The signing of the Côte d’Ivoire-European Union Economic Partnership Agreement

The drivers of the economic growth of ECOWAS area are, among others, employment and investment. The potential is there with a market of 300 million people, vast natural riches and considerable geostrategic importance. For now and after some markedly turbulent years with political conflict around the whole region, ECOWAS now seeks above all stability. A stability that is a pre-condition to any attempt at integration. 2009 will be a landmark year for the economic history of the region as free circulation of its citizens is expected to come into place.

It was the final objective of the EU and Cote d’Ivoire officials have worked in the terms of the Economic Partnership Agreement (EPA) with the whole region, such was not possible. Catherine Ashton, European Trade Commissioner was not at the signing of the EPA and it was in fact the French ambassador in Cote d´Ivoire, M. André Janier, signing on behalf of the EU and Mr. Koné Amadou, Minister of Integration and a key player in the success of the negotiation. It remains unclear if the absence of Catherine Ashton was a sign of a certain lack of appreciation by the EU Commission of the significance of the agreement. Messieur André Janier brought attention to three particular points: first that the EU remains, by far, the first commercial partner of the Cote d’Ivoire; secondly, that the deal represented a win-win situation for the two trade partners; thirdly, that all the key forces of the Cote d’Ivoire had participated in the negotiation process, including representatives from Civil Society.

The deal itself will allow Cote d’Ivoire, one of three non-LDC countries in West Africa (Ghana, Cote d’Ivoire and Nigeria), to keep exporting to the EU at zero-tariff. In return the Cote d’Ivoire will be progressively opening its markets over the next 15 years to European products, progressively complying to the guidelines of the World Trade Organization. The deal has been divisive of African political opinion with some considerable voices, such as Cameroon, condemning the deal as being European-dominated. The group of Least Developed Countries however have less to worry about than non-LDC countries since they benefit from the “everything but arms deal”, an accord that circumvents the zero-tariff inclining tendencies promoted by the WTO and gives the opportunity for this group of countries to keep exporting at zero-tariff to the EU market. Koné Amadou, Cote d’Ivoire’s minister of Integration expects the deal to accelerate the sub-regional and regional integration of West Africa but also recognizes that there have been difficulties regarding the implementation of the free circulation of people and products.

Chapter 4 - China’s Trade and investment with Mozambique

4.1. Introduction

This chapter will be looking at the broad dimension of China’s general trade and investment with Mozambique. According to Kaplinsky et al. (2006:23) Chinese activities on the continent have three primary channels: trade, aid and FDI. These three are all interrelated. Trade is closely linked to the integration of African and Chinese investments into global value chains, and often Chinese aid offers are underpinned by extraction and market-seeking purposes. This chapter will provide a basis of the trade and FDI channels, laying ground for the cases that will be analysed in the following chapters. It will first scan the general figures and numbers of China’s FDI in Africa as a whole, to then look at different suggestions and calculations of China’s overall trade with the continent. Then, after analysing what general lessons these leave for Mozambique, this chapter will look at the particular figures of China’s trade and FDI in Mozambique, finalising with an analysis of the different paths and challenges that China’s FDI and trade might have in stall for the country. As mentioned, before moving into the specific figures for Mozambique-China trade and investment, this section will first take a look at the more general statistics of China-Africa so that a more contextualized analysis can be achieved.
4.2. General China-Africa FDI

It is the striking case in the beginning of the 21st century that:
“‘South-South’ FDI – investment from one developing nation into another–is growing at a rate five times faster than that of traditional North-South investments from industrialized to developing countries. Today, ‘South-South’ flows represent almost a third of all foreign direct investment” (Pamlin & Baijin 2007: 27)

It appears that a partial exit of TNCs of the “North” from the riskier investment areas of Africa opened up a window of opportunity “for smaller, more nimble investors able to serve local markets from a lower cost base” (Henley et al 2008:1). Looking at FDI is important because, while official economic exchange and assistance remains the order of the day, in the last few years, China’s relationship has tended to assume a more commercial, private sector-led nature. It is therefore through private vehicles and enterprises that much of that engagement has been occurring after 2001, with FDI being a privileged “vehicle for carrying tacit knowledge as well as assisting enterprises at the frontiers of world technological learning” (Liu & Wang, 2003: 945).
Before the first estimates are advanced, some notes regarding the figures are worth mentioning. For instance, because China’s private enterprises tend to rely on “retained earnings and informal arrangements rather than capital markets and bank borrowing for their investments” (Wang, 2007:11), FDI numbers have tended to go somewhat under recorded.
According to a United Nations study (UNCTAD, 2007) total FDI holdings in Africa in 2005 were worth US$96 billion. Of this, European firms accounted for 61 percent, US firms 20 percent, Asian firms eight percent and South African firms two percent.
Of the $29 billion of FDI that went into Africa in 2005, the UN put Chinese investment in Africa at about $1.6 billion in 2005, around 5,5% of total FDI to Africa. This is a figure close to Broadman’s estimate of US$1.3 billion by 2005 (Broadman 2008). Kaplinsky and Morris draw on data that suggests FDI in Sub-Saharan Africa reached a total of US$1billion by mid-2005, up by US $125 million in the first six months of 2005 alone (Kaplinsky, McCormick, & Morris, 2006:15). In June 2006, Xinhua stated that direct investment into Africa has grown to US$1.18 billion and there were almost 700 Chinese companies on the continent (Xinhua, 2006). Harry Broadman refers to this figure in his seminal work “Africa’s Silk Road” (Broadman, 2006:11). Another report from Xinhua-China Daily announced that by the end of 2006, China had invested more than $6.6 billion in Africa (Xinhua; China-Daily, 2007). These values remain however, as noted, still negligible when compared to FDI flows from the industrialised economies of the North which still account for a greater share (Guerrero & Manji, 2008:2). Africa, in turn, only accounts for about 3 percent of China’s global outward FDI flows; these are calculated with 2004 figures (UNCTAD 2007). The report further estimated that between 1979 and 2000 93 percent of Chinese FDI in Africa was in manufacturing (UNCTAD, 2007:51-56). Although no definite sum can be concluded, China’s total, non realized, estimated investment in Africa must now be well above the US$5 billion after the Standard Bank and Congo multi-year deals which are worth US$5.6 billion and US$8.5 billion respectively (africanpress, 2008) and were agreed upon in 2007. It is perhaps appropriate to finish this section by looking at an excerpt from Barry Sautman (2006:8-9) already capturing these tendencies back in 2006:
There were 750 Chinese enterprises in Africa in 2005. While a growing presence, they account for a tiny part of foreign direct investment (FDI). In 2004, PRC entities invested $135m in Africa and in the first ten months of 2005, $175m (of China’s $3.6b and $6.9b in outward investment). Africa’s average annual FDI intake in 2001-2004 was $15-18b, despite Africa providing the world’s highest returns on FDI, averaging 29 percent in the 1990s and 40 percent in 2005. FDI in Africa jumped in 2005 to $29b (of $897b in global FDI), but China’s realized FDI in Africa stood at only $1b of Africa’s $96b, two-thirds of which is European (half British or French) and one-fifth North American. PRC Africa investment is also concentrated; in 2005, $316m was in Zambia and $230m in S. Africa. Based on planned investments, however, China may become one of Africa’s top three FDI providers in five years.
4.3. General China-Africa Trade

When it comes to trade between China and Africa, the figures have increased by an average of 24 percent between 1995 and 2007 with total trade now standing at approximately US$74 billion in 2007 (TRALAC 2008). Mofcom confirms these figures, observing in November 2007 that trade between the two has just hit the US$70 billion mark and is set to hit US$100 billion soon (Mofcom 2007b). Before running the risk of overplaying its significance, it should be noted that part of the explanation as to why the numbers illustrating the growth of China’s trade with Africa are so dramatic is because the development started from a low base. Nevertheless, looking at the historical records of the actors, the volume and pace are unquestionably unprecedented. For this purpose it is helpful to refer to visual aides and graphs as in the figures below.
Having recognized the volume and pace of trade growth it is still noteworthy that investments by entrepreneurial family or kinship based companies such as small Chinese firms are rarely recorded as FDI. The reason for this is that most of the time these will not be registered as subsidiaries of companies in their home countries. Hence, their activities do not form part of the trade balance so often argued to be to Africa’s disadvantage because of exports of non-processed goods and import of manufactured goods. They do however constitute a significant component of the trade relationship because of the impacts that they have on the micro economy of most African countries whether in displacing local producers, causing disruptions to supply value chains or providing African consumers with goods at cheaper prices. In fact, Mozambique consumers have already acquainted themselves with Chinese products, said by some to be “invading” the local market (Afrodad, 2007:17) but bringing, at the same time, cheaper and more accessible consumer goods. It is however important to note that FDI does not always directly affect the trade balance, one can invest and then explore the international market with no or little effect on the trade balance. But, of course, if small businesses settling in Africa import products from China it will have an effect on the trade balance. At the same time, some of them will probably also act as platforms for exporting Mozambique’s products to China and also have an effect on the trade balance.






