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4. Foreign Investment beyond Compradorism and Primary Commodities: The Role of the Global South

Scott D. Taylor Indiana University Press ePub

4

FOREIGN INVESTMENT BEYOND COMPRADORISM AND PRIMARY COMMODITIES

The Role of the Global South

INTRODUCTION

If Africa had a dollar for every time a scholar, policymaker, journalist, or casual observer noted that “Africa is rich,” the statement might actually be true. Or at least it might have some validity beyond the geologically based wealth to which that expression almost universally refers. Without question, Africa does have stunning natural resource wealth. The continent boasts the world’s highest reserves of platinum and diamonds. Africa is home to approximately 10 percent of the world’s proven oil reserves, 8 percent of its natural gas, and 40 percent of its gold deposits. Uranium, copper, cobalt, columbite tantalum, chromite, coal, asbestos, and gemstones are found in abundance, not to mention plentiful timber, fisheries, and forestry resources. And hydrologic resources in the Congo Basin alone could supply 150,000 megawatts of power, far more than the entire continent’s present consumption. These abundant natural resources have attracted outsiders for millennia, but it was not until the colonial period that the extraction of these resources was truly transformed into a modus vivendi for Africa’s unequal entry into the global economy.

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2. Institutional Change in the 1990s: Economic and Political Reform

Scott D. Taylor Indiana University Press ePub

2

INSTITUTIONAL CHANGE IN THE 1990s

Economic and Political Reform

INTRODUCTION

Some scholars regard the 1990s as something of a “lost decade” for Africa. In the wake of the calamitous 1980s, it appeared the region was mired in “permanent crisis.” Although economies began to show signs of recovery by the mid-1990s, there were genuine questions about sustainability; politically, democratic transitions were faltering. The economic hardship and political oppression suffered between 1979 and 1999 is well documented, and countless observers were properly dismayed at Africa’s dismal performance, but what it is less well acknowledged is to extent to which Africa’s economic and political institutions and ideologies have also changed dramatically in the past two decades.1 This chapter explores the origins of those changes in the 1980s and 1990s and examines how various aspects of liberalization affected business in Africa. As we begin the second decade of the twenty-first century—admittedly with the benefit of hindsight—the 1990s in particular look decidedly different; I contend that this period was in fact a critical juncture for the improvement of the political and economic environments for business.

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Appendix

Scott D. Taylor Indiana University Press ePub

APPENDIX

Table 1. Exports of Merchandise and Services

*Measured in USD at current prices and current exchange rates.

Source: UN Conference on Trade and Development Statistical Database, http://unctadstat.unctad.org

Table 2. Net Domestic Credit

*Adjusted for exchange rate fluctuations. Data reported in LCU. Average exchange rate per year used for conversion to USD.

Source: World Bank Development Indicators and Global Development Finance, http://databank.worldbank.org/ddp/home.do

Table 3. Foreign Direct Investment in Reporting Economy (FDI Inward)

*Measured in USD at current prices and current exchange rates.

Source: World Bank Development Indicators and Global Development Finance, http://databank.worldbank.org/ddp/home.do.

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6. Going Continental, Going Global: Africa’s Corporate “Giants”

Scott D. Taylor Indiana University Press ePub

6

GOING CONTINENTAL, GOING GLOBAL

Africa’s Corporate “Giants”

INTRODUCTION

The champions of the view that Africa is “open for business” display an almost unbridled enthusiasm for Africa’s private sector development prospects. Even those who insist that business in Africa is an exercise in intrepidity, such as the producers of the preposterously titled 2009 CNBC series “Dollars and Danger: Africa, the Final Investing Frontier,” wish to convey that there are great opportunities for entrepreneurship in Africa.1 Notwithstanding the enthusiasm of this crowd for business on the continent, their interest is mainly in the potential of small- and medium-scale enterprises, which tends to be the focus of most policy initiatives as well as academic research. Indeed, the principal target of private sector development programs, as described in chapter 3, is expansion of SMEs. Likewise, though their aim is analytical rather than promotional, Ramachandran, Gelb and Shah similarly focus on medium-sized firms, analyzing the constraints faced by entities of this size.

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3. Business, the African State, and Globalization in the New Millennium: Transnational Influences and Domestic Responses

Scott D. Taylor Indiana University Press ePub

3

BUSINESS, THE AFRICAN STATE, AND GLOBALIZATION IN THE NEW MILLENNIUM

Transnational Influences and Domestic Responses

INTRODUCTION

In Africa, the 1980s were a period marked by economic and political stagnation and exhausted statism, whereas 1990s ushered in sweeping changes. But if Africa throughout much of the 1990s was characterized by a liberalization and democratization imperative, despite very mixed results, events in the second half of that decade were paradigm-shifting, as both Africa and its international partners alike reacted to the failures of politics and of policy as well as to new exogenous forces. In other words, a high degree of learning occurred internationally, as well as at the national and societal levels, including that of business. The Washington Consensus began to unravel, and its decline accelerated in the wake of the 1997 financial crisis in Asia, which eroded confidence in its neoliberal prescriptions. By the start of the new millennium, a number of new developments had begun to transform much of the traditional thinking about African political economies, especially about the role of and prospects for the private sector. Thus, the beginning of the twenty-first century also laid down a significant marker for Africa and particularly for business on the continent.

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