Breaking the mould : The Character of Regional Integration in Southern Africa

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Hein Marais

 


1.         Introduction - Setting the Stage[1]

 

 

The world shifted on its foundations in the final quarter of the 20th century, collapsing the three development models that had characterized the global economy since the 1940s. Gone or partially dismantled are the welfare states of the West, the “sovieticism” of the Eastern bloc and the “developmentalism” of the Third World. That tripolar world system has been replaced by a unipolar one, marked by the unprecedented extension of market economies across our planet (most of them restructured along neoliberal lines), the global dispersion of production chains and the non-stop, ubiquitous circulation of financial capital. Economically and culturally today there is said to exist greater degrees of uniformity than ever before - a trend that is generally termed globalization.

 

 

 

The apparently homogenizing passage of globalization is leaving in its wake profoundly restructured economies, many of them divorced from the social roles and responsibilities assigned them over the past half-century. States bow before the prerogatives of capital, while directing resources away from social developmental functions and toward facilitating and safeguarding capital accumulation, and policing the social consequences of their revised roles.

 

The fates of individual economies are no longer formatively shaped by their states, but by the mechanisms of financial markets, the profit-maximizing tactics of transnational corporations (TNCs), and strictures imposed by transnational institutions (such as the International Monetary Fund, World Bank and World Trade Organization), and bi- and multilateral trade and other agreements. 

 

1.1        The central axis for ordering societies over the past 200 years - that of state power – has been radically redefined. Perhaps the central problematic of our time lies in the fact that capital’s global sweep and authority appears to have severely denuded the nation-state’s sovereignty, authority and regulatory reach. Removed, it seems, from the ambit of the nation-state is the ability to craft, implement and administer development paths that answer, in the final instance, to local needs (whether of ruling elites or society at large). At the same time, political, social and economic management still occurs at the national level and befalls the nation-state. Disappearing, according to Samir Amin, in countries that have undergone extensive economic restructuring is “the link between the arena of reproduction and accumulation and that of political and social control” (1997:12).

 

1.2       Profound changes – some of them irreversible – have been set in motion at the level of the world system. Sketched briefly, that system is today defined by the:

 

Ä    Collapse of the post-1945 tripolar system and its replacement by a unipolar system,

Ä    Ubiquitous and commanding presence of capitalism, particularly in its neoliberal form,

Ä    Increased mobility and authority (expressed globally) of transnational corporations, augmented by adjustments wrought at the national, regional and international levels,

Ä    Predominance of financial capital which (thanks to advances in information technologies and the induced shifts towards free market economic systems) has become increasingly mobile, decentered and transnational,

Ä    Global spread of geographically segmented transnational production (dominated by TNCs) and the fact that a very large share of international trade now occurs within multinational firms,

Ä    Industrialized countries’ dominance in the military, media and communication fields, as well as their predominance in access to natural resources and the use of new technologies[2],

Ä    United States’ (intermittently contested) domination of key supra-national institutions (principally the UN, World Bank, WTO and IMF),

Ä    Failure, to date, to establish effective, new forms of countervailing sovereignty and political and social organization at the regional and international levels,

Ä    Continuing exclusion of the African periphery (most of sub-Saharan African, with the qualified exceptions of Nigeria, Mauritius and South Africa) from processes of competitive industrialization.

 

Prevailing is the view that these changes are launching the world towards an era of unmatched global prosperity, as economies are “rationalized” along free market lines. Success is deemed to require submission to a compilation of adjustments allegedly aimed at freeing the capitalist system from inefficiencies and contradictions attributed to the interventionist or regulatory activities of states.

 

1.3       A less fanciful and immeasurably more distressing reality defines the lives of the majority of the world’s population. Inequalities within and between countries and regions are increasing at a staggering pace. In 1960, the richest 20% of the planet earned 30 times the income of the poorest 20%; three decades later the ratio had swollen to 61, and by 1997, the richest fifth of the world was pocketing 78 times the income of the poorest fifth.[3] By 1994, 1,3-billion people were earning less than one US dollar a day (70% of them women), while the numbers of homeless, undernourished and severely impoverished citizens have soared, prompting the Worldwatch Institute (1990: 148) to warn that “following a business-as-usual course in the future could doom half of humanity to absolute poverty by sometime between 2050 and 2075”.[4]

 

Preventable diseases and illnesses such tuberculosis, measles, cholera, meningitis, kwashiorkor and diarrhoea have reappeared with ravaging vigour in regions where, two decades ago, they had almost been extinguished.[5] Environmental destruction proceeds at a devastating pace and, on current trends, will likely render the planet uninhabitable for humans in the not-very-distant future.

 

Inequalities have soared also within the world’s most prosperous countries, each of which today harbours its own de facto “third world” underclass of discontents.  In the US, for example, the ratio between blue collar wages and top management salaries stood at 1:41 in 1975; two decades later it had widened to 1:189.[6] Food riots and looting rebellions punctuate the chronic social and political instability that besets many developing countries - and are answered with increased repression - while desperate citizens seek refuge in the ideologies and networks of ethnic, religious and nationalist chauvinisms.

 

The catalogue of decay and destitution that defines the “new order” is indeed long, and is perhaps most dramatically evident in Africa - not the least in the countries of southern Africa, including the continent’s wealthiest and most powerful nation-state: South Africa. Yet, most of them have sought salvation by adjusting their economic systems along neoliberal lines they hoped would grant them toeholds in the world’s cramped circles of prosperity. In most cases, those decisions were imposed; in others, like that of South Africa, they were willingly introduced. Measured strictly in macro-economic terms, neoliberal structural adjustments have registered modest but uneven results. Inflation rates and state deficits have stabilized or declined. In some instances, growth rates have improved. But in all cases, social indicators have deteriorated, with the levels of inequality, joblessness, child mortality, fatal diseases and social dislocation rising.[7]

 

1.4       This paper adopts as its starting point the proposition that, in the current world system, most countries are unable to reverse the trends of burgeoning inequality and deprivation strictly from behind the perimeters of the nation-state.

 

This notion is hardly novel. Developing countries are routinely counseled that their only recourse lies in adjusting to the imperatives of the free market. Rewarding their obedience, it is claimed, would be greater economic competitiveness and larger shares of the bounty. Also fashionable is the view that the most attractive route towards reaping at least some of the advertised rewards is by forming regional trading blocs that join together structurally-adjusted economies. In southern Africa, deeper regionalization is held up as the key that could unlock the region’s dormant potential for growth and prosperity. Significantly, it is a view held not only by free market converts but also by their adversaries (ranging from revivalists of Bandung-era developmentalism to post-Keynesian rebuilders).

 

1.5       The text interrogates such claims by examining the unfolding character of regional integration in southern Africa. It will do so, firstly, by applying a particular reading to the current world system and to the ongoing process of globalization. It will then examine the location of Africa and, specifically, southern Africa in that system - an exercise that will form the basis for assessing the character and trajectory of regional integration in that sub-region. In doing so, it focuses also on the regional role of SA and on the growth path this country has embarked on. It will conclude by examining some of the key challenges confronting an integration project that could offer scope for a development path capable of servicing the multitude of social rights and needs of southern Africa’s citizens.

 

The text is an abridged version of a longer paper completed in the late 1990s. Although the data have not been updated, the analysis presented here remains valid and accurate.

