Notes on Proposed NCFCA Resolutions
Resolved: The United States Federal Government should substantially reform its policy toward one or more countries in the Economic Community of West African States (ECOWAS).
For the 2018-2019 school year, NCFCA proposes three resolutions, all interesting, and all will encourage students to research some history and economics of international trade, investment, plus institutions of international governance. Below are notes on U.S./West Africa policy, international terrorism policy, and European Union reform (with the excuse that I don’t have time for a short post).
Critics argue many U.S. trade, foreign aid, and anti-terrorism policies toward West Africa and the world are misguided, as are E.U. regulatory and monetary policies. Students investing time learning development economics will gain valuable insights to each of these topics.
Reducing trade, investment, and travel barriers with West Africa’s ECOWAS countries would would benefit people in both countries. Reducing U.S. foreign aid to West African countries and to the ECOWAS bureaucracy itself would likely benefit everyday people in these countries (as well as U.S. taxpayers, those aid levels don’t seem high). Plus, economic freedom reforms reduce corruption, tribal conflicts. and the allure of terrorist organizations.
The resolutions are connected in interesting ways and related to this year’s nationalism-globalism LD topic. After World War II most development economists advocated, and foreign aid supported state-owned enterprises (SOEs) and protectionist barriers to advance economic growth. But these policies politicized economies and increased corruption and fueled ethnic, religious, and tribal conflicts. Countries that reduced trade barriers and opened to foreign investment, especially Asia’s Four Tigers (Hong Kong, Taiwan, South Korea, and Singapore) advanced rapidly to developed economies. In the 1960s these countries had average incomes similar to India, Kenya, and Ghana, and were poorer than most Latin American countries….
The revolution in development economics shifted U.S. aid policies toward institutional reforms and reducing trade and investment barriers as well encouraged reductions in the size and scope of government in West African and other developing countries. But these policies were attacked as “the Washington Consensus” and to critics seemed too much like a return to colonial policies. (For more on this, see Did the Washington Consensus Fail? (CSIS, Peterson Institute, 2002) and A Political Economy Perspective on the Failure of the Washington Consensus (2008), quoting an Acemoğlu, Johnson, Robinson paper:
Institutional and policy reforms are promoted as a way to improve economic performance and growth in poor countries. Reforms that have received substantial attention over the past decade or so are often referred to as the “Washington consensus”. These include trade opening, financial liberalisation, judicial reform, privatisation, reduction of entry barriers, tax reform, removal of targeted industrial subsidies and central bank independence. Although there are sound economic theories suggesting why these reforms might be important in improving economic performance, the experience of many developing nations that have embraced these reforms over the last two decades shows that the gains anticipated by the proponents of reform have often not materialized.
Relevant to all three NCFCA resolutions is this ongoing debate over best practices in economic development: what are the proper roles of governments versus markets in the developing world, and how might or should the U.S. and E.U. support or promote those policies?
For example, European Union restrictions on trade with African countries to protect E.U. farmers and other special interests hurts enterprises and slows economic development, which critics say sends more impoverished and desperate young people to terrorist groups. Peruvian economist Hernando de Soto in The Capitalist Cure for Terrorism (Wall Street Journal, October 10, 2014):
The conventional wisdom [about dealing with Maoist terrorist in Peru] proved to be wrong, however. Reforms in Peru gave indigenous entrepreneurs and farmers control over their assets and a new, more accessible legal framework in which to run businesses, make contracts and borrow—spurring an unprecedented rise in living standards.
Between 1980 and 1993, Peru won the only victory against a terrorist movement since the fall of communism without the intervention of foreign troops or significant outside financial support for its military. Over the next two decades, Peru’s gross national product per capita grew twice as fast as the average in the rest of Latin America, with its middle class growing four times faster.
In Globalization for Everyone (Project, Syndicate, September 19, 2016) DeSoto writes:
Every aspect of globalization – free trade, free movement of capital, and international migration – is under attack. Leading the charge are antagonistic forces – from populist political parties to separatist groups to terrorist organizations – whose actions tend to focus more on what they oppose than on what they support.
In Russia and Asia, anti-Western groups are at the forefront of the campaign against globalization. In Europe, populist parties have tended to emphasize their aversion to European integration, with those on the right often also condemning immigration, while the left denounces rising economic inequality. In Latin America, the enemy
seems to be foreign interference of any kind. In Africa, tribal separatists oppose anyone standing in the way of independence. And in the Middle East, the Islamic State (ISIS) virulently rejects modernity – and targets societies that embrace it.
