Globalisation and Development: Assessing Factors that impede Development among the Economic Community of West African States (ECOWAS)

Table of Contents

SECTION A: GENERAL OVERVIEW
1.1 Introduction
1.2 Rationale of this Study
1.3 Study Objectives
1.4 Scope, Methodology and Data Collection of this paper
1.5 Organization of the Paper

SECTION B: GLOBALISATION AND REGIONAL INTEGRATION: A RECIPE FOR DEVELOPMENT FOR ECOWAS MEMBER STATES
2.1 What is globalization and Regional Integration?
2.1.1 ECOWAS Regional Integration Model
2.1.2. Revival of Interest in Regional Integration in West Africa
2.2 What Factors Impedes Development among ECOWAS Member States
2.2.1 Challenges of Effective Integration among ECOWAS member States
2.2.2 What have been the Consequences of these impediments to ECOWAS and SSA Development?

SECTION C: OVERCOMING THESE IMPEDIMENTS: LEARNING FROM THE EUROPEAN UNION MODEL AND A SNAPSHOT OF THE BENEFITS
3.1 The EU model in Perspective
3.1.1 Political will and leadership, not just institutions matter
3.1.2 The need to be strategically selective and to sequence
3.1.3 Diversity and identity
3.1.4 Monetary union
3.1.5 Bringing the people along
3.2 Benefits of Regional Integration to the Development of ECOWAS member states?
3.2.1 Intra ECOWAS Community Trade

SECTION D: RECOMMENDATIONS AND CONCLUSION

LIMITATIONS

REFERENCE

Abstract

In this paper, there is an attempt to assess factors that pose as impediments to the creation of an effective regional block to maximize some of the benefits embedded in integrating regional economies to foster development in West Africa. For the past four decades, West Africa has been experimenting regional economic integration but progress has been slow and without significant results. Thus, there is a need for a more favorable environment for overall trade. The potential of ECOWAS in exploiting economies of scale and enhancing competition has been limited by a number of impediments such as trans-border movement, lack of monetary union, political divide especially with francophone countries still holding allegiance to France under the system of assimilation, protection of market by bigger States (protectionism), lack of institutional framework to champion the cause of economic integration and instability posing as security threat among other factors. Analysts have suggested adopting and replicating the EU model holds the key to overcome these impediments. A critical assessment of the EU model is made to ascertain which aspects of the EU model are adoptable and implementable for ECOWAS to be fully operational to bring about desired economic progress and development. However, the current EU crisis has given analysts a lot to think about and any other regional body (like ASEAN) that desires to pursue full integration. Currently, there are signs to show that some members want to secede from the union either voluntarily or by coercion. On the basis of this development, we outline certain measures as recommendations for ECOWAS.

Key Words : Globalisation; Regional Integration; Development; ECOWAS, Impediments; EU model.

“..“The efforts of the EU to promote and support regional integration among developing countries should not at all be interpreted as an attempt to ‘export’ the European integration model. Clearly, there are different approaches towards integration and economic development. It should be recognized that the European model, shaped by the continent's history, is not easily transferable nor necessarily appropriate for other regions. On the other hand, to the extent that the European model of integration has become an unavoidable ‘reference model’ for virtually all regional initiatives, the EU should share with other interested parties its experience on: improving the functioning of regional institutions, absorbing the adjustment costs originated by lowering barriers, and sharing the benefits from integration.” (European Commission, 1995b)