 

2.        Decoding Globalization

 

2.1       Despite the emergence of regional organizations in the “third world” since 1945, the post-colonial Bandung[8] projects remained essentially national-based, with the main developmental duties assigned to the national bourgeoisie and the developmental state.[9] The political-ideological division of the world during the Cold War enabled developing countries to achieve shifting degrees of latitude for the pursuit of “alternative” development models. The first tier of newly-industrialized countries in East Asia (South Korea, Taiwan, Singapore) arose in that context, as did the second tier (Malaysia, Thailand, Indonesia). In all instances their achievements were closely linked to US largesse and support which was purposefully inserted into the most hotly contested region during the Cold War.[10] In Africa, several countries won space for their developmental experiments thanks to the West’s nominal indulgence and the USSR and China’s support (albeit uneven and inconsistent). Those relationships, too, were definitively shaped by the Cold War. The same applied to the Middle East and North Africa. The post-war world system, therefore, was “tri-dimensional” (comprising the welfare capitalist West, the sovietism of the Eastern bloc and the developmentalism of the Third World), with each “nation state” acting as a basic unit in that system (Amin, 1997:6).

 

That system has disappeared. The geopolitical and geo-economic fields of the world today result not only from the end of the Cold War but from the collapse or deep erosion of the three development models that shaped the world’s societies over the past 50 years.

 

It is on the resulting terrain that the current process of globalization occurs,  a process that has breached the boundaries of national productive systems and begun to reshape and incorporate them as segments of global production, distribution and consumption networks. The market economy now enfolds almost the entire planet, albeit still in different varieties (Mexico’s free market, for example, cannot be equated with the strong supply-side role of the state in Malaysia), despite the homogenizing force of neoliberal globalization.

 

2.2       In purely descriptive terms, globalization can be defined as the worldwide spread of industrial production and new technologies, accompanied and promoted by the rapid and unimpeded mobility of capital and unfettered freedom of trade, and the global reach and authority of transnational corporations. 

 

Accurate as far as it goes, that definition is inadequate. Globalization does not refer simply to a compilation of neutral, technical processes. It encompasses two overlapping dimensions - the objective and the subjective - and describes both the policy frameworks within which capital accumulation occurs and specific shifts that define the current phase of the capitalist system.  In both instances, these processes and adjustments are occurring on a worldwide scale. A distinction can be drawn, therefore, between the ideological dimensions of neoliberal globalization and the dramatic technical and technological advances in production, distribution, communication and transaction systems since 1970. The latter refer to transnationalizing factors with the potential of linking all national economic units into an integrated global economy. The former are ideological constructs that emerge from the need for accumulatory adjustments identified in the industrialized centres since the early 1970s.

 

2.3       These two dimensions overlap. For instance, technological advances make possible the segmentation and dispersion of production across the globe - whereby a vehicle’s gearbox is built in Sweden, the chassis in Turkey and the entire product is assembled in Thailand. But putting such transnational production into operation requires profound restructurings at the national, regional and international levels.[11]

 

In other words, the two dimensions of globalization are dynamically related - yet, they can be separated analytically. Compressed into the doctrine of neoliberalism, the ideological prescriptions are aimed primarily at adjusting the terms of economic interaction between the dominant industrialized powers themselves, as well as between them and other national and regional economies.

 

It is therefore more accurate to speak of neoliberal globalization, in recognition that other forms of globalization are possible. The description is not chosen for the sake of novelty. Acolytes of neoliberalism (and sometimes even their adversaries on the) conflate the objective and subjective dimensions. Consequently, the former claim that only one variant of globalization can exist (the neoliberal type) and that it heeds a set of “economic laws” which, once applied, will create level playing fields for all contestants in a single integrated world economy. The latter, meanwhile, risk adopting an almost Luddite-like posture by rejecting globalization in toto as the outcome strictly of an imposed economic doctrine. In that view, even the ostensibly neutral features of globalization are deemed “reversible”. Both approaches are mistaken.

 

2.4       The ascendancy of neoliberalism can be traced back to a compound of restrictions that began stunting capitalist accumulation in the advanced economies in the early 1970s. Compared to the preceding two decades of post-war growth, the economic system had entered a long trough of relative stagnation. The social fees attached to accumulation in the welfare systems of the US, Britain, Western Europe, Canada, Australia and New Zealand were increasingly curtailing profit margins, while state regulatory systems (especially in the labour and financial markets) were identified as impediments hindering a revitalized cycle of accumulation. Along with a host of other factors, this fuelled a trend of overproduction which, in turn, generated massive surpluses of capital that were withheld from investment in the productive spheres of the industrialized economies. From this emerged the ongoing trend whereby gargantuan volumes of capital are retained in liquid form, allowing them to be deployed in rapid and intricate speculative ventures.

 

Anchored to a great extent still in its advanced cores, the capitalist system required a series of formative responses. These had to

Ä    Reduce the social costs attached to accumulation, by dismantling welfare systems;

Ä    Greatly ease the penetration of other markets by readjusting trade regimes;

Ä    Enable large corporations to more easily escape the constricting terms of production (in their “home zones” and further afield) ; and

Ä    Loosen the global circulation of surplus capital.

 

The resulting adjustments have been rationalized within the doctrine of neoliberalism, while being propelled by technological changes described above. In macro terms, the effect has been to boost the capitalist system’s capacities to manage the sporadic breakdowns that afflict it - by deflecting the costs of constrictions in any one location onto other geographic zones. In essence this represents the guiding logic of neoliberalism.

 

The field within which capitalist accumulation occurs has therefore been extended globally in a manner and with an intensity unprecedented in history. Among the prime beneficiaries have been TNCs that are at increased liberty to re-articulate their already segmented and transnational production systems, with the overwhelming majority of economies in the world serving as terrains for these adjustments. One result, in Noam Chomsky’s formulation, is

that for the US about 40% of what is called “trade” is actually internal to a firm - like Ford Motor Company shifting something for assembly in Mexico, and shipping it back across the border; it’s not trade in any serious sense ... One fairly conventional estimate in technical studies is that about 15% of trade may be called free in some sense (1998).

 

2.5       Globalization represents a profound paradox: its homogenizing and integrating thrust leads, at the same time, to ongoing polarization at the global level. As Burbach, Nunez and Kagarlitsky have noted, globalization

is both centripetal and centrifugal. It concentrates and integrates capital, commerce and trade in and between the metropoles, while at the same time casting off industries, peoples and even countries it has no use for (1997:5).

 

Most of the economies of the world (and, in Africa’s instance, an entire continent) function at best as marginal adjuncts to accumulatory processes that remain anchored in the industrialized cores of the system. This realization has to form the starting point of any survey of the prospects of a regional integration.

 

Countries of what used to be called the periphery remain integrated into the world system only insofar as they can, in an auxiliary mode, service the accumulatory requirements of the dominant economic actors (be they states or multinational corporations). Researcher Dot Keet has suggested that globalization therefore represents not an irrevocable march towards a single integrated world economy, but rather the establishment of

a complex combination of national (and sub-national and even very local) economies in different degrees and forms of interaction with one another, and varying degrees and modes of integration into, or participation in the larger whole (1998:2-3).

 

2.6       There is an inherent logic to several, apparently anomalous features of globalization. Both generations of “Asian Tigers” achieved staggering economic performances despite “violating” key elements of neoliberal doctrine.[12] Many of the key ingredients of neoliberal globalization are not in equal evidence internationally, most tellingly when sought in the economic policies of the most powerful industrialized countries. The US, for example, continues to lavish Keynesian-type stimulants on its military-industrial complex (while, simultaneously, demanding that other economies shift to supply-side policies). Both it and the EU are able to maintain highly protectionist trade stances, particularly in relation to the developing world. In fact, as Chomsky reminds, under the reign of free market capitalism, constraints on trade have increased:

This period, since the early seventies, has been described as a period of sustained assault on free markets by the head of economic research at the WTO in a technical study of his. He estimates the effects of Reaganite barriers at about three times the level of other industrial countries .... A UN development report estimates that, annually, the Third World loses about half a trillion dollars from various forms of “first world” protectionism and market intervention (1998).

