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A multidimensional analysis of regional integration and cooperation: The case of the Economic Community of West African States

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A multidimensional analysis of regional integration and cooperation: The case of the Economic Community of West African States

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Content A MULTIDIMENSIONAL ANALYSIS OF REGIONAL INTEGRATION
AND COOPERATION: THE CASE OF THE ECONOMIC
COMMUNITY OF WEST AFRICAN STATES
by
Yilma Gebremariam
A Dissertation Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
(Political Economy and Public Policy)
August 1989
Copyright 1989 Yilma Gebremariam
UMI Number: DP23355
All rights reserved
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UMI DP23355
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UNIVERSITY OF SOUTHERN CAUFORNIA
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This dissertation, written by
Yi 1 m a _Gebr;emari a m ..............................................
under the direction of fr.is Dissertation
Committee, and approved by all its members,
has been presented to and accepted by The
Graduate School, in partial fulfillment of re
quirements for the degree of
DOCTOR OF PHILOSOPHY
Dean of Graduate Studies
Ph.D.
Ec
S2.93
Date . .fee.ii..l989
DISSERTATION COMMITTEE
ACKNOWLEDGEMENTS
The original idea behind the writing of this dis
sertation arose out of several term papers I submitted
to professors in economics and political science courses
I took while at Southern Methodist University in Dallas,
Texas and the University of Southern California in Los
Angeles, California. A further consideration which in
fluenced the writing of this dissertation was the con
tinued interest I developed over the years in African
economic, political, and social affairs.
A project of the present magnitude could not have
been undertaken, however, without intellectual support
and guidance from many people--I hastened to add--incur-
ring any responsibility for the views or contents ex
pressed herein. A special thanks goes to the chair of
my dissertation committee, Professor John E. Elliott.
The extent of his support during my study at the Univer
sity of Southern California has been immeasureable. My
study at the University of Southern California would not
have been accomplished without the continued assurance
i i
from Professor Elliott. For this, I owe him my deepest
appreciation and I remain loyal and a true friend. I
owe an incalculable and enduring gratitude to Professor
Nora Hamilton who gave willingly and unstintingly of her
time often interrupting her busy schedules and making an
extra effort to provide me with the needed information
for sharpening my interest in the analysis of complex
concepts. I am also indebted to Professor Eric Heikkila
for his valuable comments and suggestions in matters of
substance.
I would like to dedicate this dissertation to my
parents who never had the chance to witness my academic
achievement: (1) my late father, Ato Gebremariam Gemme-
sa, and my late step-mother, Wizero Desta Borrie, both
of whom never had a chance to read and write, but their
continued support during my childhood provided me with
all the nurturing of a father and mother, (3) my late
mother, Wizero Tsge Foye, who also never had a chance to
be able to read and write. She deceased on August 9,
1989 which was six days after the approval of this dis
sertation. (4) my brother, Ato Mergia Gebremariam and
his wife, Wizero Zenebetch Ako and my second brother,
Ato Tesfaye Gebremariam who provided me with their af
i i i
fection and financial support when I was most in need.
They made the achievements of their children possible.
Needless to say, this dissertation would not have
been accomplished without the reassuring and supportive
attitude of my wife, Wizero Elizabeth Abebe. She has
demonstrated utmost patience and dedication for six
years. I owe my incalculable and deepest debt of grati
tude to her. Although it is not possible to list the
names of all those who have been supportive of my study
at USC, I am most in debt to Ato Fisseha Gebre-Egziabher
and Wizerit Nigist Abraham for all the time and friend
ship they shared with me during my struggle to complete
my academic endeavor. Finally, this dissertation would
not have taken its present form without the help of many
individuals at the University's Computing Services (UCS)
and a special thanks goes to Dr. Gerald P. Jones for his
continued assistance during the entire research period.
I thank all.
iv
CONTENTS
ACKNOWLEDGEMENTS i i
ABSTRACT.................................................... xi
Ichapter page
I. INTRODUCTION............. 1
Statement of the Problem ................... 1
The Purpose of the Present S t u d y ........... 15
Proposal......................................15
Explanatory Model ........................ 17
Significance of the Present Study .......... 19
Sources and Organization ................... 20
II. THEORETICAL PERSPECTIVES ON REGIONAL
INTEGRATION AND COOPERATION . 23
The Need for Conceptualization..............23
Defining Integration and Cooperation . . . 25
Process or Performance ................... 28
Political Integration ................... 31
Economic Integration ...................... 36
The Theory of Customs Union ................43
Defining Customs Union ................... 43
Trade-Creating and Trade-Diverting
Effects of Customs Union ........... 45
The Desirability of the Formation of
a Customs Union ................... 53
Dynamic Effects of Economic Union . . . 55
III. DEVELOPMENTAL THEORY OF INTEGRATION .......... 63
Introduction .................................. 63
Issues in the Economic Integration and
Cooperation of L D C s.............. 66
Economic Issues .......................... 66
Political Issues .......................... 72
v
Limited Relevance of Traditional
Theory to LDCs....................... 76
Structural and Socio-Economic
C h a n g e s ...............................82
Minimalist Versus Maximalist
Alternatives ........................ 85
Alternative Theoretical Approaches for
Evaluating ECOWAS ...................... 92
Conclusions......................................95
IV. THE ECONOMIC COMMUNITY OF WEST AFRICAN
STATES (ECOWAS) .......................... 97
Organizational Background, Structure
and Objectives of E C O W A S ..............99
Problems of Economic Development and
Integration............................. Ill
Conclusions............................. 126
V. OBSTACLES TO TRADE LIBERALIZATION AND
ECONOMIC COOPERATION ...................
