Exporting Africa: technology, trade and industrialization in Sub-Saharan Africa: Part I. Exporting Africa: an analysis: 6. Conclusions and policy implications: Regional cooperation and trade agreements

Exporting Africa: technology, trade and industrialization in Sub-Saharan Africa

Part I. Exporting Africa: an analysis

6. Conclusions and policy implications

		Building core capabilities: towards competitiveness
		Economic reforms and industrialization
		Export orientation or import substitution?
		Local or foreign investment?
		Regional cooperation and trade agreements
		Notes to part I

Regional cooperation and trade agreements

The volume of trade to countries in the region was found to be influenced by the nature of the regional cooperation and trade agreements. This finding is grounds for a reassessment of the viability of small-scale import substitution and far more consideration for regional cooperation and regional trade, which enable economies of scale to be tapped.

The exporting firms have mainly targeted regional markets, with smaller volumes being exported to international markets. This study has found that even to sustain regional markets, competition with other regions of the world will have to be faced sooner or later. There is always a danger of losing the regional markets to competitors from other regions. Even if imported products are not as suitable to local conditions, competitors from outside the region have sometimes penetrated the regional market by supplying their products at lower prices or by supplying products with a better finish. Thus specific local and regional markets can be lost to others if continuous efforts are not made to develop competitiveness in terms of quality and price. The study has revealed some cases in which competitors from other regions have made products specifically for the African regional market. Thus the specificity of regional markets may make the competition for various products less intense but it does not guarantee a monopoly. The need to exert continuous effort to attain and maintain competitiveness in such markets does not seem to be obviated by any specific characteristics of regional demand.

Africa has demonstrated the slowest progress in developing regional integration and cooperation arrangements (UNCTAD, 1993b). The challenge which emerges from this study is whether regional cooperation arrangements can be designed for Africa to facilitate (through investments, joint technological activities and trade) the process by which firms and other institutions in Africa build up technological capabilities. The African Economic Community and existing sub-regional economic cooperation arrangements should accord high priority to promoting trade expansion' based on both exports and imports, by removing distortions, avoiding the duplication of large investments where national markets are small, reducing transaction costs (e.g. by trading arrangements which guarantee market access, regional marketing intelligence, improvements in the marketing infrastructure) and by redirecting trade flows.