 

This unevenness or eclecticism discloses the discriminatory and polarizing character of capitalist globalization, and reveals the intense rivalries that shape it.

 

2.7       It is tempting to propose that globalization conforms strictly to the needs of the most powerful economic players. But this would be inaccurate in several respects.

 

Economic power remains diffuse in the current world system. Despite its military, cultural and diplomatic dominance, the US has not been able to maintain the hegemony it enjoyed in the economic realm during the third quarter of the century. Without a hegemon, the world economic system has become dangerously volatile, with deepening economic rivalries emerging between the US and the other powerful industrialized countries, mainly western Europe, Japan and China. The proliferation of regional blocs is closely tied to the absence of a global economic hegemon and, hence, can be seen as a response to intensifying competition between the major powers.

 

Globalization, in other words, is not guided by some conspiratorial unanimity between Washington, Bonn and Tokyo. These powers themselves harbour contesting needs - both internally and in relation to one another, and they are engaged in fierce contests to acquire dominion over or privileged access to foreign markets, natural resources, productive opportunities, new technologies etc.

 

2.8       The contestation involves not only countries but also TNCs. Although nominally decentred, TNCs  still operate with the active assistance of national governments. To be sure, the extent of this collaboration varies, but the point is that TNCs have not entirely severed their bonds with states.

 

The state’s authority in economic affairs has been drastically revised - albeit in different respects and to varying degrees from place to place. In the weaker economic zones of the world, state sovereignty has been profoundly enfeebled; in the dominant zones, it has been not been denuded as sharply. In fact, in the latter instances it would be more accurate to speak of the recasting of the state’s role vis a viz the economy.

 

2.9       Rivalry and contestation is therefore part and parcel of globalization, with the planet as a whole representing the field on which differing interests and needs are pursued. The linkages and forms of integration that result depend on the balances of forces operating. The unfolding path of globalization is being determined not simply by the operation of objective factors but, crucially, also by social, political and economic struggles that are waged at the sub-national, national, regional and global levels.

 

But states are not purely instrumentalized in service of neoliberal globalization. They are prone to a complex array of forces and processes that encourage - and often impose - economic and developmental trajectories that conform to the needs of the dominant economic powers. But their obeisance is not predetermined or inevitable. In Keet’s view, the emerging global system is

characterized, in the economic sphere, by unrelenting competition between business enterprises, and in the political sphere by intensive pressures, lobbying and financial inducements to governments. Consequently, national and multilateral institutions are terrains for complex tactical manoeuvres and alliances, and continuous political battles (1998:6).

 

The ostensibly self-sustaining momentum achieving by globalization is shadowed by other, possibly inhibiting factors. Consider, as an example, technologies that make possible the movement of billions of dollars across the globe at any instant on any day - apparently an objective “fact-of-life”. But the requisite technologies and speculative systems do not in themselves necessitate that capital will commute at the scale and in the manner that it does. Two other factors cause the current state of affairs:

 

Ä    One is the adoption by states of particular policies designed to remove hurdles in the path of uninhibited capital flows worldwide - by liberalizing financial markets, dismantling regulatory systems, lifting exchange controls etc.

 

Ä    The second factor resides in the capitalist system’s tendency towards overproduction in the industrialized cores, and the resulting generation of massive capital surpluses, much of which is retained in the liquid form of financial capital. The surge of financial capital has created a powerful impetus for the design of new and more intricate types of financial transactions, which add to pressures for financial liberalization. These capital flows can be regulated.

 

2.10     Fundamental to this paper is the proposition that the meanings commonly attached to “globalization” include ephemeral and non-essential features (wholesale financial liberalization, privatization, fiscal austerity, etc.). They do not represent an immanent set of “laws” which require compliance if a country or region is to have any hope of economic success or developmental progress. The growth paths of China and the two generations of newly-industrialized countries in Asia remind that no single formula exists for economic growth.

 

 

3.        Catching up via regionalization?

 

 

It is against this backdrop that the pursuit of regional integration occurs. For developing countries, such projects appear to be an attractive way of eluding stagnation and marginalization, and for strengthening their bargaining hands against industrialized countries.

 

3.1       A country or region’s place in the world system - and the terms on which it is linked with or integrated into that system – decisively shape its development path. That, in turn, shapes its ability to meet the socio-economic rights of citizens. Confronting the most countries in the world is this basic conundrum: To what extent and on what terms is compliance with the prescribed adjustments associated with neoliberal globalization likely to alter their locations in the world system?

 

Prevailing still is the dream of “catching-up”, of escaping a peripheral status in the world system via a new or revitalized industrialization process. Typically, this is taken to demand wholesale conformity to the economic “rationalities” that are said to govern the global economic system. Yet that system is characterized not by a steadily growing circle of “winners” but by the enforcement of “a new hierarchy in the distribution of income” and greater, not less inequality, on the world scale (Amin, 1997:14). Any attempt to “catch up” via regionalization ventures has to contend with this reality.

 

The idea of “catching up” is not new, of course. In the post-1945 era decolonized states without exception concentrated their efforts on such a venture. In Latin America, Africa and the Middle East this occurred largely via the route of inward industrialization, behind protective barriers, often with the material support of one of the two former superpowers, and without exception fuelled by highly active “development states”.

 

3.2       What are the prospects for developing countries that attempt to “catch up” in the current economic and geopolitical order by adjusting themselves to the prevailing framework of free market economics? Amin’s answer is both compelling and sobering. Fundamentally skewed, the world system is marked by an ensemble of monopolies, he argues, exercised by one or more of what we might call “the centres” - the US, western Europe and Japan.[13]  Those precincts of dominance include:

Ä    the development and deployment of weapons of mass destruction,

Ä    domination in (as opposed to control of) the world financial markets,

Ä    monopolized access to the world’s natural resources,

Ä    domination of supra-national institutions tasked with managing or modulating the operation of the market at the global level,

Ä    predominance in the fields media and communication, and in cultural and ideological production, and

Ä    the development and deployment of new technologies (hence, the strong emphasis on patent protection and defending “intellectual property rights” at the WTO).

 

In Amin’s view, the axis of the world system today is constituted by those countries “that control the global industrial system through their command of financial power and communications systems, their dominance in decision-making over the use of resources at the global level, and their monopolies of technology and weapons of mass destruction”.[14]

 

Clearly, the notion of “catching up” loses its purchase in a system organized in such a manner. The feat of successful industrialization no longer implies entry into the centre which is defined not merely by levels of development and competitiveness, but by pre-eminence in the zones described.

 

3.3       The newly industrialized countries of Asia (and Latin America) constitute what can be termed today’s “third world”. Integrated relatively snugly into the world system, some of them are able sporadically to challenge some of the monopolies mustered by the countries of the centre, but in the short- to medium-term none are capable of usurping those monopolies.

 

The rest of the planet makes up the “fourth world”, marginalized in moderate to extreme degrees and weakly integrated (if at all) into the world system. They include countries

Ä    that have partially industrialized but remain uncompetitive and require radical restructuring to reverse that state of affairs (eg. South Africa, industrialized Arab countries like Algeria and Egypt, as well as some countries of eastern Europe);

Ä    that are still essentially pre-industrial but have achieved comparative prosperity on the basis of agricultural, mineral and oil exports (eg. the Gulf states, Gabon, Cote D’Ivoire);

Ä    that are unable to successfully promote even traditional commodity exports and that founder as a result (most of sub-Saharan Africa).[15]

 

3.4       Persisting in most of these countries is the view that the national bourgeoisie stands at the hub of a successful development strategy. In South Africa, the ANC’s developmental vision is deeply imprinted with this approach, which Amin (Amin, Arrighi & Wallerstein, 1990:113) has summarized as follows:

 

1.             a determination to develop productive forces and diversify production (notably to industrialize);

2.            a determination to ensure that the national state should lead and control the process;

3.            the belief that “technical” models are “neutral” and can simply by reproduced;

4.            the belief that this process does not involve popular initiative as a starting point but simply popular support for state actions;

5.            the belief that this process is not fundamentally in contradiction with participation in the international division of labor even if it involves temporary conflicts with the developed capitalist countries.

