TRADE: ''You Have to Be Rich To Live in This World''

PORT LOUIS, Mar 21 , 2008 (IPS) - ‘‘The globalisation train is moving. It is up to us as developing countries to run fast enough to catch it. Whether we like or not, globalisation is unavoidable. We should accept and adapt to it to be able to benefit from its advantages.’’

This is how Prega Ramsamy, chief executive officer of the Economic Development Board of Madagascar, sums up the discussions at the Africa-America-Asia Business Summit that took place in Mauritius this week.

It seemed that everybody at the summit - from the prime minister of Mauritius, Navin Ramgoolam, to ministers from other countries and experts - agree that globalisation and trade liberalisation are the keys to successful economic development and to help tackle poverty.

Citing the examples of Mauritius and Dubai, speakers encouraged other developing countries to open up their economies.

Speaking to IPS at the conclusion of the conference, Ramsamy admitted that liberalising trade will lead to an influx of products from developed countries into developing countries. But, he said, these products are better - both quality-wise and price-wise.

Poor countries find it difficult to abide by sanitary and phytosanitary norms. Therefore, they should insist that developed countries put at their disposal the necessary funds to capacitate themselves to face competition and globalisation, he said.

One example is Mauritius which is receiving funds from the EU to restructure its sugar industry.

‘‘One should not forget that developed countries have for years benefited from the natural resources of Africa,’’ he pointed out, insisting that this matter be taken seriously in the various trade negotiations currently taking place.

Ramsamy raised one more point as to why globalisation cannot be ignored by developing countries. Citing foreign direct investment (FDI) figures, he indicated that developed countries attracted 857 billion dollars in 2006, compared to the much lower amount of 379 billion dollars that went to developing countries.

Out of the latter amount, Africa received only 36 billion dollars or 10 percent of total FDI, and only three percent of the total world FDI. To him this means that economies should be opened up to attract FDI.

At the conference, Mauritian finance minister Rama Sithanen urged developing countries to go to the root of the problem of lack of investment. Mauritius has removed the impediments to investment, is reforming its business environment, incentivising production, and diversifying and restructuring the economy.

One result has been the development of a much stronger fishing industry.

Part of rising to the challenge of globalisation is to embrace regional integration and trade liberalisation to stimulate trade and cross-border investment, Sithanen emphasised. No investment means no production and no production means no trade.

Trade data from the finance ministry in Mauritius shows the poor performance of South-South trade. Intra-African trade improved only slightly from five percent of total African trade in 1980 to 10 percent today.

Sithanen pointed out that sustainable trade needs more than preferential access. It requires intra-regional South-South trade that grows due to improvement in income levels and global competitiveness.

‘‘I would much rather want to think that, as a country, Mauritius is able to export to India, China, Brazil, South Africa or any other country not because of lower tariffs or preferential access but because we are globally competitive,’’ he said.

He regards trade as a powerful instrument for increasing economic growth which, for him, is the necessary condition to alleviate poverty. Economic growth means providing gainful job opportunities, widening opportunities and allowing small and medium enterprises to flourish.

Prime Minister Ramgoolam also stressed the unfolding South-South partnership at the summit. ‘‘It is important that developing countries open up, continue to eschew protectionism and embrace globalisation and free trade."

He ascribed Mauritius’ economic turnabout to its opening up to foreign capital, ideas, expertise and technology. It has turned a slide into a recession into a high and rising growth path.

Ramgoolam illustrated this by indicating that FDI in Mauritius soared by 150 percent in 2006, by more than 50 percent in 2007 and by an expected 50 percent this year.

Dr Mohun Kaul, director of the Commonwealth Business Council (CBC), held Mauritius up as a role model because of its open economy, its view on the world as one market, its focus on building a pool of highly-skilled human resources and its investment in good governance and infrastructure.

He believes Africa should be able to produce goods for export to other developing and developed countries. But for this to happen, it needs better infrastructure for sustainable development.

Apart from the case of Mauritius, participants also learnt about Dubai in the United Arab Emirates. The executive director of the Dubai Group, Soud Ba’alawy, said the emirate of Dubai’s experience has shown that ‘‘the more open you are, the more FDI you attract’’.

Explaining the success of Dubai, he said things happened because people left politics on the side and focused on trade. ‘‘If you ask me who is the finance minister, I might not know. But if you ask me who is the richest man in Dubai, I’ll tell you. That is the difference.’’

Mozambican vice finance minister Pedro Couto told IPS that there is no point for African countries to keep their economies closed as it is quite clear that in the world today, the only way to survive is liberalisation.

Quizzed by IPS about the depletion of natural resources in Africa by foreigners, the Mozambican vice minister said he sees this as an opportunity to make deals to the benefit of populations. ‘‘We do not fear to get absorbed by them as we do not want them to fear us. I think we can have mutual respect,’’ he said.

According him, the possibility of investment and access to markets will contribute to better earnings and raise the income of the population of the Southern African Development Community (SADC). About 45 percent of the population of SADC live in poverty, according to Dr Tomaz Augusto Salomao, executive secretary of SADC.

Salomao spoke about social indicators such as high levels of malnutrition, illiteracy, unemployment, underemployment, declining life expectancy and unsatisfactory access to basic services and infrastructure needed to sustain basic human capacities.

‘‘This year SADC will launch a free trade area, one of the first stages in regional integration with the aim to accelerate economic growth, reduce poverty and achieve sustainable patterns of development,’’ he said.

Far away from the conference centre, IPS spoke to sugar industry trade unionist Ramesh Maudhoo, who said: ‘‘How can we survive if we do not open our economy, particularly when foreign revenue is going down and prices of food, oil and energy are rising?’’

His suggestion to the people living in developing countries is: ‘‘Stand on your feet, work and become rich to be able to live in this world. If not, you die.’’

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