My eye on 2009, G20 height in London
By Hildebrand Shayo
In pursuance of current global economic crisis governments of the developed capitalist countries and the major international economic institutions, such as the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO), have been straining developing countries to desist from economic intervention and allow global markets to determine their national policies.
International trade is one main policy area in which this pressure for re-engineering economic recovery has been persistent. In my view, governments of the developed countries and the leading economic institutions, in the spirit of neoclassical trade theories, have been demanding African and other developing nations to open or open their domestic markets to the products of the former.
Since the 1980s, such demands have become institutionalized in the form of IMF/World Bank stabilisation and adjustment lending programs linked to trade liberalization policy conditionalities. Even the new and stylized demand for “good governance” or global governance being made of the less developed countries is now broadly interpreted as including market liberalization.
It is hypocritical on the part of the world’s economic powers to try to impose on the weak countries a free trade doctrine that they themselves cannot practice. Pre-meeting held yesterday between British Prime Minister Mr. Gordon Brown and Presidents of leading powers centred among other issues protectionism.
The fine predictions of the neoclassical comparative advantage and free trade theories have never been achieved in real life, because governments of nation-states have always had important internal economic and political reasons for not playing by the neoclassical assumptions.
Just as the British, on the way to establishing their industrial predominance in the nineteenth century, not only protected their own industries from foreign competition but also destroyed those of other countries, most of today’s advanced capitalist economies benefited from protectionist polices.
Even, as I write, I hope there will be serious trade battles brewing between the United States and its European, North American and other major trading partners, over issue of protectionism. France and Germany have shown their own way. What African countries position going to be is still unidentified! The above point underlines the difficulty, ineffectiveness and double standards of enforcing an ideal-typical global free trade system. Every nation-state has its own domestic economic and political priorities that will always weigh heavily in its public policy decisions.
Given the impossibility of achieving an ideal-typical global free trade order, it is an ultimate hypocrisy for the world’s economic powers to seek inject fiscal economic stimulus packages help their economies that in a way in my view will entail such an ideal system on the less developed economies, when they-the advanced countries-are not able to practice it among themselves.
Instead of pressuring these countries to adhere to such an unrealistic ideal-typical policy regime, through adjustment lending and other financial aid conditionalities, and bailout incentives to meet this global dispute, perhaps it would be better for all trade issues and problems to be negotiated with these countries, without the specter of financing conditionalities hanging over their heads.