 

That approaches of this sort have, in the main, failed in the developing world can no longer be disputed. The debate today is whether the “national bourgeois project” can be revised and successfully pursued within the changed global economic order, or whether it belongs to an epoch that has ended. We believe the latter to be the case. The global division of labour has tended to relegate the so-called “patriotic bourgeoisie” of the developing world “to carry out its development in the compradorized subordination that the expansion of transnational capitalism imposes on it” (Amin, Arrighi & Wallerstein, 1990:115). Rather than serving as a vehicle for achieving greater developmental sovereignty, the national bourgeoisie was most likely to operate in a structurally submissive and supportive role to international capital.[16] The rise of China, industrial India and even the transnational expansion of some South African corporations, however, raise questions whether that subordination remains as clear-cut as it seemed in the past.

 

3.5       Nevertheless, it is against this general background that both the concepts and realities of regionalization have to be examined, since the different conceptions of regionalization still share the hope that coordination at the regional level is the most promising way for non- and semi-industrialized countries to “catch up”.

 

An obvious but often neglected point needs to be stressed at the outset: the popularity of regionalization is relatively new. The economic models attempted by both the industrialized capitalist countries and the non-aligned countries of the “South” were, until the 1980s, in the main national. Furthermore, coordinated adjustments at the regional level gained appeal first in western Europe and North America (the EEC and NAFTA), and were aimed primarily at shifting the balance of forces between the centres of the industrialized world. The same aims continue to undergird the dominant conceptions of regionalization in the 1990s, which Amin (1997:25) has called “neo-imperialist”,

attaching different parts of the South to their Northern preferential partner - Africa behind Europe, Latin America behind the United States, South East Asia behind Japan.

 

Read at the level of the world system, the main function of regional blocs structured along free market principles is to aid the resolution of contradictions within and between the centres of the world economy - not to enhance the developmental autonomy of their “Southern partners”, as Mexico has discovered.  These forms of regionalization are geared, then, at deepening the integration of countries of the “South” into the world economy on terms that benefit, in the first instance, the dominant economic powers.

 

Nevertheless different interpretations of regionalization exist. It can be seen as:

Ä    “intermediate stages or stepping stones” towards the consolidation of a single, integrated world economy;

Ä    the “rationalization” of national (developing) economies within a regional framework so as to encourage and aid their more intimate linking with (groupings) of industrial powers;

Ä    creating for groupings of developing countries more leverage and space, from which they “can collectively engage more effectively ... and achieve more favourable integration into the global system”; or

Ä    “a form of temporary disengagement, even a degree of delinking from the liberalized global order, and a framework for the implementation of development programmes differing from the dominant paradigm” (Keet, 1997:8).

 

Some forms of regionalization therefore are angled towards reinforcing the subaltern status of developing countries, while others could serve as the “frame for the efficient economic, social and political management of negotiated interdependencies” in ways that enhance participating states’ capacities to address their respective developmental priorities at both the regional and national levels (Amin, 1997:25). Regionalization, in other words,

may be designed as a subsystem submitted to the rationale of (neo-liberal) globalization, or as a substitute to it, or as a building block for the reconstruction of a different global system (1997:1).

 

3.6       The ongoing process of globalization is underpinned not by unanimity at the global level but by contestation. Its character is shaped by social, political and economic contradictions and struggles - at and between the national, regional and global levels, a matter we shall return to.

 

While not entirely ambiguous, the character of the evolving world economic system - and hence also of regionalization projects - remains contested and is replete with systemic tensions and policy contradictions.[17] Attempts to extend regional groupings like NAFTA and the EU into Latin America, Asia and Africa disclose some of those tensions which have been described as “neo-mercantilist rivalries” between economic powers that are “striving to pre-empt the other by carving out ... de facto global spheres of pre-eminent influence” (Keet, 1997:9). The circle of globalization has by no means been closed. But the pressures exerted on developing countries (especially in Africa) by the EU, the US to enter into “reciprocal” free trade agreements either as individual countries or regional blocs should not be underestimated. Proceeding against that background are the ongoing efforts to integrate more deeply the economies of southern Africa.

 

 

4.        Framing Regionalization in Southern Africa

 

On the basis of the first three sections, we can now examine the following key questions:

 

Ä    What are the main features of de facto regionalization in southern Africa?

Ä    Are the potential benefits spread relatively equitably among the states of the region?

Ä    If not, which state(s) draws most benefit and what are those benefits?

Ä    In what ways does SA’s historical dominance in the region affect regional integration?

Ä    Do the terms of regional integration potentially reinforce or challenge the sub-altern status of the region’s countries in the world economy?

Ä    Do those terms open new opportunities to engage in development paths geared towards local priorities? 

 

4.1       Attempts to gauge the prospects of regionalization projects on the continent - and to explore the most appropriate forms of regionalization - have to proceed from a sober reading of Africa’s location in the world economy. What we discover is that sub-Saharan Africa is not plagued by insufficient integration into the world economy. Its core economic sectors - those producing primary commodities - are, as Keet reminds, “almost totally extroverted”. But this is not supplemented by internal integration, through backward and forward linkages, regionally, continentally or even nationally. Its relation to the industrialized world remains essentially neo-colonial. At the same time, and despite desperate attempts, most of sub-Saharan Africa remains unable to attract long-term, sustained FDI on any significant scale. FDI remains heavily focused in mining enclaves and extractive operations, especially petroleum.

 

Absent are “multi-dimensional investment strategies towards more self-reliant and internally integrated development”.[18] South Africa, importantly, represents the only noteworthy sub-Saharan source of investment. Yet, as we shall see, these investments appear aberrant and do not fit into coordinated investment strategies. Meanwhile, powerful national elites in government and business have developed vested interests in maintaining the current types of linkages to the industrialized world. The challenge, therefore, is not only economic but, in fundamental respects, also political.

 

4.2       Different variants of regionalization exist, but common to all but the most autarchic versions is the conviction that developing countries - strong and weak - can no longer hope to achieve sustained economic and development success along national-centric growth paths. It is at the level of the region that countries seem more likely to win (some of) the requisite maneuvering space that could allow them to pursue development paths which, in the first decades of the post-colonial era, had seemed possible at the national level.

 

4.3       The Asian “tigers” are often cited as proof that the appropriate mix of policies, structures and commitment can reproduce those successes in southern Africa. Yet many of the conditions and factors that enabled the two generations of Asian Tigers to emerge no longer pertain, while most are not certainly not present in the case of sub-Saharan Africa. Broadly, the economic growth records notched up by East Asian and, more recently, South-East Asian countries were grounded in the following features and approaches:

 

Ä    Protectionist measures that allowed for industrial “targeting” and enabled enterprises to “mature” before switching to incentive systems that favoured manufactured exports;

Ä    The development and/or defence of a relatively stable agricultural sector based on a productive peasantry capable of meeting a large part of domestic food needs (partly due to earlier land reform programmes);

Ä    Sufficient rates of labour absorption by the agricultural and small business sectors;

Ä    High rates of domestic saving which were augmented by relatively easy access to foreign finance (much of it from within the respective regions);

Ä    The proximity of large markets with strong demand;

Ä    Greater latitude for macro-economic flexibility thanks to the indulgence of multilateral financial institutions and the US;

Ä    An ability to resist or regulate rampant penetration by multinational corporations;

Ä    Regulation of the financial sector; and

Ä    The fact that, worldwide, growth strategies resting on manufactured export drives were the exception and not, as they are today, the norm.[19]

 

The absence of most of those factors and conditions in sub-Saharan Africa - and southern Africa - underline the need to attach modest expectations to the regional integration project being attempted in southern Africa. There is very little prospect of the region becoming a kind of composite economic tiger in the next two decades.

