal involvement (of all stakeholders) in the integration process including creation and sustaining of regional solidarity and consensus; (viii) rationalization of the current plethora of integration institutions and establishment of the best pace and sequence of tasks towards full integration; (ix) identification of areas in which the donor community can support implementation of both national and regional programmes from financial and technical perspectives; and (x) perspectives on culture, peace making, peace keeping, security, preventive diplomacy, governance and globalization.

2. Democracy and Good Governance

Africa’s independence era marked the historical events of liberalization from colonialism and the assertion of the sovereignty of the African state. With this came the expectation that democracy and good governance would successfully promote prosperity and well being of the people in a fair and competent manner. Unfortunately, good governance in Africa is the exception rather than the rule and personal rule has replaced the constitutional models of the independence era. Such personal rule is characterized by a combination of civil and military authoritarianism arising out of personal, fractional or ethnic power bases.

 

The political economy of such personal rule has its own inherent logic which starts with the consolidation of political and economic power or tightening of control over society and the economy. Policies to overcome economic vulnerability, promote economic growth, improve social conditions and build capacities compete for priority with pre-occupations such as pervasive corruption, graft and regime survival. This degenerates into a bitter legacy of civil disobedience, collective violence, and political instability, which cause reduced investment, capital flight, brain drain, destruction of physical infrastructure, displacement of persons, disruption of economic activity and the collapse of the civil society and institutions. Such a situation is followed by the outbreak of mass action for a return to a more public agenda of political pluralism, popular participation, the rule of law, greater respect for individual rights, alleviation of economic hardship and improvement of social conditions. Poor political management imposes high costs associated with lost production, low morale, and absence of social cohesion. This is also true of decisions that waste resources because they are inconsistent, grossly ill judged, or inherently open to corruption.

 

Good governance refers to the sagacious use of political power to manage cleavages and conflict within society, to purposefully facilitate nation building, to promote and nurture democratic processes, to design and implement responsive public policies, and to enhance the effectiveness of public institutions and the technical efficiency of public administration by promoting coherent decision making process – all in an atmosphere of peace and stability.  Such governance together with more transparent, predictable and effective regulatory frameworks helps to elicit and maintain investors’, trading partners’, and development partners’ confidence, trust and support, reinforce the legitimacy of government, and also nurture trust between public officials and the people. This creates an environment where public and private investment decisions are made in the most economical and socially efficient manner.

 

ACEG considers the following issues as important for research: (i) failure of many nations to establish full democracy due to resistance to democratization, and tendencies of creating too many political parties based on selfish interests; (ii) failure of governments to broaden democracy beyond the principle of majority rule so as to carter for the rights and interests of the opposing or minority groups that end up suffering from social injustice; (iii) rampant nepotism and the absence of affirmative action in public employment, education and training enrolment, spatial provision of physical infrastructure, and creation of employment opportunities; (iv) promotion of programmes that support democratization such as elimination of illiteracy, establishment of unfettered mass media, establishment of competent, issues based political parties; (v) elimination of pervasive corruption (including that facilitated by foreigners) and other undesirable economic and social practices which affect investment, confidence in public services, project costs and profitability,  quality of goods and services, and performance of  institutions; (vi commitment to peace and social justice as reflected in an independent judiciary, properly conducted and effectively supervised law enforcement agencies, education of people about their rights, and political tolerance and accommodation to avoid internal civil strife, armed conflict and exploitation of ethnic fears; (vii) enhancement of state capacity as an arbitrator and facilitator of peace, stability and security; (viii) review of nature and role of public service and public servants in terms of  employment numbers, staff qualifications,  remuneration levels, supporting facilities an equipment (ix) support for non-governmental organizations and community development institutions that encourage  local initiative and participatory activities (x) the incorporation of gender issues in all programmes, policy and project design; and (xi) articulation of programmes targeting main environmental challenges such as desertification, forest destruction, soil erosion, air and water pollution, and wildlife destruction.

3. Poverty, Equity and Sustainable Growth

(a) Poverty 

 

Poverty, which is defined as pronounced deprivation, is a multidimensional phenomenon with numerous interconnected quantitative and qualitative factors contributing to it. At the macro level, poverty can be linked with food insecurity, relative welfare, and basic needs satisfaction, and so on. At the household level, one encounters material deprivation (hunger, lack of shelter and clothing), isolation, sickness, illiteracy, alienation, dominance and dependence, lack of participation and freedom of choice, assetlessness, vulnerability and insecurity associated with powerlessness.