Figure 3 - China Imports from Africa 2007

Source (World Trade Atlas)
Figure 4 - China Exports to Africa 2007

Source (World Trade Atlas)

Figure 5 - China trade with Africa

Source (World Trade Atlas)
While the boom in trade between China in Africa started in around 2001, the terms of trade have, since then, been improving in favour of the African side, much thanks to the rise in international fuel prices (Wang, 2007). From Figure 4 however it is also noteworthy how PRC’s exports to Africa have actually been gaining pace since 2006. The share of trade between the two blocs compared to that of China and Africa with other parts of the world is still relatively small but the tendency is for this share to quickly rise not just in absolute terms but in relative terms as well.
From 1999 to 2004, Africa's terms of trade rose by approximately 30 percent, an increase far greater than for any other developing region in the world (Biswas, 2007). Kaplinsky et al (2006) discuss how China’s trade can affect Africa. It can either be complementary or competitive. It is competitive in cases where African products compete with the export products of China, a situation which often affects African export oriented industries. It is complementary when Africa’s exports fit China’s profile of import demand, or the Chinese goods function as part of a global value chain as intermediary goods needed in African manufacture.
Both complementary and competitive trade patterns can have either direct or indirect consequences. Direct consequences such as trade volumes and immediate job losses are easily quantified. Indirect effects are more difficult to measure, but have nonetheless important implications. Kaplinsky et. al. note that “there is a great danger of focusing on the present, the known and the measurable impacts” (2006:23), while the unknown remains more potent and can have much more embedded consequences. The authors have tended to have somewhat of a one-sided approach looking at the most negative impacts of China’s trade. Their analysis focuses on the cases in which exports from China crowd out similar African products in third markets such as in Europe and the US while their dominance in regional markets of Asia would pose challenges for African supplies to penetrate. A complementary indirect effect on the condition for African trade might be for example when global prices for commodities rise as a result of increased Chinese demand. This demand in turn generates greater revenues for resource rich African countries, but again this is short-term and based on a highly volatile international commodities market as African countries experienced in the 1970s on the back of the oil shocks. Not only can industries in Africa be affected directly by the import of cheap consumer goods from China. Another indirect effect is on potential industries where competition against the establishment might have serious implications for African development. However, it must be remembered that direct effects such as job losses due to competition from cheap Chinese consumer goods can also come as a result of other intervening factors, such as for South Africa in 2005 when AGOA quotas were removed (Kaplinsky et al 2006:19).
In macro-economic terms, Africa has thus benefited from China’s rising demand of exports. However, we know that revenues from extractive industries do not always translate into development for the broad masses. Kaplinsky et al note that “the benefits of this resource boom will not follow automatically – they need effective management” (2006:28). Riches in natural resources might otherwise strengthen authoritarian tendencies and lead to instability or even civil war – the already mentioned ‘resource curse’ (Beri 2005:373). Solutions to the potential problems related to trade can be interpreted from various points of view. For instance, China can be encouraged to take responsibility for the impact that their exports might have for Africa and African countries can promote and formulate policies promoting a higher positioning of their economies in the value chain. Such can be done through the encouragement of joint-ventures, promotion of technology transfer as well as legislation and other incentives.
4.4. Mozambique General FDI

Between 2000 and 2007 foreign investments really picked up in Mozambique, although from a very low basis. Investments went from US$20 million in 1990 to US$550 million in 2007. In 2005, the tourism sector was the biggest recipient of such investments, followed suit by agriculture and agro-industry (US$168 million), industry (US$49.4 million), transport and communications (US$32 million), other (US$30.6 million), mineral resources (US$15.7 million), construction and public works (US$5.4 million), banking and insurance (US$1.9 million) and aquaculture and fisheries (US$900000) (Games 2007:11). These figures almost quadrupled by 2007. They saw FDI targeting industry mounting up to US$19 million of the investment and for mining and energy to around US$502 million, more than 91 percent of total investments for 2007.

Table 2 – Evolution of total FDI to Mozambique
Year No. Projects FDI
in US$ million
1990 31 20
1991 25 21
1992 27 77
1993 29 46
1994 123 136
1995 166 60
1996 270 97
1997 184 558
1998 209 207
1999 235 101
2000 179 230
2001 129 528
2002 128 559
2003 112 122
2004 105 122
2005 139 165
2006 157 162
2007 186 550

(Source - US Department of State 2007)
4.5. China-Mozambique FDI figures

It is first worth noting how, for the purpose of the provision of FDI, the Investment Promotion Centre of Mozambique has put out a requirement of a minimum US$50 000 of initial capital investment. This has meant that a significant number of small Chinese businesses, many of them in trade (Afrodad, 2007:15) go unrecorded in the process of data registration and consequently, stay out of official statistics. Even if that is the case, when it comes to FDI figures for the period between 1990 and 2007, these show that US$32 million in Chinese direct investment has already been realized out of a planned US$108 million. From these, the most salient sectors are industry and manufacturing valued at around US$15 million, followed by US$8 million invested in agriculture, mostly in the wood industry in the north (Mofcom 2007; Market Access Map 2008).
The specific features of FDI from emerging markets, such as China are expected to reflect the social, political and economic history of the country of origin (Filatotchev et al. 2007), and for the case of China’s investment in Mozambique this is no different. Until 2007, the figures FDI for Mozambique revealed a total of US$108 000 invested by private Chinese companies, creating around 6500 jobs. The company employing singlehandedly the most employees was Formosa Textile in Maputo, with a workforce of 2,970. The largest single investment has been from a company in the forestry sector belonging to Liu Chaoying Jian, a project of US$ 64,000 that comprises logging, exploration, transformation and commerce of wood. Comparing between investments in agriculture, services and industry, agriculture takes up the bulk of the investment with US$85,000. Otherwise there seems to be a tendency for the industry sector to be the preferred destination of investments with the largest number of different investments, 17 in total (Mozambique Investment Agency, 2007). This previous estimate is larger than that of US$48 million in Mozambique also for the year of 2007 advanced by Noticias newspaper (Manchiça, 2008).
Another important source of China’s investment in Mozambique is that of state sponsored investment in the infrastructure sector. Such investments are, as previously discussed, the fruit of China’s recent tendency to offer “infrastructure packages” in order to charm African governments economically and diplomatically. Another example is the Incomati river bridge, 60 kilometres north-west of Maputo, which was delivered in 2008, one month before the initial date set out for the completion of the project. The bridge, valued at US$8 million, and its construction was carried out by China Henan International Cooperation Group (CHICO) and verification was the responsibility of Ninhan Shand (Jornal Notícias Moçambique, 2007 A). Many of these projects make use of preferential loans from China, some of which are on display below in Table 3.

Table 3 - Chinese loans to Mozambique by project
Year Funding Agreement Description Amount Repayment period/ conditions

2001 Any projects to be submitted and approved by the Government of China. US$3.9 million (loan) 2011 - 2021
2002 Funds utilized in building the Joaquim Chissano Conference Centre and the new Building of the Ministry of Foreign Affairs. USD$3.9 million (loan) 2013 - 2022
2003 Funds utilised in purchasing Police equipment. US$3.9 million (loan) 2013 - 2022
2004 Funds for building 150 houses for low income people in Zimpeto, Surroundings of Maputo. US$3.9 million (loan) 2015 - 2025
2007 Preferential credit protocol for renewal of Public Ministry Building and houses for its magistrates US$40 million (loan) 20 years of maturity plus 5 free years. Interest rate: 2%; Immobilization rate: 0.75%; Managerial rate: 1%.
Total: 3,75%
Technical cooperation protocol with the Ministry of Youth and Sports US$15 million (loan) To be determined

Source – (Afrodad, 2007)

That being said, a large part of China’s economic involvement in Mozambique is manifestly private in nature, encompassing a wide range of business endeavours across a wide range of sectors. By 2008, China’s Projects and investments in Mozambique were estimated to comprising of the following, as exhibited in Table 4.



Table 4 - Estimated Chinese Projects and Investments in Mozambique by 2008


Roads More than 500 km nationwide, mainly along the road Number 1 that links the country from south through the north passing across more than six provinces. Over 1/3rd of Mozambique’s current road construction programme, amounting to 600km roads, is carried out by Chinese road contractors.

Bridges Over Rovuma River, in Cabo Delgado province, linking Mozambique to Tanzania - Cabo Delgado province.

China Henan International Cooperation Group (CHICO) is to construct the Moamba Bridge over the Incomáti River in Maputo province, Mozambique - estimated at US$8 million

Energy and Water supply

Under Negotiation Maputo City (Maputo Province), Beira City (Sofala Province) and Quelimane City (Zambézia Province) total - US$45 million (rehabilitation of the urban water supply systems of the main provincial capitals, namely Maputo - US$30 million and Beira and Quelimane – US$15 million)

Mphanda Nkuwa Dam - to be built 60 km downstream from the existing dam at Cahora Bassa. The public-private consortium that will build and operate the dam includes Mozambique’s government-owned electricity company, EDM, Brazilian engineering company Camargo Correa and Energia Capital, part of the Mozambican Insitec group. The Export-Import Bank of China (China Exim Bank) is set to finance the US$ 2.3 billion dollar investment.

Buildings Preferential credit protocol for renewal of Public Ministry Building and houses for its magistrates – US$40 million
20 years of maturity plus 5 free years. Interest rate: 2%; Immobilization rate: 0.75%; Managerial rate: 1%. Total: 3.75%.