 

4.4      Proclaiming the need for greater regional integration is by no means a novel proposition. Its virtues are sung by the World Bank, sections of the business community, governments of all political stripes and development organizations. Typical are exhortations such as this one from the African Development Bank:

Africa must transform its weak production structures and fragmented markets by embracing economic integration with a renewed sense of purpose and direction. The alternative is that the continent would risk becoming increasingly marginalized in its participation in the global economy.[20]

 

But what kind(s) of regional integration is most likely to reduce countries’ marginal status in the world economy?

 

Propagated in southern Africa is a version which could lead to “higher levels of regional welfare, a more balanced distribution of economic activity and better balance in the development of the region”. This implies the design and introduction of “mechanisms to prevent stronger countries from monopolizing the benefits of regionalization” (Scott, 1995:211). The ANC government shares this view, and has committed itself to

redressing past inequalities which characterised not only North-South relations but some of the South-South links as well. We will do our utmost to avoid the domination of South Africa's economy over the region.[21]

 

A range of factors determine the fate and character of regionalization ventures. They include:

 

Ä    Globalization of the world economy - particularly the accompanying growth of transnational production, the growing share of global trade that occurs between transnational corporations, and deregulation of the financial sector. This, along with the imposition of austere fiscal and monetary policies, and the removal of protective regimes and state regulatory systems has forced countries into unequal competition with more powerful economic forces;

Ä    The extent to which countries have adopted (willingly or under duress) economic adjustment packages of the neoliberal variety which tend to erode their abilities to implement national development strategies;

Ä    The policing/disciplinary powers of the IMF and World Bank (particularly with regard to countries bearing heavy foreign debts and/or suffering chronic balance of payment difficulties), and of the WTO;

Ä    The terms of existing or emerging (bilateral or multilateral) free trade agreements with the dominant economic powers;

Ä    The countries’ locations in the world economy which, of course, relate also to their structural characters - i.e. to what extent they have industrialized and developed diversified export capacities or, conversely, remain arrested in a neocolonial mode of primary commodity export production;

Ä    The levels of domestic savings that are present, attractiveness to foreign investors, and their capacities to articulate capital inflows to domestic economic strategies;

Ä    The existence of investment frameworks, agricultural and/or industrial policies and the extent to which these are articulated to development strategies;

Ä    The presence of a dominant economic and political force in the region;

Ä    Levels of political stability and national cohesion in the region;

Ä    The degrees of political commitment that exist for regionalization, as well as the levels of institutional capacity to advance such a process;

Ä    The presence of existing or evolving institutions geared at achieving some form of regional integration.

 

4.5       Many of the economies of southern Africa already are linked - in some instances, quite intimately. As a result, a strong degree of de facto regional integration exists. Other factors that can influence the trajectory of regionalization in southern Africa include:

 

Ä    The weak status of the constituent economies and their marginal locations (individually and collectively) in the world system;

Ä    Their geographical location on a continent which, despite stronger overall growth performances, is not sharing in global trade increases or attracting significant capital flows;

Ä    The presence in the southern African region of a hegemonic regional power whose dominance is expressed in the size of its economy, its comparatively developed infrastructure (especially transport, telecommunications, electricity and water supply) in regional trade and investment patterns;

Ä    The highly ambivalent character of that regional “superpower” which commands a comparatively developed economy much larger than those of the rest of SADC combined and much more diversified, but which is also stricken with deep-set problems of underdevelopment (particularly in its rural hinterlands), wide inequalities in income and wealth, high unemployment and slow economic growth;

Ä    The existence in southern and eastern Africa of three regional groupings already - SACU, PTA and SADC - which along with the economic ties that exist already between the regional hegemon, South Africa, and other countries of the region brings the advantage of not having to design and forge a regional integration project ab initio;

Ä    The danger that attempts to exploit the latter feature could be complicated by the highly unequal nature of these economic ties, which has generated considerable political resistance and suspicion towards the advertised benefits of a revised and more intimate regionalization project;

Ä    Consequently, the extent to which a political commitment to a closer and more equitable regionalization process is evident, especially on the part of the South African state;

Ä    The existence of contradictions between the political visions of integration and already existing market dynamics; and

Ä    The emergence within the region of small but potentially powerful “castes” of comprador elites that have developed vested interests in persisting with neoliberal policies.

 

 

5.        Background to Regional Integration in Southern Africa

 

 

The highly skewed character of regionalization in southern Africa has been exhaustively surveyed in numerous books, essays and research studies. The summary provided by Marais (1998) is a useful guide to its contours. Suffice to say that the southern African regional economy has been substantially  integrated since the latter decades of the 19th century, with South Africa acting as the hub and main beneficiary of these economic ties. As sketched by historian Dan O’Meara,

competing European colonialisms fashioned a Southern African region marked by a fairly high degree of what can be called skewed integration - an essentially regional economy in which the central pole of accumulation was the mining and later the agricultural, industrial and service sectors of the South African economy. All other economies in the region, except that of Angola, were locked into this regional economy as suppliers of cheap migrant labour, certain goods and services (water, energy, transport, etc.) to the South African economy, and as markets for its manufacturer and capital.[22]

 

The legacies of SA's historical domination and the destabilization campaigns of the apartheid regime pose both obstacles and advantages to an integration project capable of “actively promoting economic growth of a type that brings benefits to all members of society”.[23] Many of the countries in the region are already firmly integrated economically - through trade links, transport systems, energy networks and labour movements. At the same, SA’s dominance has exacted heavy costs. The evidence is evident in the uneven (and in most cases, deeply stunted) development levels in the region and in the immense devastation wrought by apartheid destabilization as Pretoria sought to exert its political hegemony and its extend the economic dependence of countries that had adopted overt anti-apartheid stances.

 

5.1       The challenge today is to reshape regional relationships in ways that yield mutual benefits. It has become axiomatic to assert that the fate of the region as a whole cannot be separated from the fortunes of its individual countries. Certainly, for SA, the benefits of closer cooperation are manifest. Increased trade with the region (and the rest of sub-Saharan Africa) could boost SA's manufactured exports, help it escape its status as a primary commodity exporter and create sorely-need jobs. Energy drawn from the region could augment its efforts to develop the economy. Regional investments that target viable industrial sectors can boost the income earning potential of other countries, thereby sustaining their role as markets for SA products and services. In short, it is “in South Africa's own interests to work for a climate of growth and development throughout the region and wider continent”.[24]

 

But that requires high degrees of reciprocity from SA, on several fronts. Investment decisions should be guided by other countries’ need “to promote growth and diversify their productive bases” and not strictly by the short-term profit objectives of SA firms.[25] Other countries need to gain greater access to the SA market, while the regional transport system has to be restructured “to address problems caused by distortion of historic transport flows”.[26] Crucially, regional - not merely national - solutions have to be found for the problems of labour migration. On the whole, a new regional framework for relationships must enhance democracy in the political, economic and social spheres.