SECTION A: GENERAL OVERVIEW

1.1 Introduction

A cursory look at the global trend in development has shown a massive improvement in the fight against poverty. The share of the global poor has dropped significantly with an increasing middle class gaining more ground. This phenomenon has prompted the World Bank and the IMF to reconsider the classification of who the poor are. Hitherto, those who live on less than $1 USD a day were classified as being poor in most developing countries. With this improvement, the figure has been revised to $1.25 USD. Homi Kharas (OECD, 2010) defines a global middle class as all those living in households with daily per capita incomes of between USD10 and USD100 in PPP terms. According to the same OECD report, there are close to about 1.8 billion people in the middle class globally from developing economies (ibid). It has also been projected that by 2025, 1 billion households will be earning more than $20,000 a year, and three-fifths of those will be in countries that today are better known for their poverty than their wealth, among them Rwanda, Brazil, Chile, Tunisia, Turkey, Ghana, Mauritius and some 30 similar nations^[1]. China, a developing country has succeeded in reducing the spate of poverty from 250 million people to a little less than 15 million in less than 30 years (Forson, 2008). All these successes owe a lot to the breaking of barriers to integrate economies through trade, spillover effects of education and mobility of technology under the umbrella of globalization. What then is globalisation? Globalization thus refers to the deep on-going socio-economic changes that started largely in the 1980s. These changes have been associated with, and employed to explain the financial, market and technological competitiveness. It is also related to the increasing integration of national economies with that of the rest of the world. Internationalization, which refers to the trade relations of the 1950s, has been revolutionized in part with the advent of information and communications technologies (ICTs). Nations of the world have always engaged in trade and other forms of exchanges. In the last 20 to 35 years there has been a major and qualitative change reflected in a high rise in capital mobility and shifts in the structure and forms of Direct Foreign Investment (DFI). What constitutes globalization is beginning to emerge but the precise ways in which they would affect individual countries, region and economic blocks are not clear. This paper focuses on the implications of the globalization process for West Africa’s regional block (ECOWAS^[2] ) to development through industrial competitiveness, manifested in part in the region’s inability to produce and export manufactured goods among its member states to bring about the desired level of development being called and anticipated for.

Co-operation between nations within a specific geographical area, whether in terms of economic or security issues has for the past decades been an area that resonates in the minds of policymakers and continue to dominate foreign policies. Several arguments have been advanced in favor of regionalism with the assumption that such move will strengthen the efforts of countries to manage relations with powerful external actors and can facilitate the expansion of markets that will aid industrialisation in turn to foster even development.

The Economic Community of West African States (ECOWAS) was thus established in 1975 and comprises fifteen member states and has the total population of over 280 million people. ECOWAS was established to address a specific problem with which it was confronted – economic development. Consequently, ECOWAS was originally conceived and established to address the narrow security issues of economic integration as the basis for self-reliance. However, with time, the leaders of the regional body realized that there was a strong nexus between economics and other broader security issues. Hence, in recent years, the organization has begun to tackle a number of issues which were not originally envisaged to address.

After independence, most African states faced the challenge of addressing the legacies of long years of colonial rule, and economic development was one of the issues confronting these fledgling states. Individually, these states could not address such problem and therefore the need for a regional approach to it. The creation of ECOWAS provided the regional framework for achieving such a goal but like other post-colonial projects, the process of economic integration was undermined by the strong link with the economies of the former colonies, which led more to dependence than independence; and the unfavourable and unequal international trade regime established did not provide any basis for African countries to develop .

1.2 Rationale of this Study

The many benefits of globalization, realized through regional integration for development have been well touted and has been the basis on which the Economic Community of West African States (ECOWAS) was established some 37 years ago. However, after 37 years of its inception, the West Africa regional block has not been able to function as pre-conceived to orchestrate the sort of development preconceived. Challenges and impediments such as the political divide between the English and French speaking countries visualized through colonial affiliations (especially the French system of assimilation)^[3], divergent level of natural endowment, security and conflicts among others have been identified as having created a fertile soil bed for these impediments to germinates. A lot of questions have been asked and continues to be asked as to why are there still impediments in dealing with issues like regional immigration/migration(movement), having a single currency to foster trade among member states to minimize the risk of overdependence on the US dollar, and other key protocols. How can such impediments/barriers be removed to foster regional integration to bring about even regional development among ECOWAS member states? What are the basic economic convergence criteria that ought to be met in order to roll out the full ideas and ideals of economic integration? What challenges does the new phase of globalization pose for the ECOWAS and, by extension, for the development of Africa as a whole? What are its prospects and limitations in the new global order? The major thrust of this paper therefore will be to provide insight into these and other related questions.