(small parts are sometimes concessional loans)
1999 Mozambique parliament buildings – US$5 million
2003 Chissano Conference Centre
2004 Ministry of Foreign Affairs – US$12 million
Under negotiation Rehabilitation of Maputo International Airport – US$50 million
Under negotiation Renewal of Public Buildings – US$200 million
Under negotiation Building of a National Stadium – US$100 million

Industry and Commerce Soja processing plant:
Owned by China Grains & Oils Group – CGOG - in Beira by Sojecoa - US$10 million

Prawns production plant :
In the Centre of the country, for which the infrastructure was also built by Chinese contractors - US$12 million

Industrial warehouses and a large shopping centre in Maputo
1996 Agroalfa - investor: Tianjin Machinery, US$1.7 Million
1999 Mozambique TV/VCD, investor: China L. Tian He F. Chemical Co, US$3 Million
2000 Iron & Steel Factory, investor: Li Huamin, US$800 Thousand
Fábrica de Motorizadas e Bicicletas da Beira (Beira Motorcycles and Bike Factory), investor: He Jianping, US$ 826 Thousand
Mozambique L&H Wood Co, investor: Li Xiangdong E Yao Huis, US$550 Thousand
2001 Honda Shoe Factory, investor: Hao Jingue; Hao Jinglan; Xu Dongshan; Han Baoxing, US$50 Thousand
2002 Chinelos De Moçambique, investor: Shou-Ta Huang, US$ 55 Thousand
2003 Khangelo Confections, investor: Xinle Cheng Garment, US$824 Thousand

2004 Pharco-Moçambique, investor: Shanghai Desano Chemical Pharmaceutical, US$1.5 Million
2005 Chen Chen Fundição, investor: Shengli Chen, Changli Chen, US$50 Thousand
2006 Yuan Feng Investments, investor: Wang Yuan Dong, Huang Lin Feng, US$ 510 Thousand
2007 Fundição de ferro e aço, Lu Xuhong, Tang Zhi US$2 Million
Fabrica de sapatos Hua Feng,(shoe factory) investor: Jiang Wang, Jing Li, Xugang Huang, Weiqing Lin, US$100 Thousand
Jiangsu Metals, investor: Ming Ho Lam, Chan Sze Him ERIC, US$ 300 Thousand
TYT, US$500 Thousand

Under negotiation Special Economic Zones: A study was done for a Free Trade Zone in the surroundings of Nacala in the North of Mozambique by TEDA (Thengui Economic Development Agency) and another potential project was identified in Catembe, the outskirts of the capital Maputo – US$200 million
At the moment the investment costs are too high to qualify for donations for these areas which can potentially become Special Economic Zones, but in the near future direct FDI might become a realistic option, possibly jointly with a donated portion.

Services
2004 Hua Long, Chinese Clinic, investor: Zhongxian Yao, Cha, US$52 Thousand
2007 Estudios Dragão, investor: Bo Zhang, Changhua Shan, Haiting Hao, Fengshan Li, US$100 Thousand

Agriculture
and Fishing
1999 Zhong Na Mozambique, investor: Grain & Oil L., Animal Products Of A. M. Imp.Exp, US$500 Thousand
Hubei Liafeng Mozambique, investor: Hubei Province Liafeng Overseas Agriculture Development, US$1.2 Million
Prawn-Culture and fishing in Mozambique, investor: Weihai International E.& T. Co-operative, US$12 Million
2003 Uta - União dos trabalhadores de África, investor: Tang Yu; Shen Tonghai, US$1 Million
2005 Ccog Africa, investor: China Grains & Oils Group Corporation, US$6 Million
2006 Xin Jian Companhia, investor: Xin Jian Zhang, Jing Xue Zhang, US$200 Thousand
Moz-Tai Aquaculture, investor: Su Hua Lu, US$220 Thousand

Source (Mozambique Investment Agency, 2008; Noticias de Moçambique; Afrodad, 2007)

4.6. China-Mozambique FDI Analysis

Evolution towards greater economic development will, to a great extent, depend on the nature and future vitality of Mozambique’s private sector. Generally speaking, when it comes to attracting FDI, Mozambique is able to combine low-cost electricity, with a good supply of raw materials, sea accessibility and competitive low wages. This gives for a group of factors that can potentially “act as a major catalyst for industrialization and export-oriented business” (Afrodad, 2007:11). At the same time, China and its investors must also contend with an investment environment which is high risk. In effect, particularly when it comes to sectors or industries that have only been very recently privatized there still exists a considerable number of investment “traps”. An example has been the case of the Malaysian purchase of Mozambique’s ‘Banco Popular para o Desenvolvimento’, which ended as a fiasco for the investors when government prevented them from getting the capital some government-linked individuals owed them. Chris Alden uses this example to show how most of the African countries in which the Chinese are investing still remain “locked into arrangements with local government elites that inhibit profit-making” (Alden 2005:144). China is observably subject to the same risks as other investors.
From the data above it seems that the bulk of investments are clearly concentrated in the manufacturing sector. Data above also suggest that the flowing Chinese investment is mainly small scale, seen from the angle of volume of capital. It is also important to note that, seeing that the dominant part of this Chinese investment is in the manufacturing industry, currently the competition with domestic investment is not so high, as domestic investment is mainly on agriculture and services. The one Mozambique economic cluster that has been affected and shaken by China has been the construction sector which has now been dominated by foreign companies including those from China.
Concerning the employment of local labour, figures show that, contrary to much popular belief, local workers are to a great extent being employed in Chinese-sponsored manufactures and other investments. Similar FDI data from Kenya and Ethiopia investment agencies show that more than 90 percent of the workforce employed in China’s investment is local in nature (Kenya Investment Agency, 2007); (Ethiopia Investment Agency, 2007). There is no evidence to suggest that the situation is any different for the case of Mozambique, both given the similarity in the activities of the companies that are operating in the three countries and the general tendency and business-sense of Chinese companies that are keen to utilise, whenever possible, cheaper local labour.
Some arguments now emerge predicting a shift in the medium-term towards a higher share of value-added products on exports from Africa. A growing set of evidence has meant that such claims are now more than mere speculation and constitute an analysis backed up by important evidence and signs. With Africa’s current population reaching around 900,000 million, the continent represents an important market (Mahajan, 2008). Although expendable income remains minimal this is a very similar situation to the domestic markets in which the majority of Chinese companies initially developed. As Ming Zeng and Peter Williamson have shown, such economies are an important intermediary as Chinese companies expand beyond China and prepare to enter European and North American markets (Zeng & Williamson, 2007).
For now, labour intensive manufacturing firms based in Mozambique have struggled to compete internationally. Particularly when compared to regional competitors, local firms have insufficient skills, manufacturing techniques and overall productivity to be truly competitive. Manufacturing firms face high operational and transaction costs, mainly due to lack of infrastructure, labor market rigidity and bureaucracy. However this situation is not irreversible. Meyer and Estrin (2004) go back to basic economics to remember how “market-seeking FDI seeks large populations with rising incomes”. As such, many African countries now fit this bill, even if there are still conditions in the local economies which do not offer the most inviting absorptive and institutional contexts. In similar lines, Geda (2008:13) notes that:
the long-term might hold a very different picture: the pace at which the drivers are changing the technological structure of their production and exports, rising costs of locating export oriented production in China, Africa’s proximity to European and Middle Eastern consumer markets and a host of other factors might help Africa to become the next ‘goose’ in the long run. There are signs that such combination of factors have already began to appear
Although potential returns through investment in Africa also carry with them considerable risks, Chinese investors are willing to underwrite such risks since their presence in Africa’s manufacturing sector is notable (Henley et al. 2008:5). Hence, in the near future we will plausibly see more economic integration arriving through localized hubs such as the Copper Belt in Zambia, southern DRC, Ethiopia and Nigeria’s Niger delta as these are able to connect to the international value chain (Broadman 2008). Already the Special Economic Zones identified by the Chinese in Zambia (metals hub), Tanzania (shipping hub), and Mauritius (trading hub) are going to facilitate this process. In this note, Kaplinsky et al note that “there is scope for improving the productivity of existing industries, often by working with value chains (…) rather that individual firms or subsectors”, actually suggesting that competitiveness could be improved via industrial policies (2006: 26, 27). China’s long-term engagement with Mozambique will also depend on the success of the wider strategic move of China towards setting up such SEZs and to what extent they have the opportunity to flourish together with a new and vibrant private sector in Mozambique. It also might help that China is interested to test its new technologies in Africa (Afrodad, 2007:17). Michel and Beuret (2008:44) add to such opportunities when observing for the case of Morocco that “producing in Morocco, even if you are Chinese, gives you the possibility of selling your goods without any trade barriers to Europe, across the Atlantic and to other regions”. All thanks to free trade and low trade barriers previously negotiated by Morocco with the West. Similar opportunities also apply to Mozambique’s international trade deals. This shows evidence of China not only making the most of international supply chains that run through Africa but also of China and its companies trying to make the most out of the discriminatory opportunities crafted in the rules of international trade. The practice of making the most out of international value-chains and different sets of discriminatory international trade and economic legislation is one of the ways in which China advances its relative gains vis-à-vis other major international powers. A realist perspective can read this competition of Chinese companies, entering Western markets through Africa, as a form of circumventing the trade and economic constrains put in place by state actors also directly competing with China for relative power. The long-term presence of such strategies also serves to discredit views which would see China as a simple economic competitor of Mozambique in a short-term “resource-grab” spree. Africa and Mozambique are in fact part of a broader and wider longer-term strategy by China which does not discard economic partners with ease but in fact entangles them into a complex web of economic interdependence.
4.7. China-Mozambique Trade

Afrodad (Afrodad, 2007:7) refers back to official records by the Embassy of China in Mozambique showing that, by 2004, China-Mozambique trade flows had reached US$ 120 million, already a 66.9 percent increase from 2003. By 2008, China’s top import from Mozambique was wood in its various forms and types with a volume of around US$50 million followed suit by iron and cotton at US$12 and US$10 million respectively. Imports to Mozambique from China are instead clearly topped by cells and batteries which amount to US$15million (Mofcom 2007; Market Access Map 2008). During the first semester of 2005 recorded trade flows were of about US$110 million, showing sound increase. The upward trend in the China-Mozambique trade volume is evident from Figure 6 below. While the figures rise China has consistently retained the trade balance in its favour albeit not by a huge margin, currently having a surplus of exports over imports to Mozambique of around US$40 million.

