reverse the recent trends in disinvestment and the drying up of private investment, both foreign and African, in the region.
49. At the domestic level in Africa, there are as yet few
definitive signs of the likely agricultural trends in 1995, apart
from the limited indications from those countries that had entered
their cropping season by the end of 1994. It appears, at this point,
that weather conditions may not be favourable in the Maghreb,
particularly in Morocco, and that the same situation may hold for
some countries in southern Africa. There are grounds also for
concern in the Horn of Africa, where the weather pattern at the
beginning of the year was somewhat unusual. Those developments would
suggest only a modest increase in agricultural production for the
Whole region in 1995. The ECA secretariat forecasts a 2.7 per cent
increase in value added. At the same time, the overall food supply
situation is expected to be fairly satisfactory in 1995 except for
a few possible cases of short-falls associated with isolated cases
of drought, flooding and pest and locust infestation. According to
the latest FAO estimates, total cereal import requirements in the
region were expected to decline
by8.7 per cent from 28.6 million
tons in 1993/1994 to 26.1 million tons in 1994/1995.
50. It is expected that progress towards the restoration of peace in 1995 would launch countries previously embroiled in conflict on the path of recovery and sustainable development. It is hoped, similarly, that the fra.gile situation in Angola, Rwanda and Burundi will become more viable in 1995 and that significant breakthroughs towards peace and reccmciliation will be forthcoming in Liberia, sierra Leone, Somalia and southern Sudan, so that those countries could emerge from protracted emergency or relief dependency into rehabilitation, reconstruction and real development. It is also hoped that transition 1:0 democracy in other African countries will move forward under peaceful and less destructive conditions in 1995 and that the economic and social costs of such transition will be contained.
51. In South Africa, in 1995, it is expected there will be an intensification of efforts, through the implementation of the Reconstruction and Development Programme (RDP) to correct the gross socio-economic imbalances inherited from the apartheid era. Coupled with the firm stance towards fiscal responsibility, price stability, support for the private sector and encouragement of foreign investment, South Africa'S economic growth rate should accelerate.
That, however, will also require co-operation by labour and employers to build a new pragmatic relationship, based on a sympathetic understanding of each other's basic concerns as they set out to correct the labour market. distortions entrenched by years of apartheid.
52. There is little doubt that African countries will continue to intensify their economic reforms in the direction of growth and transformation in 1995. Already, it is a good sign that most national budgets in Africa are indicating a reduction in deficits and in the inflationary spiral associated with excessive money creation. It is hoped that in 1995 the economic efficiency and macro-economic stability, concerns of the reform process, will be integrated within a sustained long-term programme to build critical capacities in the areas of human resources, institutions and economic and social infrastructure that will put Africa on a sustainable footing and make it fUlly competitive in the modern world economy.
53. Altogether, therefore, there are grounds for only modest optimism regarding the growth prospects of the region's economy in 1995. Based on the above considerations and assumptions, ECA secretariat estimates that Africa's regional out.put should grow by about 3 per cent in 1995. It is to be noted, as usual, that this is an average of widely divergent results by countries and sUbregions.
In Central Africa, which was severely hit by political turmoil in 1994 and remains mired in political instability, real development remains somewhere on the distant horizon with only a faint hope for output rebound in 1995. In contrast, a strong recovery is expected in East and Southern Africa, the subregions badly affected by drought in 1992.
54. It is yet too early to quantify prospects for 1996, but it would seem that growth may not exceed the rate expected in 1995, which in itself is far from what is required to make an impact on poverty and social welfare in the region. African countries' earnings
14
from agricultural and mineral exports may retain their current positive trends if the dynamics of the recovery in the OECD countries is maintained. On the other hand, the surge in commodity prices in 1994 and 1995 may well encourage an expansion in productive capacity that was previously discouraged in Africa and elsewhere by low and declining world prices; and i t may cause prices to revert to their secular trend. As in 1995 and previous years, therefore, the vicissitudes of the weather and price movements on the international market continue to cast a cloud of uncertainty over future growth prospects in Afr ica, in view of the importance of agr Lcu LtureI s contribution to aggregate output, export revenues and employment.
And so may the violent conflicts affecting a significant number of countries and the lack of democratic and enlightened governance in many cases. It would be an error, though, to conclude that mere political, economic and financial liberalization will automatically bring about development. A lot would indeed depend on the real changes in the production sphere, in terms of competitiveness and productivity - and in intra-African cooperation - all of which are crucial for socio-economic progress and transformation in the region.
II. AFRICA IN THE WORLI) ECONOMY
A. Introduction
55. This section of the Survey reviews the major trends in the international environment, and draws attention to the challenges and opportunities which they pose for African countries.
56. The past four decades have witnessed a growing interdependence of the world economy in the form of inter-linkages between production processes across national frontiers. Integrated international production has grown with the expansion of the activities of transnational corporati.ons; i t has now become a main feature of the world economy, a vehi c Le for the transfer of technology, an expansion mechanism for international trade and promotion of foreign direct investment (FDI). These developments have certainly been aided by the technological revolution, particularly advances in information technology, in transport and in communication, which have caused profound shifts in the Qrganization of world production, and altered signif icantly the environment. for competition.
57. The attainment of a high level of productivity now requires, more than ever before, the capacity to organize production across national frontiers, and to cope with the management and logistical problems that cross national operations involve. Several provisions of the Uruguay Round Agreement, by intensifying global competition and the race for productivity, will carry the processes of integrated international production and economic integration still further.
However, by aiming at eliminating barriers to the flow of goods and services, as well as capital, without extending the same facility to the movement of labour, the Agreement has blocked one avenue whereby developing countries, with their abundant supply of labour, could have participated effectively in global integration. It has been argued that "In the emerging international system, i t is increasingly firms TNCs and their affiliates, rather than arm's length transactions -- that determine a country's participation in the international division of labour. As a result, the growth potential of developing countries will depend to a large extent on their ability to participate in integrate~ international production and on the nature of their participation."
58. More significant.ly, the year 1994 witnessed major changes in the international environment that are likely to have profound effects on Africa's international economic relations, in the coming years and beyond. First, i t seems the developed countries have finally emerged from a protracted recession that had previously put so much strain on national economies and caused a good deal of disruption to the smooth working of the international economy.
Second, the Uruguay Round, concluded in 1994, opens a new chapter in international trade relations while its wide reach into areas of
World Investment Report 1993 Transnational Corporations and Integrated International Production, United Nations, New York, 1993