1.3 Study Objectives

The focus of this paper is

I. to take a critical look at globalisation via regional integration in west Africa
II. to critically assess some of the impediments working against an effective regional integration to foster development
III. to take snapshots of some of the key benefits/ prospects awaiting member states
IV. to compare and assess the EU model and draw lessons from it
V. to suggest relevant recommendation to actualize the full benefits of regional integration.

1.4 Scope, Methodology and Data Collection of this paper

Geographically, the study will be conducted in the West Africa sub-region with its regional body (ECOWAS) being the focal point. Evidence from some of the 15 member states will be used to unearth the challenges/impediments of ECOWAS to regional development. The study will mainly rely on qualitative approach but intersperse it with some descriptive data. The data and information to be used in this study will mainly be from secondary source through Government documents, ECOWAS, research papers and NIDA library.

1.5 Organization of the Paper

The paper is organized as follows to deal with these issues. Section A provides an overview of the study on global development trend and have it linked to globalization through regional integration in western Africa focusing on the Economic Community of West Africa States (ECOWAS). We try to establish the linkage and the need to undertake such research on the essence of regional integration for harmonious development. In Section B, we try to explain what globalisation is; have it linked to regional integration and how it holds the key to unlock the development potential of ECOWAS member states. We also do an in-depth assessment of the impediments bedeviling the development of ECOWAS member states and the significance of overcoming these challenges. Section C draws from the EU model and explains how it can be replicated in the West Africa regional block and other related bodies like ASEAN to enhance the lot of its members, and a brief snapshot of the benefits in terms of trade that stands to be magnified should there be an effective regional block. In Section D, we make recommendations to stimulate and consolidate the gains of regional integration for ECOWAS leaders.

SECTION B: GLOBALISATION AND REGIONAL INTEGRATION: A RECIPE FOR DEVELOPMENT FOR ECOWAS MEMBER STATES

2.1 What is globalization and Regional Integration?

Globalisation has been interpreted in various ways. A review of literature suggests differing ways of looking at this phenomenon. From an economic viewpoint, globalization means ‘a process of increasing involvement in international business operations’ (Saee 2005). From a sociological perspective, globalization is conceived as ‘a more pervasive force throughout the world’ (Saee 2005). Saee (2005) also commented, ‘globalization occurs when the constraints of geography on social and cultural arrangements recede as people around the world become increasingly aware that they are receding.’ Marquardt and Berger (2003) generalized globalization as ‘a single market place with growing free trade among nations; the increasing flow and sharing of information, connections, or links of people around the world; the opportunity for organizations and people to shop around the world and not be constrained by national boundaries.’ Further, these writers indicated the four Ts – technology, travel, trade, and television – as main forces leading the world to a ‘Global Village’. Dowling and Valenzuela (2010: p.299) define globalisation as the ongoing economic, social and political integration of economies around the world that has taken place since World War I. They argue that consequently, international frameworks have been set up to deal with global issues such as safeguarding of international financial transaction and intellectual property rights.

Much of the global changes leading to the intense internationalization of trade and production are partly driven by technological change particularly ICTs. The changes are highly interrelated and in some cases, causes and effects become difficult to separate. The key elements of globalization are summarized below:

- Technological change has led to new and diverse range of products and services that in turn promote specialization and new forms of exchanges including inter-industry trade.
- Tremendous improvements in transportation and communications and sharp reductions in transactional costs have shortened economic distances for trade and manufacturing.
- Improvements in production technologies have given rise to economies of scale making it more attractive and efficient to produce far beyond the requirements of the domestic market; increased plant sizes is a tacit incentive to explore foreign markets.
- Growth of world exports output especially in manufactures, for instance between 1965 and 1990, share of exports to world Gross Domestic Product (GDP) increased from 11 to 20%.
- Rapid increases in Foreign Direct Investment (FDI). Economies in transition and some developing economies have recently benefited greatly from inflows of DFI. According to United Nations Development Organization (UNIDO) (1996), more than 30% of total world FDI compared to 20% in the mid-1980s goes to developing countries with most of it channeled into manufactured exports.
- Widespread adoption of deregulation and liberalization policies.