Figure 6 - Evolution of China-Mozambique Imports and Exports

Source (adapted from Mofcom, 2008)

Going back to Kaplinsky’s (2006) framework for distinguishing between complementary and competitive trade, it appears that trade between the two countries seems to be complementary for the time being with China still having the better off with products of greater value-added being exported to Mozambique, reflected in the trade surplus it holds. China is sourcing from Mozambique resources it does not hold at home or, in the case of resources it does hold at home, such as the case of wood or prawns, China’s tendency to sourcing them from Mozambique remains high due to attractive and rising levels of international and national demand. Meanwhile, Mozambique tends to import manufactured goods such as machinery and refrigerators as well as cheap goods such as footwear and textiles. These manufacturing products do not pertain to a situation which affects Mozambique’s export-oriented industries. It is in fact complementary as Mozambique’s exports fit China’s profile of import demand. As for the potential development of Mozambique’s manufacturing sector, also spurred by Chinese investment in the sector, the simultaneous arrival of Chinese manufacturing products to Mozambique must be understood within the mode in which Chinese goods function as part of a global value chain as intermediary goods needed in African manufacture, as previously discussed in the section regarding the potential of the new SEZs set up in Africa by China, as illustrated in Tables 5 and 6.

Table 5 - China Imports from Mozambique
China Imports from Mozambique (in Millions of US Dollars)

2001 2007
Wood 11.05 95.06
Oil Seeds & oleaginous fruits 0.00 9.79
Chromium ores and concentrates 0.00 8.14
Cotton 0.00 4.94
Wood sawn 0.01 2.86
Copper Mattes; Cement Copper 0.00 1.24
Niobium, Tantalum, Vanadium & Zirconium ore 0.01 1.02
Crustaceous 0.00 0.29
Binders for found molds; chemical products 0.00 0.27
Molluscs & aqua invert 0.00 0.11
Ores and concentrates 0.00 0.07
Coconut, abaca, Ramie, raw, tow 0.00 0.05
Lifting,, handling, loading & unload machines 0.00 0.01
Medical, surgical, dental or veterinary instruments 0.00 0.01
Precious & semiprecious stones, not strung 0.01 0.01

TOTAL US$11.19 Million US$123.88 Million
Source (adapted from Mofcom 2008)



Table 6 - China exports to Mozambique
China Exports to Mozambique (in Millions of US Dollars)

2001 2007
Motorcycles 0.08 8.52
Footwear 2.18 5.51
Primary cells & batteries 2.83 5.16
New pneumatic tyres of rubber 0.18 4.97
Portland cement, aluminous cement 0.00 4.29
Refrigerators, freezers 0.24 3.91
Travel goods, handbags, wallets, jewellery cases 0.36 3.78
Sodium hydrox; potass hydrox 0.77 3.45
Rice 0.75 3.37
Motor Vehicle for transport of goods 0.06 3,01
T-shirts, singlets, tank tops 0.08 2.72
Tv, Video monitors & projectors 0.08 2.65
Air conditioning machines 0.55 2.54
Woven fabric 0.95 2.50
Medicaments 0.07 2.47
Structures and parts of iron steel 0.10 2.34
Blankets and travelling rugs 0.00 2.31
Steel bars 0.00 2.11
Handtools & tools used in agriculture 0.35 1.93
Insecticides, rodenticides , fungicides, retail 0.09 1.89
TOTAL US$22.04 Million US$160.39 Million
Source - adapted from Mofcom 2008
4.8. Conclusion

The figures of overall trade and FDI are still not exact and there is considerable work that needs to be done in relation to the collection and calculation of FDI in particular. Nevertheless the numbers that have been put forward so far show evidence of a picture whereby China’s investment is picking up tremendous pace and scope. This picture is no different for Mozambique where the range and intensity of trade has accelerated notoriously, particularly since 2001. FDI from China in turn is also composed of a wide number of Chinese stakeholders, with a couple of them having made particularly significant investments inroads, namely in the forestry sector and in manufacturing. While trade seems to be dominated by the forestry sector and prawn exports from Mozambique to China and machinery imports from China to Mozambique, FDI from China to Mozambique has had the most significant participation in the manufacturing sector. The case of Mozambique also seems to follow the rule of thumb in Chinese investments in other African countries that a great majority of the labour force is composed of local workers and not flooded by Chinese expatriate workers. Lastly, after looking at the evolution of trade and FDI figures, it would appear that the impact of China on the long term development of Mozambique will depend on the success of the wider strategy of China’s SEZs in Africa, as well as its impact across the regions in which they are located. With prospects of an SEZ emerging in northern Mozambique, Nacala, in the future, it will be up to the government to actively seek to integrate its country’s industrial strategy into China’s engagement.

Conceptualising and assessing “development”, “democracy” and “governance” in Southern Africa

Introduction

What is the reality recently showed by the evolution of development indicators show and what do these tell us of the agency and performances of government and state institutions in the Southern African region? This essay starts by establishing a theoretical framework regarding the concepts of governance, democracy and development and then moves on to lay out the latest quantitative data available on how these dimensions have been evolving in the region. This data will be occasionally contextualized with some qualitative data on particular country case-studies. Similarly, in the section on development, I will present a discussion on how the future of Southern African development remains tied up to the evolution of significant externalities as is the case, for example, with international trade. This discussion will end with an attempt at interrelating and synthesizing the indicators presented, assessing their utility for policy-makers in providing “flags” that alert them about serious governance crises as well as providing them with a more accurate picture of the state of development and democracy in the region.

The politics of democratic governance in the Southern African region
Governance and the State in Southern Africa – a conceptualization

It is hard to discuss the concept of governance without first discussing the concept of state. For the last few years the destiny and responsibility for good governance has been inextricably tied up with the affairs of the state and its performance. Despite the ongoing heated debates regarding the fluidity of state borders in Africa and the impact of reified sovereignty in the continent since colonial times (Boas 2003) it is now generally agreed by the international community that “stable sovereign states are a prerequisite to addressing poverty and insecurity” (Ghani et al. 2005). Much of the literature, present discussion included, is looking at assessing and addressing the so-called sovereignty gap – the gap between the legal privileges that states are assigned and the practical responsibilities they sometimes fail to assume. Ghani et al (2005) in their influential piece on state building mention ten particularly important functions that the modern sovereign state has to fulfil in order for development to flourish: a legitimate monopoly on the means of violence; administrative control; sound management of public finance; investment in human capital; creation of citizenship rights and duties; provision of infrastructure; market formation; management of the assets of the state; effective public borrowing; and maintenance of the rule of law. As seen from Figure 1 (Ghani et al 2005) the unit of the state is involved by a wider set of factors influencing levels of development and the premises underpinning it. A state-led successful stride towards development is therefore also dependent upon a favourable external environment, comprising a favourable trade, security and aid systems, among others. The ten functions of the state are in this sense dependent on a series of externalities which are important to take into account when conceptualising and analysing the current meaning of development and governance in the southern Africa region. This makes it important to also look at how development and governance are tied in with the wider international economic relations of the region as will be done in a latter section of this paper.
Given this framework, it can also be enlightning to mention the current ideas floating around the notion of the developmental state and its position vis-à-vis the Washington consensus. In a nutshell, the Washington consensus refers to the spread of the neo-liberal state supporting free trade and non-state intervention as the only game in town. This model has been traditionally pushed forward by Western-led international institutions such as the International Monetary Fund and the World Bank. The developmental state instead, alludes to an economic model whereby the government structures of the state assume control in guiding the economy or in the words of Adrian Leftwich (Taylor 2005) the states “whose politics have concentrated enough power, autonomy and capacity at the centre to shape, pursue and encourage the attainment of explicit developmental objectives”. The focus of the developmental state is traditionally making sure that the quality standards of its education system work for development by serving two purposes: pursuing export-led growth against the background of a strong tertiary sector; and achieving sustained growth by the taking off of internationally competitive research and development investment serving the driving sectors of the economy (Johnsen 1999). For the purposes of this essay, I will move away from the prevalence or not of the Washington consensus of developmental state models in Southern Africa. Arguments paying lip-service to the insurmountable pressures of the Washington consensus, although alluding to the existence of important externalities to the process of development in the region, paint an imprecise picture of a political situation whereby the entities of state and government in the Southern African region are ‘stripped out’ of a considerable degree of agency in deciding their particular paths of economic development. Nevertheless, the question of how the developmental state model of growth can be ‘transported’ from its natural ‘habitat’ in Southeast Asia to Africa remains extremely interesting. This question will be explored further down on the regional economic profile of the Southern African region. As Ian Taylor (2005) puts it, “the leap from neo-patrimonial regimes to a developmental state is one fraught with difficulty (…) but it is not impossible”. Therefore, an analytical yet more empirically grounded approach will be taken whereby I will look at different ways of understanding and assessing the progress of democracy, development and governance in the region. Firstly, I will put forward the numbers and assess the strengths and weaknesses of some governance indicators. Lastly I will then try and bring them together in painting a congruent picture of the Southern Africa region and show how useful the indicators can be if put to use in the correct analytical framework. It is important at this point to mention the concept of democracy. In this analysis, democracy will be understood as Omano Edigheji (2005) sees it - holistically. I will amalgamate the various indexes, aiming at putting together a picture of what the current status of democratic developmental governance is in the region, according to institutional attributes and objectives. A synthesis of such nature would be able to better apprehend to what extent states in southern Africa are “able to transform its economic base by promoting productive, income generating economic activities while ensuring that economic growth has the resultant effect of improving the living conditions of the majority of its population” (Edigheji 2005). Given this, autonomy, multipartyism and levels of economic equality will be part of the equation.