 

5.2       But the economies in the region remain highly dependent on a small basket of traditional commodity exports, most of which are traded with countries outside the region (and the continent as a whole).  Trade relations are highly skewed in favour of SA, which runs a consistently high trade surplus within the region. Levels of intra-regional trade are low. SADC members’s prime exports markets lie in the EU, North America and East Asia. Again, South Africa is an exception, but only insofar as its manufactured exports are concerned: the SADC region is a prime destination for its manufactured exports (but it sources very few of its imports from those countries). The region attracts minuscule volumes of foreign investment.

 

5.3       Given SA’s ongoing role in the skewed social and economic architecture of the region, any attempt to revise the character of regional integration will continue to hinge on this regional powerhouse. With an economy more than three times larger than the other SADC countries’ combined and 13 times as big as the second-largest economy in the region (Angola), SA its widely seen as a regional and, potentially, a continental superpower.

 

5.4       The question is not whether South African hegemony is being prolonged but what the nature of that hegemony shall be. In far-reaching respects, SA’s role in southern African regionalisation is being defined by a contradictory mix of market-driven impulses (that reinforce and extend historical imbalances and disparities) and the sometimes poorly coordinated efforts by the SA government to help construct a more equitable form of regional integration.

 

5.5       Active in southern Africa are three regional groupings:

 

§    The Common Market of Eastern and Southern Africa (COMESA), previously known as the Preferential Trade Area of Eastern and Southern Africa (PTA).

 

§    The Southern African Customs Union (SACU) with South Africa, Botswana, Lesotho, Swaziland and Namibia as members. With SA as its hub, SACU is by far the most entrenched regional bloc in southern Africa. It functions largely to SA’s benefit - particularly as a market for South African services and manufactured exports. Trading patterns are highly imbalanced. All the SACU members also belong to SADC.

 

§    The Southern African Development Community (SADC), with fourteen members: South Africa (joined in 1994), Botswana, Lesotho, Swaziland, Namibia, Zambia, Zimbabwe, Mozambique, Malawi, Angola, Tanzania, DR Congo (joined in 1997), Seychelles (joined in 1997) and Mauritius (joined in 1996). Created in 1980 in a bid to lessen countries’ dependence on apartheid SA, it was originally titled the Southern African Development and Cooperation Community (SADCC).

 

 

6.        Main features of the “regional powerhouse”

 

Several fondly-held misconceptions suffer once the SA economy is scrutinized. It is necessary to revisit them because they cut to the heart of debates about which paths towards economic recovery and development are viable and provident for SA. Inevitably, this impacts also on the character of southern African regionalization.

 

6.1       The standard description of SA as a combination of “Third World” and “First World” economies is misleading. The country does not have a “core modern industrial ... First World economy”, as businesspeople and politicians routinely claim[27]. The supposedly “First World” features of  its economy are, in fact, much more akin to those found in middle-income developing countries like Brazil, Argentina or Mexico.

 

6.2       Essentially, SA’s economy combines three chief features, two of which are endemic to middle-income countries: a heavy reliance on commodity exports, and an industrial sector arrested in the semi-industrialized phase (marked by the standard ensemble of attendant factors such as low productivity, limited skills base, ageing plants and, hence, large surplus capacity, reliance on capital goods imports, etc.). The other feature - developed information, communications and transport systems – to some extent sets SA apart from some other developing countries, though it too hardly matches the sophistication (or efficiency) of those associated with First World countries.

 

6.3       Prevalent, too, is the nostalgic belief that SA at one stage was situated in the mainstream of the global economic community (a notion that lacks supportive evidence) and the contention that from the 1960s onwards the country became “progressively delinked from the family of nations”.[28] The latter claim rang truer for the diplomatic, cultural and sports arenas than for the economic sphere.  Despite the hobbling effect of sanctions in trade and investment fields, a great deal of the SA economy remained outward-looking - principally its mineral and agricultural sectors. Its industrial sector failed to keep pace with new technological developments largely because of the structural decline of the economy since the 1970s, which generated chronic balance of payments problems and foreign exchange squeezes. It was only in the mid-1980s that access to new technologies and international loan finance was significantly affected by international sanctions. Meanwhile, its core economic sector - mining - continued to draw large portions of its labour needs from beyond SA’s borders. This never was an economy structured along autarchic lines.

 

In truth, SA had been integrated into the world economic system to much the same extent and in similar respects to most other semi-industrialized developing countries. In only one respect did its post-1945 growth path acquire an inward-looking bias - in the production of luxury, consumer durables. These sections of industry were parochial only insofar as the production and/or assembly of products was concerned; capital goods and a high percentage of components were still imported from abroad.

 

6.4      Thomas Scott is correct in describing the country as “a pedestrian middle income developing country”, one which “does not add up to a great deal in global economic league tables” (1995:200). The conventional argument holds that the economy became progressively distorted under apartheid, as the country was jostled out of the “family of nations”. Required, in this view, is the introduction of a set of “normalizing” adjustments that would bring the economy in line with “the global consensus” and thrust it towards deeper and more advantageous integration into the world economy. As we have argued in detail elsewhere[29], that line of thinking is fundamentally flawed - ignoring, as it does, the deep and wide-ranging weaknesses that hamstring the SA economy, several of them structural:

 

o                    A dependency on strong performances in the agricultural and mining sectors;

o                    Vulnerability to commodity price fluctuations on the world market;

o                    Poor labour, managerial and capital productivity;

o                    A low domestic savings rate (exacerbated by the Reserve Bank's efforts to boost savings by maintaining high interest rates) which underlines current account frailties and has been translated into a heavy reliance on capital inflows from abroad;

o                    A vulnerable balance of payments situation which stems in part from the fact that foreign revenue generation depends to large extent on mineral exports;

o                    Low domestic demand;

o                    Very low rates of labour absorption;

o                    An industrial sector which exhibits uneven competitiveness and which remains dependent on imported technologies, capital goods and even product components;

o                    A heavy dependence on TNC operations which generate approximately almost half of SA’s GDP. This feature has been deepened, as large SA firms have been allowed to shift large portions of their surplus capital into off-shore investments (rather than expanding their domains domestically).[30]

 

6.5       By introducing in June 1996 the Growth, Employment and Redistribution (Gear) strategy, the SA government opted for a form of adjustment which included many of the tenets associated with the “Washington Consensus” of the 1990s. The Gear document described the nub of the strategy as follows:

The higher growth path depends in part on attracting foreign direct investment, but also requires a higher domestic saving effort. Greater industrial competitiveness, a tighter fiscal stance, moderation of wage increases, accelerated public investment, efficient service delivery and a major expansion of private investment are integral aspects of the strategy. An exchange rate policy consistent with improved international competitiveness, responsible monetary policies and targeted industrial incentives characterise the new policy environment (SA Department of Finance, 1996:21).

 

The result was a compendium of adjustments geared at creating an optimum climate for private investment. The outcomes have been documented extensively elsewhere (Marais, 2001; Bond, XXX, Terreblanche, 2002).[31]

 

6.6      Outside of real estate development, few of the top investing companies have sunk money into new assets; their emphasis has been “either the acquisition of equity in existing corporations, expansions, or reinvestments”. The professed shift towards manufactured exports as the mainstay of the economy has been felt most strongly in SADC countries (and, increasingly, beyond in the continent). These countries’ geographical proximity, their historical trade and transport links with SA, and their underdeveloped manufacturing (and retail, financial services and information technology) sectors have made them ideal targets for SA expansion.

 

6.7       Hampered by their poor investment attractiveness, most of the SADC region (which comprises “fourth world” countries, with the exception of SA) have competed for foreign investment by selling off state-run enterprises, many of them in the primary sector (which, in many instances, has not yet been subjected to optimum exploitation). SA firms have been quick to seize these opportunities. SA dominance is therefore being extended into the ownership and/or control of core sectors of neighbouring economies.