 

Poverty may be associated with international processes, domestic policy biases, dualism, population pressure, environmental degradation, natural cycles, gender biases, cultural/ethnic biases, exploitative intermediation, and internal civil strife, among others. Whichever way one looks at it, poverty is pervasive and worsening in Sub-Saharan Africa. In all the developing regions of the world, the severity of poverty and malnutrition is greatest in sub-Saharan Africa where it is also growing at the fastest rate on Earth.

 

Since 1999, nationally‑owned participatory poverty reduction strategies are used as a basis for multilateral (World Bank Group and IMF) concessional lending and for debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. This approach, building on the principles of the Comprehensive Development Framework, is being reflected in the development of Poverty Reduction Strategy Papers (PRSPs) by many African countries. Five core principles underlie the development and implementation of poverty reduction strategies and include being: (i) country-driven, involving broad-based participation by civil society and the private sector in all operational steps; (ii) results-oriented, focusing on outcomes that would benefit the poor; (iii) comprehensive in recognizing the multidimensional nature of poverty;  (iv) partnership-oriented, involving coordinated participation of development partners (bilateral, multilateral, and non-governmental); and (v) based on a long-term perspective for poverty reduction.

 

The ACEG poverty research track seeks to analyze the effects of economic policies on poverty, and to examine alternative policies to promote poverty alleviation.  The following constitute the focus of ACEG policy research: (i) development of a comprehensive understanding of poverty in terms of poverty identification, measurement, profiles, and determinants, among socioeconomic and spatial categories of the population; (ii) the role and effect of national and local level institutions in alleviating poverty; (iii) effects of growth and income distribution on poverty; (iii) links between poverty, health and malnutrition and education with focus on the role of malnutrition and disease epidemics (particularly HIV/AIDS and malaria) in the impoverishment of households; (iv) dynamics of poverty evolution within households, regions and temporal frames; (v) the macroeconomic framework and poverty reduction as relates to vulnerability to shocks and appropriate targeting, the impact of trade liberalization on the poor, the effect of commodity price volatility on the rural poor, agricultural markets and poverty alleviation,  and informal and formal labour markets;  (vi) globalization, rural institutions and poverty alleviation; (vii) and policies that address gender based disparities in welfare and the role of empowerment of poor groups and deliberate broadening of their access to productive assets.

 

 (b) Equity

 

Equity concerns fair access to opportunities such as employment, incomes, productive assets, social amenities and ‘participation’. Where access to the opportunities is skewed, there are serious problems in sustaining economic growth. This calls for policies and strategies of redistribution from growth to correct gender, regional and group imbalances.

 

Renewed interest in inequality is associated with the observation that where there is more equal distribution of assets such as land, higher growth rates tend to occur. Secondly, with poverty reduction in many countries being slow at best, the scope for public policies to have a poverty reducing impact through redistributive effects (of for example social expenditures) needs to be examined. Finally, several empirical studies associate poor health outcomes as measured by morbidity and mortality rates and increased violence to inequality for a given level of poverty.

 

The research track hopes to analyze:  (i) channels through which inequality influences economic and social outcomes; (ii) how gender roles and public policy influence intra-household inequalities; (iii) the link between income inequality and higher morbidity, mortality and violence rates: (iv) inequality and tax structures;  (v) inequality and access to capital markets; (vi) inequality trends in relation to factor incomes.

 

 (c) Sustainable Growth

 

Sustainable growth is he realistic attainable growth that an economy can maintain without running into problems. Such growth is associated with developing and implementing strategies that create both economic and societal value while also reducing negative environmental impacts. Sustainable growth is also evoked in relation to macroeconomic management concerning four inter-related tasks of: balance between domestic demand and potential output in ways that lead to highest utilization of resources consistent with price stability; maintaining an exchange rate that allows rapid export growth and a sustainable current account; financial arrangements that balance aggregate saving and investment and provide an efficient based market allocation of available capital; and ensuring that public and private  sector borrowing remains within prudent limits.

 

ACEG’s concern is about the current unsustainable patterns of production and consumption characterized by the persistence of poverty, hunger, disease and malnutrition that must be changed in the interest of future welfare especially when it is difficult to halt the deterioration and loss of natural resources as the burden placed on he environment is increasing. Natural resources that have always been renewable in the past such as water, air, soil and forests, are losing their ability to regenerate hence the need to centre attention on environmental and natural resource management issues which must be viewed in the context of long term strategies and that development is sustainable only if an inter-generational perspective is adopted.