The current dynamics of governance and democracy in Southern Africa

Although I aim at exploring the Southern African region as a whole and there are challenges that are clearly common to all of those who inhabit it, it is important to keep in mind that this specific geographical and political unit gathers many diverse and significantly distinct countries and peoples. This is the case in regards to the efficiency and models of their governance, their role in regional politics and, most importantly, in regards to their stage of development and political stability. The average ability of states in the Southern African region to address risk and fulfil their good governance objectives appears to be moderate. This is according to the Failed States Index [1] in Figure 2 conducted by The Fund for Peace (2007). Zimbabwe does stand out negatively in the region but most of the other countries appear to be fulfilling their mandate in terms of political, economic and social indicators. These indicators assess the performance of internal bureaucratic processes, especially in terms of how prepared state authorities are in tackling and mitigating internal risks such as uneven economic development and negative growth, criminalization or de-legitimization of the state, deterioration of public services, violation of human rights, and efficiently addressing complex humanitarian emergencies. To look at a couple of cases more specifically, Malawi’s political instability appears to reflect the current crisis underpinning the country’s poor governance and shadowy public spending. In contrast, Mozambique appears to be strengthening its state bureaucracy. While the rankings tell the story of a region that is moving towards a satisfactory score when it comes to state bureaucratic processes, the internal challenges to democracy are still troublesome. This becomes very clear for example in Lesotho, a country which has a score reflecting a very efficient bureaucracy, but that is simultaneously experiencing a problematic political crisis underpinning the outcomes of the 2007 electoral process.

A quick glimpse at the Economist Intelligence Unit 2006 democracy index in Figure 3, the state of democracy in the region seems to vary between flawed democracies, authoritarian regimes and hybrid regimes. The index rates democracy in terms of electoral process and pluralism, functioning of government, political participation, political culture and civil liberties with the scores that are closer to ten being the most democratic. The lower the score the less democratic the regime while a higher score indicates better democratic conditions. Again, with the exception of Zimbabwe where the political and economic crises are worsening, it looks like institutional democratic processes are moderate within the region. Countries like Swaziland have not signalled any change towards addressing their democratic deficits. This however does not exclude major challenges to governance in the region when it comes to centralisation of power; weak opposition and lack of media freedom. This is so regardless of the optimism noted in the previous profile of regional leaders institutionalising checks and balances towards strengthening democracy amongst member-states. This situation is particularly aggravated by the persisting levels of corruption, which appear endemic.
In regards to corruption, it looks from the Corruption Perceptions Index (Transparency International 2007) in Figure 4[2] that the adoption of an anticorruption protocol in August 2001 by the heads of state and governments of the Southern African Development Community (SADC) has failed expectations. Bringing to justice corrupt officials at border posts, within the wide spectre of the government and within the ministries of the executive, remains a persistent problem for the region.

Governance and the status of diversity and participation

Looking at the evolution of voter turnout in the Southern African region between 1980 and 2006, apart from some exceptions such as in Mauritius, there has been a general tendency for decreasing turnouts in Botswana, Lesotho, Mozambique, South Africa, Swaziland, Zambia and Zimbabwe. Despite greater difficulties in data collection when it comes to local elections, equally negative tendencies are believed to be assuming prominence (Kersting 2007). Apathy and disbelief being another threat to the region.
Meanwhile, Southern Africa presents very active women’s movements in Botswana, Mozambique, Namibia, South Africa and Tanzania, this recent trend in the region must be welcomed and fostered. Conversely, women-empowerment measures, whatever the nature of the policy process that created them is (grass-roots movements or from centralized decision-making), have to be complemented by what Aili Tripp (2005:60) characterizes as policies targeting the “status” of women in the broad sense. This is a call for an empowerment that comprises not only legalistic and formal elements but most importantly the informal and the embedded social realization of the group.
It will therefore also be important for the future of the region to uphold diversity and make sure citizens will remain seized and engaged in the political affairs that concern them.
The economics of development from a Southern African perspective
According to an April 2007 IMF report developing countries in general are expected to keep growing strongly thanks to benign global financial conditions and high commodity prices. Those that are part of the Southern Africa region are also on the cusp of a significant economic upturn. Relative to other African regions, Southern Africa has been growing just above the continental average as can be seen in Figure 5 (UNECA 2007). This is positive news but those studying the Southern African region should nonetheless keep in mind the old truthful cliché that, although a “precondition for it”, growth does not immediately translate into development. Another frequently mentioned problem with the current outlook is that a considerable part of growth is primary commodities-based, which can be problematic in the longer term (Farfan 2005).


In the Angolan growth portrayed on Figure 7 for instance, oil accounts for 90 per cent of exports. This illustrates that states in the region have yet to sufficiently diversify their economies despite experiencing some positive growth rates as can be seen from a 2006 World Bank report (Figure 7). The inherent risk is that member states remain vulnerable to the global commodity price mechanism and if not addressed adequately regional economies will become negatively affected if international prices plummet. A way in which to overcome growth-based economic analyses is by looking at the figures of the Gini coefficient for the region.
First designed in 1912, the Gini (UNDP 2006) coefficient in Figure 6 measures income inequality. Values vary between 0 and 1 with 1 portraying a situation of perfect inequality and 0 the least. Although updated values are not available for all the countries in the region it is interesting to see how equality and political stability are not directly correlated. Botswana for example has been one of the most stable democracies in the region while still representing one of the highest levels of inequality. However, when put together with a poor economic performance, it seems to increase the probabilities of triggering a crisis. This has been the case with Zimbabwe. In Southern Africa, interregional trade stands at 25 per cent and is expected to reach 35 per cent by 2008 (UNECA 2007) when the Free Trade Agreement arrangement should come into effect. In 2005 the region recorded an overall 5 per cent growth in real GDP. In the case of a country such as Angola, this is substantially backed by increased oil revenues and the geo-economic importance of the country to energy hungry countries like China, India, and the US.
Economic freedom, meaning the ability to create an enabling business environment for private sector development and diversification of economies is also moderate in the region. Most importantly however, development remains uneven. In spite of the impressive economic growth rates, most member states are still experiencing levels of abject poverty. This is primarily caused by weak and moribund infrastructure. However, to weak infrastructure, one must add the current growing impact of the HIV/AIDS epidemic, which is having a massive impact both economically and demographically. Southern Africa continues to be the locus of the HIV pandemic, and home to approximately 32 per cent of the global number of people living with AIDS (UNAIDS 2006). In addition, environmental degradation is starting to directly impact on the levels of water and food accessibility in the region.



Trade in services and technological learning – an untapped dimension of development for Southern Africa

Services and knowledge-intensive industries hold the greatest added-value in the value-chains of the current international economic order. These industries are complex, capital intensive and demanding for host states but they are also invaluable economic multipliers of the countries’ competitiveness and in the development of their socio-economic indicators. The services sector forms the backbone of a knowledge-based economy, which means that looking at the earnings from the production and commercialization of knowledge is a good indicator of the state of development in the Southern African region. A look at the 2007 UNCTAD Least Developed Countries report shows that the outcome of the trade relations at the Doha Round concerning this industry is absolutely vital for developing countries. The cover of that important report displays the map in Figure 8 with territory size showing the proportion of worldwide earnings (in purchasing power parity) from royalties and license fees that are earned there. Let us now try and break down the developmental state debates behind the reality represented in the map.
FIGURE 8
Services have been part of multilateral trade negotiations since 2000. By 2004, 30 to 40 per cent of workers in the developing world were employed in the sector. This rises up to 70 per cent in the case of developed countries (UNCTAD 2007). The trend is for services to progressively take over from agriculture as the most significant sector of the economy, this is also the case for developing countries. The Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, also discussed in Doha, should be mentioned. The deal covers a whole range of intellectual property rights but for a large part of Southern Africa, the HIV/AID epidemic has meant that all eyes are on the impact of TRIPS on the pharmaceutical industry and on other healthcare innovations. So that development is not forestalled by intellectual property rights, developed countries have allowed for countries to declare a national emergency and institute what is known as compulsory licensing - the right to make a drug without paying royalties to the patent holder. However, many countries in Southern Africa such as Lesotho and Mozambique simply do not have the resources, infrastructure or legal framework necessary to deal effectively with the implementation of the TRIPS agreement and, as such, find it hard to make those rules work in their favour. As seen in the map in Figure 8, knowledge and technological know-how remain a great challenge for the region. At the end of the day, in the cases where countries in Southern Africa hold low levels of technological learning[3], more than directly damaging their economies, instant liberalization in high-end labour service markets and in intellectual property rights is rather ineffective. It can easily lead to an increase in the marginalization (UNCTAD 2007 p.57) of the developing countries in the region, particularly those that are part of the Least Developed Countries group such as Mozambique and Malawi. A lack of technological and knowledge learning will invariably perpetuate a vicious cycle of underdevelopment as represented on Figure 9 below.

Figure 9

Development-focused trade liberalization is therefore dependent on: concrete expansion of service export opportunities; and improved efficiency and productivity of services sector in LDCs and ODCs through technological learning and not mere knowledge and technology transfer. The implications at stake when trade in services with Southern Africa is being discussed must also be understood within the migration-development nexus debate. Even though there are negative consequences of labour migration, such as brain-drain, the positive impact could be substantial for developing countries. Recent reports show that “liberalizing the movement of workers could amount to US$156 billion if developed countries increased their quota of workers from the developing world by 3 per cent” (Kategekwa 2006:3). The graph in figure 10 (IMF 2007:163) taken out of IMF’s World Economic outlook, shows just how migration and exchanges in labour between developed and developing world (which include the Southern Africa region) still vastly lag behind traditional exchanges in goods and services. This is very much due to the severe restrictions still in place for those wishing to migrate from the developing to the developed world.