Hernando de Soto’s PBS documentary, The Power of the Poor streams free at FreetoChoose.tv here.
See also Good Governance and Human Rights Can Help Defeat Terrorism in Africa, (State Dept. blog, March 28, 2018)
Terrorism has claimed thousands of lives throughout Africa. The number of violent events linked to terrorist groups in Africa is estimated at more than 1,500 attacks each year in 2015, 2016, and 2017. Groups like Boko Haram, al-Shabaab, ISIS, and al-Qa’ida in the Islamic Maghreb (AQIM) continue to terrorize civilian populations, undermine effective governance, and threaten American interests.
The rise of terrorism in Africa’s Sahel has had significant negative consequences for civilian populations there, as it has in other parts of the continent. This semi-arid scrub land south of the Sahara Desert is home to foreign terrorist organizations that exploit community marginalization, lack of government presence, and lack of accountability for security force human rights violations and abuses to recruit vulnerable followers.
NAFTA, the E.U., and the Commanding Heights
When World War II ended, nationalism and socialism as well as communism, were still popular around much of the world. The first episode of the PBS documentary The Commanding Heights, The Battle of ideas looks at the enthusiasm for national economic planning in USSR and across Europe and the developing world. Lenin’s New Economic Policy (NEP) called for market reforms for shopkeepers and farmers, but for the state to maintain control of the Commanding Heights of the industrial economy: steel, railroads, energy.
These ideas spread to Europe, the U.S. and later the developing world. In England the government nationalized railroads (British Rail), airlines (British Airways), telecommunications (British Telecom), along with other sectors. The New Deal in the U.S. turned much of U.S. industry into federally managed cartels.
As African countries gained independence from colonial powers in the 1950s, 60s, and 70s, national economic planning was a politically-popular response to decades or centuries of foreign political and economic control. Unfortunately the economic theories popular after World War II caused economic stagnation and decline in newly independent countries in Africa as well as in India, Indonesia, and South America. Economic conditions were worse in the USSR, Eastern Europe, China, and other communist countries due to more pervasive central economic planning.
Again, The Commanding Heights episodes look at the popularity and consequences of planning and regulations up to the 1990s, especially the Keynes vs. Hayek debate (F. A. Hayek advocated markets while Keynes advocated a larger role for government policies and economists managing the “animal spirits” of markets). Expanding government’s role in managing economies soon led to larger governments, politically-directed economies, and slower economic development.
With this as background, students can better see difficulties in West African economies, the European Union, and even countries where international terrorism exists, in large part due to deeply damaged institutions keeping poor people from sharing in the global economy.
The good news is that their has been much progress in China and India over the last couple decades, and across West Africa in the last decade especially. It’s not clear though whether the Economic Community of West African States (ECOWAS) played a positive role in economic development.
ECOWAS seems as much a creature of the foreign aid establishment as a regional trade agreement like NAFTA or the E.U. Consider this from the USAID press release U.S. GOVERNMENT AND ECOWAS RENEW PARTNERSHIP (November 16, 2017):
[The U.S. and ECOWAS] reaffirmed their commitment and collaboration to strengthen harmonization and delivery of development programs that aid millions of people throughout West Africa [and] recognized the multi-year Development Agreement between the two institutions.
Under this [2015] Development Agreement…the U.S. Government will provide up to $298 million over the five year-period of 2015 to 2020 in support of ECOWAS priorities, including:
• Strengthening Democratic Institutions;
• Enhancing Economic Growth, Trade and Investment;
• Advancing Peace and Security; and
• Increasing Opportunity and Development in Sub-SaharanAfrica.Friday’s signing ceremony , held at the ECOWAS Commission headquarters, also obligated an additional $31.6 million, bringing the total funds obligated to date to $143.3 million. Notably, of the obligated amount, $25.5 million will support Countering Violent Extremism activities in the region.
So is ECOWAS a regional trade and governance agreement among west African countries, or a regional network of foreign aid program funded by the U.S. and E.U.? Here is page with short video on E.U. funding of various program objectives in ECOWAS:
Recommended for a critical look at the foreign aid industry and U.S. policies toward Africa and other developing country is the documentary Poverty, Inc. Here is trailer for documentary:
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More thoughts on European Union and terrorism resolutions in upcoming post. — Greg Rehmke
Resolved: The United States Federal Government should substantially reform its foreign policy regarding international terrorism
Resolved: The European Union should be substantially reformed or abolished.