 

The issues that need investigation include: (i) the measures to be undertaken and partnerships to be formed in respective sectors to ensure sustainable growth; (ii) the ideas and innovations which must originate locally and which the concerned people must control; (iii) inspirational and catalytic activities that need to be formulated and which contribute to cumulative and iterative learning; and (iv) contribution to institutional development such as formulation of new routines, operational forms and habits.

4. Globalization, Trade and Localization

(a) Globaliztion

 

Globalization concerns the increasing interaction among, and integration of activities of, human societies around the world. This can be attributed to rapid growth of knowledge, technological advancement including diffusion of information and communication technology, empowerment of the individual, rapid population growth, growing power of the media, environmental concerns, inflows and outflows of capital and growing external debt, international trade, and labor migration, among others. This process entails the free movement of capital, goods, services and labour, around the world. Services such as banking, telecommunications, media and advertising, are also increasingly global in nature. The engines, which drive the globalization of the economy, are multinational companies. There are some 37,000 multinationals, and between them they account for four‑fifths of world trade.  The competitive market is the organizing and controlling force behind national and supra-national relations. The forces of globalization are perhaps the most important factors that affect the current environment for economic development. They constitute opportunities, risks and challenges underlying future development efforts.

 

Globalization, as a process or force, is not exogenous but a policy-induced phenomenon. Domestic policies affect innovation, invention and spread of technology as well as the volume and direction of international trade and financial capital. The domestic policy environment is thus an important determinant of the extent to which an economy of a country is globalized and therefore forms part of the international economy.  Non-policy factors such as geography or remoteness also influence forces of globalization, but their influences can be mitigated by policy.

 

Some of the issues calling for critical analyses include: (i) understanding the damaging effects of an increasingly globalized economy; (ii) ways of facing the challenges of overcoming poverty and human deprivation by equipping and providing people with the opportunities to participate meaningfully in the new global economy; (iii) implications of real time accessibility of information, the growth of knowledge, and the de-materialization of economic activities - so that future work will mostly be a product of mental rather than physical effort; (iv)  coping with also increasing complexity and connectedness of financial, economic, infrastructural, technological, and environmental systems, similar to a global nervous system; (v)  the fact that external economic shocks are for the most part beyond the control of national governments implying the erosion of government influence over national destinies as boundaries become less relevant and more porous; (vi) increasing empowerment of individuals, institutions, businesses and governments arising from easier and faster access to information for creating wealth, increasing knowledge and fulfilling diverse needs all which have tended to raise expectations that in turn result in challenges to institutions’ attempts to impose rules; (vii) the power of the media to influence thought and behavior is increasing due to increasing wealth, accessibility and inter-connectedness; and  (viii) the escalation in human population despite the dramatic impact of HIV/AIDS which brings to question ability to sustain consumption of resources required by such a population and growing scarcity of resources such as water and land and the increasing concern over environmental damage in terms of desertification, deforestation, global warming, and shortages of water, energy and arable land.

 (b) Trade

 

International trade, in spite of World Trade Organization’s efforts and the related moves to liberalize trade and remove protective trade arrangements, still continues to be characterized by trade barriers, unfavorable terms of trade for primary commodities, market price distortions, commodity price volatility, disorganization of local production associated with price liberalization and inadequate domestic processing and value adding.  Bilateral and multilateral efforts exist to encourage exports and stabilize commodity prices and incomes for the benefit of sub-Saharan African nations in terms of AGOA and stabex.

 

The outstanding issues under this track include (i) commodity price volatility of primary commodity exports and the nature and role of stabilization measures to be put in place by the international community on a broader, longer term, and more sustainable basis than has been the case in the past; (ii) increasing opportunities for trade i.e. more trade creation than diversion and elimination of trade discrimination; (iii) facilitation of meaningful international resource flows such as aid and foreign direct investments, labor and  technology transfer and absorption; (iv) elimination of pervasive, stifling controls that negatively affect savings and investment, domestic production, economic and export growth, employment creation, and  the national debt; and (v) elimination of the barriers to the flow of goods, services and productive resources, across national borders such as administrative and quantitative obstacles to both imports and exports, institution of low and uniform tariffs and taxes and liberalization of foreign exchange transactions.