Figure 10


Economic development and Poverty Reduction Strategy Papers (PRSPs) in Southern Africa
So far, eight SADC States[4] have adopted Poverty Reduction Strategies, an approach that was introduced by the World Bank and IMF in 1999. Of the eight, five have gone on to adopt second generation poverty reduction strategies, Mozambique, Tanzania, Malawi, Zambia and Madagascar. The most important novelties regarding the transition from the first to the second generation strategies (Roberts: 2007) when looking at how the Southern African region understands development include:
reclaim national ownership and address the perception from the first generation PRSPs that they are donor driven.
new focus on participation, especially since the first generation PRSP were formulation processes of many of the early PRSP adopters involved very limited engagement of non-state actors. Civil society networks have played an instrumental role in ensuring not only that the voices of the poor are heard at the policy table, but also that their influence is seen in policy content. Participation is increasingly moving from consultation with a narrow set of dominant NGOs to include broad-based involvement of the poor.
persistence of time pressures for completing the process, limited involvement of elected bodies (parliaments) and the private sector, as well as constraints on informing macroeconomic frameworks. The participation of civil society actors is also affected by funding and skills limitations.
increasing concern with the productive sectors (infrastructure, agriculture, and rural development)

In more fragile states, such as the Democratic Republic of Congo and Angola, inclusion and human welfare, competition between the poverty reduction and other priority agendas (for example security), and weak institutions are particularly important. So far the PRSP consultation processes (especially in the DRC) have been broad-based and inclusive, with participatory poverty assessments being conducted and used to inform policy priorities. When it comes to the region’s middle income countries (Botswana, Mauritius, Namibia, South Africa and Swaziland), although not immediately qualifying for the PRSP approach they in fact face some common challenges with the countries who are setting up this framework. The particular challenges they face however comprise, among others:
existence of multiple and competing development frameworks;
stakeholders feel that being classified as a middle income country presents challenges to civil society participation while donor flight has constrained the ability of civil society organisations to hire or retain skilled personnel
This shows how important it is for the development of the region that middle-income countries are also not ignored in development strategies of a regional scope.

Democratic developmental governance – A synthesis

Why is it worth it spending energy and time collecting such data? If one assumes a practitioner policy-maker point of view, these indexes put into evidence the symptoms of “borderline cases”. Recognising these borderline cases at an early enough stage can, by spotting particular analytical ‘flags’ or ‘triggers’ signalling a problem, put policy-makers in a better position to intervene and adjust their actions in a more development-effective way. By policy-makers I understand a wide range of actors going from local governments and grassroots political movements to international donors and even private multinational corporations. To achieve this however, some sort of synthesis is called for. In order to contextualize and balance out the conceptual output of the tables and variables presented, which are sometimes overly quantitative, a more holistic approach should be put in place. Including a qualitative synthesis of the indexes will therefore provide greater insight and analytical potential. I propose, as a starting point, defining a collection of ”symptoms” collected from the indexes that shed light on the seriousness of a suspected governance crisis. Let us now go back to the indexes and look at what some of the most challenging governance case-studies have in common or not, by doing that some preliminary conclusions can perhaps be extrapolated.

First of all, the presence of a PRSP is in itself a telling factor as it shows that the country’s government structures are at least rhetorically committed to setting up development-friendly policies.

Interestingly, from the case study, state failure seems to be more correlated with economic growth than any of the other variables analysed. Zimbabwe as the most serious case has clearly had a very economically turbulent decade while Angola’s slight improvement in the state failure index seems to accompany its recent very high growth rates. Also, the specificity of the economic structures of the country seems to be very influential in determining the country’s proneness to democracy. As we saw, Angola remains a very autocratic state according to the EIU democracy index. The state’s tight control over the main industries driving the economy – oil and diamonds- seems to be providing those holding power some leeway and leverage in their ability to keep power centralized and in few hands.

Most notably, corruption appears to be a cross-cutting variable. It affects countries with both bad and average performances in governance and economic development. The best performers in governance and democracy however clearly hold much lower levels of corruption – this is the case of Botswana and Mauritius for example. Corruption levels work therefore as a good ‘flag’ to first assess which countries are in the most iminent risk of governance breakdown. This is so perhaps because the complexities of its causes are of a particularly intertwined political and economic nature. Its assessment, even at the simple level of perception, can quite accurately represent a synthesis of governance just by itself. Indeed, all those countries that score well in the corruption index consistently perform positively in the state failure index.

Conclusion

The picture drawn of the evolution in terms of democratic developmental governance in the Southern African region has been of an overall positive trend but not one without challenges. These challenges come in several shapes and forms. There are regional challenges to economic development affecting the region as a whole but there are also localized governance challenges such as the particular case of Zimbabwe. Good governance, today generally regarded in the academic world as being primarily dependent on the good functioning of the state is no exception. This belief is also present in the recent PRSP papers. A good performance in development and democracy indicators is nonetheless dependent on external factors. This is particularly evident when it comes to how much room for improvement there still is for the region when it comes to making the most out of its trade in services and in improving its knowledge learning. This is an essential premise for states in the region to build the capacities for organizing economic policies that are developmental in nature. Although indexes of good governance, democracy and development are much more analytically powerful when put to use in a concerted manner some individual variables have been proven to be efficient in acting as ‘flags’ of particularly problematic situations. This has been the case with high levels of corruption combined with an extended period of economic decline and income disparity. Finally, there is still however a lacunae in the literature with regards to interlinks between the variables affecting good governance and development as well as in regards to the flows of causality between them.

References

Boas, M. 2003. “Weak states, strong regimes: towards a ‘real’ political economy of African regionalization” in Grant, J. & Soderbaum, F. (eds) The New Regionalism in Africa. Aldershot: Ashgate
Economist Intelligence Unit 2006 EIU Democracy Index http://www.economist.com/media/pdf/DEMOCRACY_INDEX_2007_v3.pdf [27Oct 2007]
Edigheji, O. 2005: A Democratic Developmental State in Africa? A concept paper. Johannesburg: Centre for Policy studies
Farfan, O. 2005 “Understanding and Escaping Commodity-Dependency: A Global Value Chain Perspective” Prepared for the Investment Climate Unit International Finance Corporation in October 2005
Fund for Peace 2007 Failed States Index (http://www.fundforpeace.org/web/index.php?option=com_content&task=view&id=99&Itemid=32) [27 October 2007]
Ghani et al. 2005 “Closing the Sovereignty Gap: How to turn failed states into capable ones” Overseas Development Institute www.odi.org.uk/publications/opinions [27 October 2007]
IMF (International Monetary Fund) 2007 “World Economic Outlook- Spillovers and Cycles in the Global Economy” April 2007
Johnsen, C. 1999 “The Developmental State: odyssey to a concept. in Woo-Cummings, Meredith, eds The Developmental state. Ithaca London: Cornell UP
Kategekwa, J. 2006 “Extension of Mode 4 commitments to include unskilled workers in the WTO. A win win situation, especially for LDCs” Paper prepared for the OECD Development Centre Panel on Migration and Development. WTO Public Forum 2006
Kersting, N. 2007 Journal of African Elections Vol.6 No.1
Roberts, B. 2007 Mapping Poverty Reduction Strategies in Southern Africa, Ongoing project
Taylor, I. 2005: Can Africa Produce Developmental States? In: CODESRIA Bulletin, 3/4(2005):51-52
Transparency International 2007 Transparency International Corruption Perception Index 2006
Tripp, A. 2005 “Quotas for women, implications for parliaments” in M. Salih (ed.) African Parliaments Palgrave
UNAIDS 2006 AIDS Epidemic Update. Geneva: UNAIDS.
UNECA 2007 Recent Economic Performance in Africa and Prospects for 2007 www.uneca.org/era2007/chap2.pdf [27 October 2007]
UNCTAD. 2007. Handbook of Statistics http://stats.unctad.org/handbook/ReportFolders/ReportFolders.aspx?CS_referer=&CS_ChosenLang=en (27.Sept)
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[1] The scores are calculated on the following basis: the lower the score the more fragile the state; the higher the score the less fragile the state.

[2] CPI Score relates to perceptions of the degree of corruption as seen by business people and country analysts, and ranges between 10 (highly clean) and 0 (highly corrupt).

[3] Note the difference between knowledge/technology transfer and knowledge/technology learning - the latter implies a sustained building of knowledge and innovation capacity at home. Not just a one-shot temporary transfer of knowledge or technology geared towards short-term goals.
[4] Angola, DR Congo, Lesotho, Madagascar, Malawi, Mozambique, Tanzania and Zambia.

The Doha round and the persistency of Constituency-economics

Introduction

Can the Doha round be understood as just another occasion when the bars and locks on the “cage of global finance” (Lindblom 1977) are reinforced? Or is it actually the case that, door after door, developing countries are finding the keys to the locks and trading their way out of poverty? Expected to be concluded in 2004, the Doha round has dragged on until 2007 and its conclusion remains uncertain. Right from the start, rich countries rhetorically committed themselves to abolishing what they recognized as major obstacles to the development of poor countries - the presence of extensive direct and indirect mechanisms of trade distortion disfavouring the developing world. These distortions were pushed through by tough bargaining by rich countries, particularly at the Uruguay round, and have slowly been challenged of late with mixed results.
Developed nations, and above all the United States (US) and the European Union (EU), were indeed the initial sponsors behind global trade but developing nations and particularly the emerging markets of the BRICS (Brazil, Russia, India, China, South Africa) and the G20+ no longer stand back and limit themselves to playing the “amendment game” at the table of trade negotiations. The agenda is now also being written up by a handful of big players from the emerging world. The result has, up until 2007, been little more than “stalemate” in Qatar although small development-victories have slowly been achieved recently. After an introduction of Doha as a follow-up to the General Agreement on Tariffs and Trade (GATT) and a sub-product of the World Trade Organization (WTO), I will discuss the context-specifity of the impact of trade negotiations on a heterogeneous developing world. From there I will debate how the Doha negotiations have provided an environment that is rich in both threats and opportunities to the developmental ambitions of the developing world. One particularly important area being negotiated – the one of trade in services and knowledge - is then more extensively explored. Lastly, I will carry out an assessment of the room for manoeuvre of the developing world at the negotiation table through the eyes of the G20+ group.


