By Thokozani Mazibuko
Globalization, according to the International Monetary Fund (IMF), is not a new phenomenon, it may be defined as the increasing interaction among, and integration of, the activities especially economic activities of human societies around the world.
On its official website, IMF says the definition contains both a description and a prescription and further refers to the expansion of international flows of trade, finance, and information into an integrated global market,
The prescription to the liberalization of national and global markets in the belief that free flows of trade, finance, and information will produce the best outcome for both economic growth and human welfare.
‘There are two reasons for the recent popularity of the concept of globalization. The first is the scale and speed with which it is occurring, and the way technology (especially in communications and transportation) is changing the world. Second.
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it is now widely accepted that globalization is not just the latest economic fad but that the international environment is changing in profound ways and that the world is indeed becoming a global village,” the IMF said in a statement.
Meanwhile, the organization further pointed out that it is how Africa decides to approach globalization which will determine its most urgent goals which would then accelerate economic growth and development and further eradicate poverty, which is not only widespread but deep and severe in some countries.
It is worth noting that at the beginning of the twenty-first century, poverty remains Africa’s most pressing problem, and economic growth is the solution to poverty reduction.
“Thus, Africa needs to achieve, as quickly as possible, growth that is both sustained and rapid,” IMF advised in its statement.
Moreover, the international organization says that the main questions Africa has to ask itself about globalization are as follows.
IMF says that, first, having escaped the worst effects of the Asian crisis, should it still pursue globalization? Can Africa continue to remain isolated as the winds of change sweep through the global economy? Second.
What are the advantages and disadvantages of integration into the global economy? How can the risks of globalization be minimized? What are the most important lessons Africa can learn from the crises and growth experiences of the Asian countries so that it can more successfully manage the unavoidable difficulties of globalization?
Third, to what extent is Africa already integrated into the global economy, judging from the various indicators at our disposal, and how can it improve its competitiveness in international trade?
Fourth, is globalization the panacea for all of Africa’s economic problems? Fifth, what policy measures must Africa put in place to derive maximum benefit from globalization?
Maximizing the benefits of globalization-IMF
It is important to stress four points.
IMF points out that globalization is not a panacea. It states that it will not solve all of Africa’s economic problems.
“Integration with the global economy is a necessary but not a sufficient condition for growth. Sustainable growth and poverty reduction depend on other factors as well, including macroeconomic stability, a high investment-to-GDP ratio, reliable accounting and legal systems, and responsible government institutions,” said the organization in the statement.
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Moreover, according to the IMF, empirical evidence shows that countries that have grown fast are those that have invested a large share of their gross domestic product and maintained macroeconomic stability.
“Africa must also anchor its growth prospects in the development of human capital, physical infrastructure, and strong institutions. It must foster the development of the private sector and the macroeconomic environment needed for the private sector to be viable.
Good governance that stresses accountability and transparency and the development of institutions the civil service, a sound banking system, and a trustworthy and independent judiciary—is also critical in this era of globalization,” reads the statement.
Further, the IMF states that it is unlikely that a liberal trading regime will, by itself, generate greater volumes of trade unless accompanied by high-quality economic growth Third, to benefit from the global economy,
Africa must make policy changes to become competitive and capable of venturing into new areas.
Fourthly, the IMF clarifies that given the differences in education, infrastructure development, and macroeconomic stability in individual African countries, the benefits of globalization are not likely to be the same for all.
“Africa can learn a lot from Asia’s development strategy. Asia benefited from its openness to the entire world and achieved enviably stable per capita income growth of 5 per cent and above, with few downturns, and a remarkable decrease in the incidence of poverty.
This progress was due to the importance the Asian countries attached to education and technology, an export-oriented strategy, a sound macroeconomic environment, and high saving and investment rates,” IMF advised.