This last element and the ways in which economic parameters and “conditionalities” have been defined constitute the most contentious aspect of globalization. More controversial are the three main institutions that govern globalization: the International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO). Some United Nations (UN) sister institutions, such as the United Nations Conference on Trade and Development (UNCTAD), the International Labour Organization (ILO) and the United Nations University (UNU) provide countervailing views. However, the influence of the first three institutions in defining global agenda is so pervasive as to generate a strong exclusionary effect. For instance, efforts to tie all investments issues to Trade Related Investment Measures (TRIMS) has all but excluded substantive debates on the ways in which developing countries build up technological capabilities through technology investments. Yet, in its fixation with trade, and less so with technological development, TRIMS has removed an important plank upon which countries acquired technology by seeking to dilute or remove state intervention. Global governance is evidently imperative in an era of globalization, in as much as the role of the UN remains critical in fostering industrialization. However, global rules setting procedures and the same rules tend to set little store on the objective conditions and institutional capacity of poor countries. There are other factors, but it is the dynamics of these elements, and not just their occurrence alone, that is giving rise to the new structures and patterns of global integration in trade, technology and markets.

Globalization itself is neither good nor bad. It has the power to do enormous good, and for countries of East Asia, who have embraced globalization under their own terms, at their own pace, it has been an enormous benefit, in spite of the setback of 1997 crisis. But in much of the world, it has not brought comparable benefits. For many, it seems closer to an unmitigated disaster.…the benefits of globalization have been less than its advocate claim, the price paid has been greater, as the environment has been destroyed, as political processes have been corrupted, and the rapid pace of change has not allowed countries time for cultural adaptation. The crises that have brought in their wake massive unemployment have, in turn, been followed by longer-term problems of social dissolution…. (Joseph Stieglitz, Winner of the Nobel Prize for Economics 2001.)

A number of writers have defined integration. According to Haas, integration is a process whereby political actors in several distinct national settings are persuaded to shift their loyalties, expectations, and political activities towards a new center, whose institution poses or demand jurisdiction over the preexisting national states. Deutsch also referred to integration as a process leading to a condition in which a group of people attain within a territory a sense of community and of institutions and practices strong enough to assure, for a long time, dependable expectations of peaceful change among its population (cited in Babarinde, 1996). The concept of regional integration takes on a predominantly economic slant in the literature, to the point of confusion with that of economic integration. However, economic integration concept can be used generically in reference to growing economic ties among countries which may or may not be geographically contiguous. A Regional integration can cover the full range of public sector activity, including not only the coordination of economic policies, but also regional security, human rights, education, health, research and technology, and natural resource management. “Regional” in this sense is here understood as ‘macro-regional’ that is at the supranational level as opposed to micro-regional that is at sub-national level. Attempts to compile inventories or matrices of the successful indicators of regional integration, particularly in a comparative context (Hurrell, 1995; Mattli, 1999), may refer to a grouping of nation-states in a defined geographic region, culturally similar countries, and shared objectives; often supported by binding agreements, an institutionalized system, a form of ‘ acquis communautaire ’ and some sectoral integration. A major benefit of a region’s economic integration is an increase in intra-regional trade. Other benefits may include intra-regional distribution of resources and a single regional market for goods, services, labour and/or capital. This is rendered more achievable if there is not a considerable disparity among member states, and if a commitment is manifest to decrease regional and social disparities and to compensate for market and structural inequalities (Philomena Murray, 2008)

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^[1] Cited from McClatchy 2013 report (see http://www.mcclatchydc.com/2013/03/14/185877/un-predicts-huge-expansion-of.html#.UYW917X-FrM)

^[2] ECOWAS is the acronym for the Economic Community of West African States.

^[3] Under French System of Assimilation, all colonies after independence are still mandated to be loyal to their colonial superiors who hold dominance in the colony’s decision making (politically, economically and socially). Before the coming into force of the European Union in the early 2000s, all French colonies had no control over monetary policies as their main currency was the CFA. In addition, all passports of French colonies are still being issued in France hence posing a major challenge to countries to fully accept and meet the set objectives of effective integration as is the case of ECOWAS.