Doha within the unbalanced reshuffle of the international order

The GATT has been in place since 1947. It started as an intergovernmental agreement to facilitate in the regulation of trade and was later integrated into the more thorough framework of the WTO – an international organization of its own. GATT’s stated objective has been from the start, to “facilitate the reduction of barriers of trade and ensure greater equality with respect to conditions of market access for contracting parties” (Hoekman 2002: 13). It was not, however, until the Dillon round in 1960 that the scope of the matters being negotiated within the GATT system broadened and went beyond deals strictly concerning tariffs. Alternatively to the multilateral GATT system, countries have traditionally had the option of going for bilateral agreements and deals between regional trading blocks. The interplay between what is happening at Doha and Special Differential Trade Agreements is a “world of its own” but I will not explore it extensively in this piece. It is important however to keep in mind that the alternative to the single simpler multilateral package being negotiated in Doha is a more uncoordinated and intricate set of deals.
One of the main reasons why it is important to put the mixed picture of parallel developing worlds into evidence is because the effects of trade are necessarily context-specific. Although this piece explores issues of trade for developing countries at the macro-level, it is important to remember that any generalization is no substitute for detailed analysis of the impact of multilateral trade regimes in particular countries, communities or sectors. This is particularly the case when analysing Non-Trade Barriers (NTBs). Revenues from traditional tariffs go straight to government coffers for redistribution. Conversely, when NTBs are in place, it is particular sectors or companies hosted by the government that indirectly benefit, making the impacts of trade slightly more complex and harder to assess. In the cases in which extensive economic empowerment to lower-income labour forces is provided by these sectors or companies, a poorly planned removal of NTBs can harm development, particularly in the shorter-term. Overall, trade can indeed influence development by impacting on several issues such as employment, wages, inequality, volatility, economic growth, government revenues and commodity prices.
After acknowledging the context-specificity of the impact of trade, let us now look at how China’s manufacturing and India’s Information Technology software and services are currently shaking the world economy. These are countries whose region, when compared to Sub-Saharan Africa, shows just how mixed the picture in development and trade-dependencies currently is. The unprecedented rise of China and India as emerging market forces presents a large set of challenges and opportunities that are simultaneously delicate, complex and comprehensive. An effective divide in the developing world becomes obvious when you put the characteristics of these two massive economies next to those of some African countries. China and India first and foremost advance their particular interests and play the game of constituency-economics in the international negotiation table; a game that, as will be seen in the last section, is part of the explanation for cooperation and bandwagoning through coalition-building in the developing world. This means that not only are African economies sensitive to tremendous competition from these “giants”, but they are also in a much weaker bargaining position in trade negotiations vis-a-vis the developed world. Africa remains more extensively dependent on the European Union and the United States’ performance for market stability and on their markets as export-outlets. This reality is evident when one compares the trade orientation by destination of different regions of the developing world. The graph in Figure 1 (IMF 2007: 124) shows just how much more dependant sub-Saharan Africa is than Asia in its exports to the EU and the US. Recently the continent is also becoming more and more reliant on rising Chinese and Indian demand for primary commodities, observed in the increase of the category “other” in the graph for the period of 2001 onwards.

Assessing the space for development – Threats and opportunities at Doha

According to an April 2007 IMF report, developing countries expect to keep growing strongly thanks to benign global financial conditions and high commodity prices. Developing countries are on the cusp of a significant economic upturn. This is positive news but one should keep in mind the old truthful cliché that, although a “precondition for it”, growth does not immediately translate into development. Another frequently mentioned problem with the current outlook is that a considerable part of growth is primary commodities-based, which can be problematic in the longer term (Farfan 2005). In addition, as I have observed, the developing world does not constitute a single homogeneous block.
In WTO talks such as Doha, when countries agree to open up already developed sectors or industries in developing countries, this significantly improves sector and industry efficiency and competitiveness through market adjustments brought about by competition. Also, lower trade-tariffs can bring down domestic prices, which can benefit consumers, particularly poorer ones. In addition WTO negotiations, when able to tackle residual constituency-protectionism of rich countries and unreliable industries in the developing world, can foster development. This is important since, when exercised in a non-transparent manner, protectionism can open the way to installed corporate lobbies that “pressure governments into pursuing policies that benefit them but not the general good” (Legrain 2003:1354). WTO negotiations, including the Doha round can therefore, in some particular instances, reduce poverty in the developing world. Another means by which it can do so is by cutting on complicated and time-related wastes in trade, namely through a simplification and harmonization of customs administration procedures and by bringing down costs. Domestic trade facilitation, improving customs administration, can boost developing countries’ export to richer countries and foster development.
Although the playing field is levelled, the question over the restructuring of the WTO and the current procedural agreements of how international trade rules are devised is important. Some “question marks” can be put on a few features of the ritual of negotiation, particularly when it comes to issues of agenda-setting. The fact remains that the WTO encompasses a very democratic model of consensual politics, perhaps even over-democratic. Every member has veto power and that brings about the “blessing” and the “curse” of consensual politics. This consensual politics is a “double-edged sword”. On the one hand it does compel actors to compromise but one the other hand it can foment lengthy and stubborn negotiations, whereby those that are the least in need of a new agreement are favoured. The sheer number of stakeholders negotiating and holding a veto in the WTO does at the end of the day make the reaching of a consensus a challenging task and gives in principle no particular privileges to developing countries. One of the technical difficulties at the negotiating table disfavouring both developed and developing countries, but at times consciously used by developed countries in their benefit has been language barriers. English was the conference language, despite French and Spanish also being official WTO languages. Interpretation facilities were restricted to the big conference rooms, while it was in the smaller rooms that the important negotiations took place. Delegates from developing countries frequently criticized this negotiation model as representing a revival of the elitist green room[1] process. In addition there were too many meetings and it was sometimes unclear where these were held, who was being consulted and on what basis (Jwara & Kwa 2003). More worryingly, many of the most crucial decisions were made in the absence of several developing countries’ ministers, as negotiations went into over-time, and not everyone was able to reschedule their flights. Moreover, Berneo and Davis (2005) observe how developing countries, while representing 2/3 of WTO members, initiate only 1/3 of disputes filed in the organization. This demonstrates the difficulties poorer countries come across in terms of their style and leverage in negotiation. They often lack the necessary knowledge and experience to be successful in such undertakings, something that is also reflected in major trade negotiations such as Doha. This is a chronic problem the WTO should try and address once and for all.
Finally, the classical issue for developing countries at Doha has been the farm subsidies that developing countries use to bolster their own farmers and which distort world prices in agricultural products, bringing them artificially down. This damaged the profit margins of farmers in the developing world, constraining their export-capabilities. At the beginning of September 2007, after an initial US$17 billion proposal being rejected by Brasil and India, the United States finally declared its willingness to limit its subsidies to a level between US$13 billion and US$16.4 billion (IHT 2007). This was the first time that the US accepted publicly that would in principle bring farmers payments below US$23 billion. Although it does go to show that rich countries are in fact interested in concluding the round successfully, there are two main reasons why developing countries welcomed the news with scepticism. Firstly, given that the fast-track powers of the American President have expired, the commitment by the US chief negotiator Robert Zoellick still needs to be approved by the American congress. Secondly, its impact on the real American expenditure in farm subsidies is likely to be nil in the short-term. In 2006, the US spent only US$11 billion out of much larger negotiated sum of US$19.1 billion (IHT 2007 B). This piece of news has however to be understood within the wider chronology of trade negotiations and if it comes through will represent an important step in the future towards cutting down on the rich countries’ ability to distort markets.
Trade in services and technological learning - a sensitive, untapped world
Figure 2Services and knowledge-intensive industries hold the greatest added-value in the value-chains of the current international economic order. These industries are complex, capital intensive and demanding for host states but they are also invaluable economic multipliers of the countries’ competitiveness and in the development of their socio-economic indicators. The services sector forms the backbone of a knowledge-based economy, which means that looking at the earnings from the production and commercialization of knowledge is a good indicator of development. A look at the 2007 UNCTAD Least Developed Countries report shows that the outcome of the trade relations at the Doha Round concerning this industry is absolutely vital for Developing countries. The cover of that important report displays the map in Figure 2 with territory size showing the proportion of worldwide earnings (in purchasing power parity) from royalties and license fees that are earned there. Let us now try and break down the trade debates behind the reality represented in the map.

Services have been part of multilateral trade negotiations since 2000. By 2004, 30 to 40 per cent of workers in the developing world were employed in the sector. This percentage rises up to 70 in the case of developed countries (UNCTAD 2007). The trend is for services to progressively take over agriculture as the most significant sector of the economy, this is also the case for developing countries. The Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, also discussed in Doha should be mentioned. The deal covers a whole range of intellectual property rights but for a large part of Sub-Saharan Africa, the HIV/AID epidemic has meant that all eyes are on the impact of TRIPS on the pharmaceutical industry and on other healthcare innovations. So that development is not forestalled by intellectual property rights, developed countries at the Doha have allowed for countries to declare a national emergency and institute what is known as compulsory licensing - the right to make a drug without paying royalties to the patent holder. However, many developing countries simply do not have the resources, infrastructure or legal framework necessary to deal effectively with the implementation of the TRIPS agreement and, as such, find it hard to make those rules work in their favour. As seen in the map in Figure 2, knowledge and technological know-how remains asymmetrically the property of developed countries. At the end of the day, in the cases where these countries hold low levels of technological learning[2], more than directly damaging their economies, instant liberalization in high-end labour service markets and in intellectual property rights is rather ineffective. It can easily lead to an increase in the marginalization (UNCTAD 2007 p.57) of the developing world, particularly of Least Developed Countries. Lack of technological and knowledge learning will invariably perpetuate a vicious cycle of underdevelopment as represented on Figure 3 below.