 

(c) Localization

 

Localization is the idea that a country’s economic activities stay within its borders and that people are able to control their own resources, economies, and means of a livelihood. It derives from those pressures that lead individuals, groups, and  institutions to narrow their horizons, and withdraw to less encompassing processes, organizations, or systems. The idea of localization recognizes that local business will provide the local people with jobs and pay local taxes that help the community as a whole. Businesses will then be rooted within the economy instead of moving to places where taxes are cheap or pollution laws are less strict.

 

Localization is also a manifesto to unite all those who recognize the importance of cultural, social and ecological diversity for the future and who do not aspire to a monolithic global consumer culture. It challenges the claims that economies must be 'internationally competitive' to survive and describes the destructive consequences of globalization. In going beyond simply criticizing free trade and globalization trends, one encounters details of self-reinforcing policies to create local self-sufficiency, implying that there is an alternative model to globalization.

 

The latest agreements on trade and investment to which more than 100 nations now adhere, include profound changes that speed up the globalization process, particularly in services, and weaken the powers of individual governments. This means that the power of multinationals to determine trading and investment activities is greatly increased, whereas the power of governments to mediate between competing interests and needs in society, such as social and environmental needs, is severely diminished. Nations not being and avoid the suffering associated with excessive and unnecessary corporate.

 

Studies in this area should help to throw light on: (i) the roadmap to help communities harness the forces of both globalization and localization in the pursuit of growth; (ii) the extent to which preference would have to be given to local goods and suppliers in a way that benefits workers, the local community and the environment; (iii) the types of self-reinforcing policies capable of creating local self-sufficiency as an alternative to globalization; (iv) approaches to localization from perspectives of  taxation, competition, private investment, social services, and so on.

5. Private Enterprise Development 

The productive sector comprises of both public and private enterprises. Public enterprises, seen at the time of independence as strategic bridgeheads of entrepreneurship, mostly became acute embarrassments leading to renewed emphasis on complete divestment or privatization of management for most of them following a new consensus on public sector policy reforms which emerged in the 1980s.

Government policies and development agency strategies now reflect the belief that private sector development promotes efficient economic growth and development and is a source of wealth, dynamism, competitiveness, diversification of activity, and knowledge through strengthening and broadening of the technological base. Such a sector generates jobs, raises incomes and produces and makes available cheaper goods and services. In the long run development cannot occur without dynamic private companies operating together with good governments and efficient public administrations.

Though private enterprise plays a key role in achieving growth in many sectors of the economy, it is faced with many challenges that call for restructuring of policy and establishment of institutional frameworks for it to meet these challenges. Policies need to be designed to create the incentives necessary for the emergence of the commanding heights of the economy that fulfill the development vision.

Incentives need to be put in place to attract new investments in order to increase capital stock and levels of capacity utilization for greater efficiency, higher returns, employment creation, export orientation, and product diversification. Small and medium scale enterprises are widely recognized for contributing to economic and social development of less advanced economies through their roles in job creation, innovation and diffusion of technologies.

ACEG will encourage research on important issues under this theme as follows: (i) review of the regulatory constraints which inhibit business competitiveness and impose costs and inflexibilities that frustrate enterprises (licensing, taxation, ownership, investment, corruption, principle agent relationships, contract enforcement and related transactions costs among others), and nurturing of small and medium sized enterprises, (ii) review of the experiences and lessons learned in financing of private enterprise in Africa for different categories of entrepreneurs when starting, operating, rehabilitating or expanding their businesses; (iii) analysis of extent to which physical infrastructure (power, water and sewerage, roads, telecommunications, industrial premises, and so on) constrains the growth and development of private enterprises; (iv) the nature of the financial sector including capital markets, derivatives, securities, and  inter-bank markets, and the extent of availability of stable sources of investment funding; (v) development of, and support for entrepreneurship, and study of the secrets of successful partnerships; (vi) role of and availability of business auxiliary services for improving and promoting performance of businesses (training, counseling, mentoring, consultancy, advise, information, facilitating networks, sub-contracting, and so on); (vii)   the nature of internal and external markets and marketing; (viii) policies and institutional arrangements for acquisition and use of technology; (ix) gender and private enterprise development; (x) the management of the environment from perspectives of pollution (water, air,  soil, waste disposal), and risks of accidents, and impacts on natural resources and the ecosystem; and (xi) primary factors attracting foreign direct investment and concrete steps to be taken by government and business to increase foreign direct investment flows and the role of international financial institutions. Empirical work in these directions is strongly encouraged.

© 2002 ACEG. All rights reserved.
Designed and Developed by Bell Computers
Last Updated 14 November, 2003