 

6.8       The relaxation of exchange controls by SA has had two key effects. Firstly, it has dramatically increased the economy’s vulnerability to turbulence in international finance markets, adding pressure on the government to “get the signals right” in line with neoliberal dictates. Secondly, the ability of SA corporations to more freely move funds abroad had increased the country’s reliance on foreign investment (which also reinforces the perceived need to “send the right messages”).

 

On the one hand, the SA government has seemed alert to the possible vagaries of off-shore investment by South African firms. On the other hand, it has viewed off-shore investment in SADC countries as an integral factor in the economic revitalization of the region and SA itself. But it has failed to devise a coherent strategy to bring those firms’ decisions roughly in line with the development needs locally and elsewhere on the continent. A muddled approach has emerged.

 

The rhetoric of patriotism and loyalty is still applied to encourage firms to invest domestically, especially in productive enterprises. At the same time, exchange controls have been lifted, allowing companies to move offshore, and incentives put in place to encourage off-shore investment elsewhere in Africa. In part, this arose from the perceived need to create “space” in the economy for foreign investors, which found an economy dominated by major, local corporations with a penchant for mergers and acquisitions, leaving little space for large-scale foreign entrants. In theory, firms shifting abroad would sell of non-core operations in South Africa in order to raise investment capital, thereby offering purchase opportunities for foreign investors - and black economic empowerment consortia.

 

7.         Southern Africa’s trading patterns MOVE THIS

 

7.1       The economies of southern (and central Africa) continue to rely heavily on primary commodity exports to the industrialized world for foreign revenue. The share of commodity exports in the region’s export baskets ranges from about 50% (Mauritius, Tanzania and Swaziland) to Angola’s 90+%. In most cases, countries rely on only one or two main commodity exports. With the exceptions of SA, they are poorly diversified with little export production occurring in manufacturing sectors. Capital goods, most consumer products and foodstuffs are imported – much of it from or via South Africa. This is reflected in the fact that some 80% of SADC’s total trade occurs with non-SADC countries.

 

Only one country in the region - SA - has managed to benefit from this state of affairs. Its regional dominance in trade has reinforced the structural character of other regional economies and ensured the maintenance of historically created monopolies. At the same time, the SA economy has failed to shift away from its dependence on commodity exports or escape the ranks of semi-industrialized countries struggling to articulate themselves to the world economy on the basis of diversified export capacities.

 

7.2       The highly unequal character of trade relations within the SADC region is reflected in the consistently high trade surplus South African runs with other members. Indeed, SADC is SA’s largest market for non-primary commodity exports, with five countries in the region ranking among its top ten export markets.

 

7.3       A viable regional integration project clearly has to begin to alter the essentially neo-colonial insertion of the other SADC members into the world economy. This, however, cannot be achieved if SA’s patterns of trade in the region are unchanged - since these fortify their reliance on commodity exports and their inability to diversify their economies.

 

Such a shift would require concerted efforts at developing and augmenting South African countries’ capacities to beneficiate or add downstream value to those primary products which currently form the core of their economies. Building manufacturing capacities primarily for export is makes sense if such production builds on already existing economic “strengths”.

 

 

8.        A Summary of the State of Play

 

8.1        Viewed within the continental context, southern Africa holds considerable potential.  The region produces 81% of Africa’s GDP and 80% of Africa’s total exports, while it absorbs 81% of Africa’s imports. At the same time, almost half the region’s GDP and exports are generated by one country: SA. Moreover, deepening economic and social imbalances define de facto regionalization in southern Africa.

 

Except for SA, the region’s economies have not attained the semi-industrialized stage and are poorly diversified. All are heavily dependent on primary commodity exports to the industrialized world, although most have registered modest rises in exports of manufactures - most notably SA. On the import side, new technologies and capital goods are sourced from the US, Europe and Asia. Agricultural sectors either perform inconsistently (in SA and Zimbabwe’s cases) or are inadequately developed to service domestic fully, leading to a chronic reliance on food imports. A small degree of diversification has been occurring on the export side, although the contribution of beneficiated primary products and manufactures to export figures remains very small. The region’s links with the industrialized world are therefore essentially neo-colonial, a feature reflected in the fact that some 80% of SADC’s total trade occurs with non-SADC countries.

 

8.2       Low levels of domestic savings and, in SA’s case, a growing trend of off-shore investments by local firms has raised economies’ dependence on capital inflows. Along with rising levels of external debt, these linkages define southern Africa’s peripheral location in the world system. The dearth of domestic surplus capital has led to exaggerated efforts to attract foreign capital by proceeding with liberalizing and deregulatory measures in the economy.

 

8.3       All the countries in the region have introduced structural adjustment programmes. These restructurings are not uniform and have not proceeded at the same pace. Although adhered to unevenly, fiscal austerity has become the watch call and has led to cuts in social spending, attrition in the public service and large-scale privatization. Social deficits are rising as a result.

 

Privatization programmes (implemented most energetically in Zambia and Mozambique) have seen the ownership and control of former state enterprises (including core natural assets) transferred either partially or wholly to foreign-owned corporations, including SA-based firms. Yet, the region attracts small volumes of foreign investment, in keeping with sub-Saharan Africa’s declining share of global FDI and despite the widespread introduction of IMF-foisted structural adjustment programmes.

 

8.4      Hopes of a regional economic revival that can meet the burgeoning social needs depend to a large extent on SA’s role. SA’s dominance formatively shapes most of the other southern African economies. Its influence is expressed in the size of its economy (with a GDP three quarters bigger than that of the other SADC economies combined), the massive trade surplus it runs in the region and its comparatively developed infrastructure (especially transport, telecommunications, electricity and water supply) and in regional trade and investment patterns.

 

8.5       SA’s regional dominance in trade has reinforced the structural character of other regional economies and ensured the maintenance of historically created monopolies, as well as aided the development of comparatively sophisticated transport and communication infrastructures, and financial systems. At the same time, SA economy itself has failed to significantly revise its dependence on commodity exports or escape the ranks of semi-industrialized countries struggling to link themselves to the world economy on the basis of diversified and competitive export capacities. Southern Africa is also an important factor in SA’s economic fate. But its quest for a successful post-apartheid growth path seems likely to reinforce other SADC countries’ location in the world economy and undermine the revision of regional economic relations along more equitable lines.

 

8.6      There is a need for the SA government to establish a dis/incentive framework that could reconcile the investment ventures of SA firms with regional development priorities. Such a framework would seek to

Ä    Foster complementarities between countries on the basis of specialty niches that hinge on maximizing existing strengths (for instance, down-stream manufacturing projects that build on the prevalence of particular natural resources),

Ä    Favour labour-intensive productive enterprises,

Ä    Emphasize infrastructure developments that are linked both to the potential comparative strengths of a specific country and to regional needs.

 

 

9.        The Challenges

 

 

9.1       In summary, formidable challenges still separate southern Africa from a regional integration project that could improve the region’s currently marginal location in the world economy in ways that enable it to meet its social and developmental obligations.

 

Ä    Designing and implementing development strategies, both at the regional and national levels, and aligning economic strategies to them,

Ä    Establishing investment frameworks that promote the creation of “synergies and complementarities” across the region in terms of production and trade,

Ä    Boosting both the regional capacity to compete internationally and individual countries’ capacities to compete equitably within the region - by, for instance, identifying and fortifying countries’ comparative advantages, integrating transport, energy and communications infrastructures, by boosting education and training capacities,

Ä    Building and developing democratic institutions and practices throughout the societies of the region,

Ä    Ensuring that investment from or via SA fits with (or at least does not undermine) the development strategies adopted by other countries in the region,

Ä    Limiting the detrimental effects of countries’ regional and international trade links on the productive capacities of other countries in the region.