Development-focused trade liberalization is therefore dependent on: concrete expansion of service export opportunities; and improved efficiency and productivity of services sector in LDCs and ODCs through technological learning and not mere knowledge and technology transfer. The Doha Round is not addressing this reality.
The implications at stake when trade in services is being discussed must also be understood within the migration-development nexus debate. Even though there are negative consequences of labour migration, such as brain-drain, the positive impact could be substantial for developing countries. Recent reports show that “liberalizing the movement of workers could amount to 156 billion dollars if developed countries increased their quota of workers from the developing world by 3%” (Kategekwa 2006:3). The graph in figure 4 (IMF 2007:163) taken out of IMF’s World Economic outlook, shows just how migration and exchanges in labour between developed and developing world still vastly lags behind traditional exchanges in goods and services. This is very much due to the severe restrictions still in place for those wishing to migrate from the developing to the developed world. Again, the current trade negotiations at Doha seem unlikely to present any major breakthroughs for this situation.



Looking for room to manoeuvre – The G20+ and the rise of a proactive developing world

The inevitability of what I call “constituency-economics”, originally reflected in Putnam’s two-level game theory (Putnam 1988), becomes evident when traders, principally traders from rich countries, start alluding to their home constituencies as having insurmountable interests they need to uphold and defend on the international stage. I argue that the development dimension of the Doha Round has been defined by the clash between the constituency-economics of rich countries and attempts by the developing world to build new avenues of cooperation. The term “constituency-economics” alludes to the persistence of a “zero-sum” game in the politics of international trade, something that Krugman (1997) also acknowledges. This is important on two levels. Firstly, it shows how crucial it is for developing countries to come together and coordinate their trade stances by forming coalitions and bandwagoning. Secondly, it explains why, as we have seen, developed countries have been “shying away” from multilateralism and pushing on their bilateral and Preferential Trade Agreement Agenda. The bilateral and multilateral alternatives of international trade are, in one way or another, mutually exclusive and in direct competition with each other. In this context, the G20+ comes about as an important example of South-South cooperation and of remarkable stance coordination for a variety of reasons. It was the first time that China assumed a more proactive and leading role. It also brought together very diverse regional powers, something that is notable not just in harnessing synergy in economic trade bargaining but also in the symbolic underpinnings of the coalition and in the moral weight it carries, representing over half of the world population (Narlikar & Tussie 2004: 953). The G20+[3] brings together actors that are as significant in the emerging international order as they are heterogeneous.
The previous sections have explored just how developing countries’ ambitions for space and flexibility encounter a “zero-sum” game as in one way or another they clash with the defensive arguments of rich countries. In a curious development, the latter have recently tended to become protectionist, losing their traditional role of liberalizing leadership in the organization. American-led liberalization of multilateral trade, witnessed particularly in the Uruguay round, has now come to a standstill. Lobby groups from uncompetitive sectors such as steel, textile and farming, important for the constituencies of those negotiating the deal, pushed the Americans and Europeans to put the “brakes on” liberalization and become more protectionist. Indeed, as Brazilian foreign minister Celso Amorim observed, “the proposals set forth by the G20+, which Washington holds responsible for the meeting’s failure to reach an agreement are 70 to 80 percent in line with the positions held by the United States at the start of the Doha Round” (IHT 2007). The EU has gone through a very similar transformation, with the added detail that it is far more worried with its own integration process to the East.
This picture gives the G20+ a window of opportunity to simultaneously lead trade negotiations and invert the traditional bargaining stances. This switch has now put developing nations as leading promoters of broad trade liberalization with small adaptations, and rich countries resisting it. We are witnessing, in the words of Mario Marconini, former Brazilian Secretary of Foreign Trade, a “shift in paradigm” (IHT 2007). An interesting argument put forward by Daniel Tarullo (2006:48) is that, since Doha and the extensive benefits earned at Uruguay round, big multinationals no longer require further liberalization for the consolidation of their profitability. He observes that these companies have been far less assertive in their lobbying for the completion of these international deals than they used to be. The telling story of how the G20+ maintained cohesion at Cancun despite many believing in the impossibility of it happening (Tussie & Narlikar:2004) is a rather encouraging example of how slowly developing countries are taking their development into their own hands.
Coalition-forming by developing countries has dramatically increased recently but has been around from at least the middle of the 1960s. It has traditionally assumed a reactive form, triggered by unsatisfactory deals proposed by rich countries. One of the initial groups of rich countries in the Doha round was named the Quad members group, constituting the US, EU, Canada and Japan. The first international coalition of developing countries was the G77 formed in 1964, comprising the promoters of the early non-aligned movement. Nowadays, in addition to regional economic organizations such as MERCOSUR and ASEAN, parallel to the G77 and the G20+ there are organization as diverse as the Small and Vulnerable Economies (SVE), the African group, G3+3, NAMA11, G10 and the LMG group. Serrano and Prieu (2006) conclude that middle-range powers also tend to use the “tools” of coalition-making and regionalism in the WTO as a means to advance their leadership in their particular regions. This explains the participation in a high number of coalitions of middle range powers such as Brazil, Indonesia, China and Argentina as is illustrated in the graph in Figure 5 (Serrano and Prieu 2006). Ultimately, economic exchanges primarily respond to the pressures of constituency-economics. The same can be said for the rule-setting of trade negotiations that underpin them. The Doha round saw, once again, individual negotiators representing the perceived interests of their constituency. It is in this mindset that developed countries sit down to discuss, draft and amend the texts and figures of the rules of trade relations. Developmental objectives are invariably relegated, at best, to second place in the agenda.

Conclusion

The main point I have wished to put across is that developing countries tend to find little improvements in space and trade-flexibility to reach their developmental goals unless they harness bargaining power through economic competitiveness and diplomatic coordination, usually through regionalism and coalition-building. Realpolitik has not been replaced by Developolitik at Doha after a simple branding exercise termed the round developmental. The rhetoric however, has been put to some use by developing countries. It has been a platform to which developing countries go back whenever they advance their discontentment with the developmental impact that rich countries’ “constituency-economics” has on their prospects for development. In the case of the Doha round, the hypocrisy surrounding the term has also been the major argument put forward by the developing world whenever the negotiations seem to be breaking down. Future development through trade negotiations will need to be conscious of the diversity in the economies of the developing world. It will also need to harness the potential in technological and knowledge learning as well as in liberalizing a services trade and migration that benefits the developing world. These two issues have so far either been damaged or ignored at the negotiation table and progress has been too slow. Finally, although not without its pitfalls, developing world coalition endeavours such as the G20+ are to be welcomed. They constitute initiatives that, when well coordinated and devising proactive and constructive proposals for trade rules, can bring diverse developing states together. The developing world will necessary rely on the leadership of the emerging markets leverage for pushing forward a more development-friendly WTO trade framework and overcome the constituency-economics of the rich world.

References

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Farfan, O. 2005 “Understanding and Escaping Commodity-Dependency: A Global Value Chain Perspective” Prepared for the Investment Climate Unit International Finance Corporation in October 2005
Hoekman, B. 2002 Economic Development and the WTO after Doha, World Bank Publishers Prepared for “The Political Economy of Policy Reform,” a festschrift in honor of J. Michael Finger edited by Doug Nelson
IHT (International Herald Tribune) 2007 “Philippine leader says bilateral trade agreements ‘2nd-best solution’ next to WTO deal” (online) http://www.iht.com/bin/print.php?id=7577891 [28.Sept]
IHT (International Herald Tribune) 2007 B “U.S. ends 3-year silence at WTO on farm subsidies, says it complies with rules” (online) http://www.iht.com/articles/ap/2007/10/04/business/EU-FIN-ECO-WTO-US-Farm-Subsidies.php [28 sept]
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Lindblom, C. 1977 Politics and Markets: The World’s Political and Economic Systems, New York: Basic Books
Narlikar, A. & Tussie, D. 2004 “The G20 at the Cancun Ministerial: Developing Countries and their evolving coalitions in the WTO” in World Economy 2004 Vol.27 No.7, Oxford: Blackwell Publishing
Putnam, R. 1988 "Diplomacy and Domestic Politics: The Logic of Two-Level Games." International Organization Vol. 42 Summer :427-460.
Serrano, O. & Prieur, J. 2006 “Coalitions of Developing Countries in the WTO: Why Regionalism Matters?” Paper presented at the WTO Seminar at the Department of Political Science at the Graduate Institute of International Studies in Geneva in May 2006 www.hei.unige.ch/sections/sp/agenda/wto/wto2006/Developing%20Countries%20Coalitions%20in%20the%20WTO%20vrai.pdf [9 October 2007]
Tarullo, D. 2006 “The end of the Big Trade Deal” in International Economy Summer 2006
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[1] The “Green Room” is a phrase taken from the informal name of the director-general’s conference room. It is used to refer to meetings of 20–40 delegations, usually at the level of heads of delegations.
[2] Note the difference between knowledge/technology transfer and knowledge/technology learning - the latter implies a sustained building of knowledge and innovation capacity at home. Not just a one-shot temporary transfer of knowledge or technology geared towards short-term goals.
[3] It currently comprises Argentina, Bolivia, Brazil, Chile, China, Cuba, Ecuador, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Peru, Philippines, South Africa, Tanzania, Thailand, Uruguay, Venezuela, ZImbabwe