Free Trade & Africa Neoclassical Essay
- Length: 8 pages
- Sources: 10
- Subject: Economics
- Type: Essay
- Paper: #58302705
Excerpt from Essay :
Disequilibrium in almost any consumer good could cause inconvenience in the face of shortage, but a shortage of food is fatal. This is why governments protect their food supplies -- food markets might behave as any other consumer good but in the sense that society as a whole benefits from avoiding famine and the markets cannot guarantee this avoidance, food also functions as a public good. Public goods will always be subject to considerable regulation - even when competition is introduced and encouraged, it will be met with controls by any non-corrupt government to ensure its ongoing supply. Thus, food will never truly be subject to free trade, and any attempt to impose free trade on the world's food system will inevitably result in moments of disequilibrium and the attendant famine.
An Outcomes-Based Approach
When food markets fail, starvation often results (Diouf, 1989). Neoclassical trade theory views poverty reduction as an a priori outcome of increasing trade and thereby increasing wealth. Yet if poverty reduction is the ultimate objective of the global trading system, it should be defined and understood as such, rather than merely implied (Palley, 2006). While free trade may increase wealth, for this to translate into global food security requires that a number of other conditions also be met (Kripke & Mittal, 2007). The creation of wealth is one issue, the distribution of wealth is another altogether. In agriculture, landowners can create wealth and subsequently fail to distribute that wealth to the farmers who work the land -- this practice may have largely disappeared in the West but it remains common in the developing world. Indeed, Mittal (2007) argues that the current system of farm subsidies in the U.S. perpetuates a similar situation to the advantage of multinational agriculture firms and to the detriment of small family farmers. Free trade in agriculture fails to address this issue.
Africa in particular has seen poor outcomes with respect to food and free trade. This owes to a number of factors beyond free trade, but which represent strong influencers on the ability of free trade to address food supply problems on the continent. These include desertification, corruption, conflict and population growth. Africa's food production capabilities are diminishing precisely at a time when local demand is increasing (Feffer, 2007; United Nations, 2007). Dossani (2008) points out that the development of a successful agricultural sector is often predicated on huge landowners or massive subsidies, neither of which is present in much of Africa. It should also be noted that highly productive land and moderate population growth are also predictors of successful agricultural development.
With the correct policies in place, Africa can build its agricultural sector and achieve food self-sufficiency, as the continent has not achieved its agricultural potential (Thompson, 2007). What is required is a stronger push for food sovereignty. African nations must build their agricultural capabilities in the same that Western nations did in the past, by taking strong control over their assets. This approach does require competent governance, as corrupt politicians will act rationally by funneling outputs to themselves if left unchecked. Another component utilized by the West, but thus far not well-utilized in Africa is government investment in agriculture infrastructure. At present, this is roughly 4% of budgets, where in Asia it was 11-14% during that region's "green revolution" (Fresh Plaza, 2007).
There is little evidence to support free trade as a means to promote agricultural development in Africa. Free trade has largely failed to promote agriculture on the continent, mainly because of neoclassical trade theory is a poor fit for agriculture. Food security is a public good, which means that few governments are willing to engage in truly free trade in agricultural goods. Africa also faces several other structural problems that prevent either the development of agriculture or that prevent adequate distribution of food and wealth generated from agricultural activity. In the West, agriculture was developed with the aid of subsidies and other protections. The same should be true of Africa. The continent should be treated with an outcomes-based approach. Free trade is not such an approach, and simply assumes that increasing trade will result in food security. The truth is that free trade has failed to develop agriculture in Africa, or to alleviate poverty in the region. Free trade does not help agricultural development in Africa, and therefore should be replaced with a system that does work. This system will focus more on wealth distribution, the introduction of democratic government and the protection of agricultural industries, through subsidies and tariffs, in order that farmers are adequately incentivized to increase production.
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