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AEC 2008 - Market Access for Africa's Transformation and Development: what's lacking and why it's a problem?

26-Sep-2008

This paper provides a perspective to some puzzling dynamics of market access initiatives for Africa's export competitiveness, in global trade. At the beginning of the 1980s, African countries contributed marginally and narrowly to the global trade. As the difficulties with trade got deep, some partners of the region, particularly the Triad (the United States, Japan and European Union) adopted legislated trade advantages, granting up to 30% cost advantage and 6,400 items duty-free and quota free, in some cases, to regional exporters against exclusion from, and narrow participation in the global economy. Over time, preference erosion has meant that the impacts of some of the initiatives, particularly those related to extensive margins of trade, were short-lived as their provisions ran into other problems or expired. The paper applies the logic of Area of influence (AOI) and Influence mobility (IM) models to add a "magnification" perspective to the complimentary/compensatory relationship between the legislated export advantages and factor input export competitiveness, and the erosion of these advantages. In the algorithm of AOI and IM models, the binding theme is that for trade initiatives to be sound and economic growth sustainable, they must not only meet short term intensive trade margins, but also help catalyze long term factor input competitiveness and extensive export margins. Events over the past years strongly suggest that the recent export boom due to GSP initiatives proved to be short-lived because legislated advantages were dominating in their effects on the region's extensive margin of exports related to these initiatives. The initiatives have not been complimented by domestic base knowledge and an iterative productive development process through vertical specialization. Thus, there are many steps African Governments must take to boost their global trade competitiveness and contributions.

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