 

Many of these conditions are rhetorically endorsed by proponents of regional integration. What’s less evident, though, is an emphasis on the need for integration to occur within the framework of regional and national development strategies. The current tendency seems to work in the opposite direction: to adopt economic policies that conform to the dictates of global free market ideology and that effectively consign development priorities to the margins (at best as “spin-offs”  from economic growth).

 

9.2       This represents the first level of challenges that confront countries seeking to gain greater autonomy and leverage - via regional integration efforts - for pursuing more egalitarian development paths. They require, first and foremost, concerted political resistance, buttressed by technical measures.

 

On the trade front, for example, this means challenging and renegotiating the stipulated time frames for trade liberalization on the basis of an agenda that is geared at protecting existing industries (especially, labour-intensive ones) and at providing adequate incubation periods for emerging or planned industrial activities. Unfortunately, attempts by SA to advance a form of regionalization which could, in some respects, help reduce members’ vulnerable location in the world system are being greeted with impatience and suspicion. They are seen as time-consuming diversions that hinder weaker countries’ abilities to reap some benefits from their submission to the neoliberal order but allow SA consolidate and build on its inherited dominance.

 

9.3             The second challenge demands intellectual and practical engagement with the different conceptions of regional integration. Championed by the industrialized powers (and supported by parts of the developing world) is a form of regionalization that purports to reward deeper and more far-reaching liberalization with enhanced competitiveness in the world economy. In the currently dominant approach, free trade blocs are said to serve as “stepping stones” towards the consolidation of a single, uniformly structured and integrated world economy. There is little evidence for this. As argued earlier, this approach instead prolongs and exacerbates developing countries’ marginal status in the world economy, with further social and political consequences. However, we should appreciate the extent to which the dominant conception appeals to specific interest groups ( in business and the state) in the affected countries.

 

9.4       SA’s status in the region is often described as “hegemonic”. Literally, this is true, to the extent that the country economically dominates much of the region. But in the Gramscian sense of the word - that of winning the active consent of other forces - SA dominates, but neither controls nor enjoys hegemony in the region. This state of affairs affects the role of SADC in forging a regional integration project which prioritizes and reconciles the development needs of its member states.

 

9.5       In the business sector, unanimity does not exist either; industries threatened by trade liberalization are potentially more amenable to conceptions that entail challenging WTO strictures, while those that detect potential rewards in a liberalized setting tilt towards the model of unfettered free trade. More broadly in civil society the inclination tends to be towards conceptions that prioritize the country’s developmental needs.

 

9.6      Another challenge is to achieve sound governance and democratized political systems throughout the region. At a minimum, this entails the separation of powers, guaranteeing the rule of law, ensuring the accountability of the executive to the citizenry (via political decision making systems in which civil society organs can participate actively and decisively), and rebuilding state institutions that are accountable to elected bodies and that operate in a transparent manner.

 

9.7       The SA government is saddled with the opportunity and responsibility to itself try and align SA investments in the region at least to a provisional outline of such a framework. “The lesson of regional efforts elsewhere is that the leading country must take the initiative, even if at first that step heightens suspicion,” as a regional economist has pointed out.[32]  One instrument could be to add incentives for firms whose investments generate job opportunities and source goods and services from suppliers and contractors in the host country. Incentives and other measures aimed at encouraging SA investment in labour-intensive industries in neighbouring countries should occur also within another industrial policy framework - at the national level inside SA - that is geared at dramatically boosting that economy’s labour absorption rate.

 

[TEXT ENDS]

 



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[1] This is a highly abridged version of an older paper prepared for the Third World Forum (Dakar) and the Institute for Global Dialogue (Johannesburg). While events of the past few years have overtaken some of the detail in the text, the basic analysis remains pertinent. This version has been produced as one of the background papers circulated ahead of the October 2008 World Forum for Alternatives gathering in Caracas. I ask that its use be restricted to this gathering.

[2] This should not, as Amin warns, be confused with US “hegemony” - a concept that implies the consent and acquiescence of other major actors. This tends to be not the rule but the exception, typically a short-lived one. The general pattern, rather, tends to be ongoing contestation and, occasionally, conflict (1997:11).

[3] Elliott L. (1998). “Why the poor are picking up the tab”, Mail & Guardian (15 May), p 19, citing figures and estimates from the United Nations Development Programme.

[4] Worldwatch Institute, 1990, State of the World, p 148.

[5] Likewise, rare diseases like Grazer (known in Africa as Noma) which, until its recent re-appearance, had last been detected among in the Nazi death camps; see O’Kane M. (1998). “Debt: The plague that kills millions”, Mail & Guardian (15 May), p 18.

[6] Keet (1997:24)

[7] South Africa is a partial exception on some of these fronts, thanks largely to the social initiatives taken by the African National Congress government since 1994. Yet, income inequalities have continued to widen, while unemployment levels have increased.

[8] The reference is to the 1955 gathering of post-colonial leaders in this Indonesian city of that name, where the main elements of post-colonial developmentalism were established.

[9] Though seldom framed in such historical context, South Africa’s professed drive to build a “developmental state” harks back to the development models of that era.

[10] Important, too, were the roles of Japan and China. For a terse chronicle of the rise of the two generations of “Asian Tigers”, see Anderson, B. (1998). “From Miracle to Crash”, London Review of Books Vol 20 No 8 (16 April), London, pp 3-7.

[11] In this example, the adjustments that enable transnational production would include trade liberalization, the removal of financial controls, and deregulation of labour markets.

[12] See, for example, Robert Wade (1998) and Stiglitz (1998).

[13] Amin (1997) and Marais (1998).

[14] Amin in Marais (1998b:xi).

[15] Amin in Marais (1998:x-xi).

[16] This applies pointedly to South Africa, as well, where fully 43% of GDP was generated by TNCs in the late 1990s.

[17] As Keet (1997) argues; see especially pp. 7-26.

[18] Keet (1997:28).

[19] See Wade & Veneroso (1998), Ghosh (1997).

[20] African Development Bank, 1993, Economic Integration in Southern Africa (Vols 1-3), Abidjan, v, cited by Oden (1998:4).

[21] Nelson Mandela, quoted in Southscan, 29 March 1991.

[22] O'Meara, D., 1991, "Regional Economic Integration in Post-Apartheid South Africa - Dream or Reality" in A. van Nieuwkerk & G. van Staden (eds.), Southern Africa at the Crossroads, Institute of International Affairs, cited by Beaudet (1994:233).

[23] ICFTU/Organizacion Regional Interamericana de Trabajadores, 1991, Economic Integration, Development and Democracy: An International Conference, Costa Rica, cited by Davies (1992b:17).

[24] Davies et al (1993:19).

[25] As suggested by Davies (1992b:14-18).

[26] Davies (1992b:14-18).

[27] In this case, Thomas Scott’s formulation (1995:200).

[28] Scott, op. cit, p 201.

[29] See Marais, H., 1998 & 2001, SA: Limits to Change - The political-economy of transition, UCT Press and Zed Books, Cape Town and London.

[30] Neither are the empire-building ventures of so-called “black economic empowerment” consortia likely to alter this state of affairs: most are feeding at the trough of unbundling exercises undertaken by local corporations as part of their bids to raise capital for off-shore investments.

[31] Terreblanche S (2002). A History of inequality in South Africa. University of KwaZulu-Natal Press. Durban; Bond, P (2002). Unsustainable South Africa. University of Natal Press. Durban.

[32] “SA’s neighbours find liberation dividend has not materialized”, Business Day, 22 September 1997.

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