Introduction ...............................
The Gravity Equation Model ..............
Empirical Results ......................
ECOWAS Trade Liberalization Policies
and Their Limitations ..............
Trade Liberalization Problems and
Prospects ........................
Trade Liberalization Policies ....
Problems of External Trade: Some
Implications for ECOWAS ............
Conclusions.................................
VI. THE ROLE OF TRANSPORT AND COMMUNICATION
NETWORKS IN REGIONAL INTEGRATION . . . 194 j
Introduction .............................
Importance of Transportation and
Communication Networks ....
The State of Transport Facilities in
West Africa ...................
ECOWAS Proposals for Transportation and
Communication Networks ..........
A Proposal for Regional, Subregional
and Inter-State Transport
Links ..........................
194 [
197 |
i
211
221
222
128
128
132
145
153
165
168
180 |
190
The Communications Infrastructure--
The Pan-African
Telecommunications (PANAFTEL)
N e t w o r k............................. 224
Financing West Africa's Transportation
and Communication Systems .......... 229
Nigeria's Role in Transportation and
Communication Networks
Development............................. 240
Conclusions.....................................247
VII. THE ROLE OF INDUSTRIALIZATION IN THE
REGIONAL INTEGRATION OF ECOWAS .... 250
Introduction ............................... 250
The Need for Industrialization in
West A f r i c a .........................253
Central Role of Manufacturing within
Industrialization .............. 262
Case Studies in Industrialization .... 268
The Case of N i g e r i a ...................... 268
The Case of Cote d'Ivoire...............275
ECOWAS Strategies for Industrialization . 287
Import-Substitution
Industrialization (ISI) versus
Export-Or iented
Industrialzation (EOI) .......... 287
The Role of the State and Transnational
Corporations ........................ 311
Evaluation of Problems of ECOWAS
Industrialization ................... 332
Conclusions..................... 336
VIII. SUMMARY AND CONCLUSIONS.........................341
Summary..........................................341
Conclusions and Recommendations .......... 355
BIBLIOGRAPHY ........................................... 366
vi i
LIST OF TABLES
Table page
1.1. Basic Data for ECOWAS Member Countries .... 10
2.1. Economic Integration and the Removal of
Discriminations................ 39
2.2. The Relative Price Ratios for Members of a
CU and a non-CU Countries.....................50
5.1. The Relative Degree of Interaction Index
for West African States......................138
5.2. Regression Equation of the Gravity Model
for Intra-ECOWAS Trade Flows, 1969-1985 . 147
6.1. A Comparative Study of Road Networks for
Selected Countries in Africa and Latin
America......................................... 214
6.2. Contributions to the Fund's Called-Up
Capital as at 19th October, 1983 (in
U.S. Dollars).............. 232
6.3. Statement of Contributions by ECOWAS
Member States Towards ECOWAS
Telecommunications Projects as at 25th
March, 1983 .................................. 233
6.4. Developing Africa: Value Added in |
Transport and Communication Services by ■
Subregion and Economic Grouping, !
1985-1987 .................................... 235
6.5. Contributions to the Budget of the Fund,
1977-1979 as at 19/10/83 (in U.S.
Dollars) .......................................236
7.1. Structure of Manufacturing Industry in
West Africa by Type of Activities .... 271
7.2. Share of Manufacturing in GDP for West
African Countries, for Selected Years
(At current factor costs) ................. 280
7.3. Share of Industry, Total in GDP for West
African Countries, for Selected Years
(At current factor costs) 282
7.4. Trade Orientation of the Industrially
Advancing West African Countries,
1963-73, and 1973-85 288
7.5. Share of GDP in Manufacturing and
Agricultural Sectors (Millions of U.S.
Dollars at Constant 1980 Factor Cost) . . 301
7.6. Annual Growth Rates of GDP by Main
Sectors( at Constant 1980 Factor Cost) . 302
7.7. Growth of Manufacturing Value Added, at
Constant 1975 P r i c e s .........................305
7.8. Value Added by Manufacturing Industry, by
Subregion and Economic Grouping,
1985-1987 (at 1980 Factor Prices .... 306
7.9. Some Transnational Corporations in West
A f r i c a ..........................................320
7.10. Flow of Foreign Direct Investment,
1970-1984 .................................... 327
ix
LIST OF FIGURES
Pg.2e
ECOWAS: Political Divisions and Ports .......... 2
The Organizational Structure of ECOWAS . . . 105
Interaction Matrix ............................. 137
Idealized Process of Transport Development . 206
Map Showing Railway Networks in ECOWAS
Member countries ............................. 213
Map of Proposed Transport Networks of
ECOWAS.................................... 220
Nigeria's Major Inland Waterways . .......... 244
x
ABSTRACT
This dissertation examines regional economic inte
gration and cooperation among a group of sixteen coun
tries of West Africa with small national markets and un
equal economic development. In an effort to improve the
economic, political-and social conditions of the region,
various developmental policies were modeled or patterned
after the experience of the industrialized countries.
However, the study argues that, after more than two-and-
one-half decades of efforts, success with regional in-
tegraton and cooperation (RIC) for these developing
countries has been limited.
The main objective of this study, then, is to
identify and analyze contending theoretical perspectives
of RIC and strategic policies undertaken to promote eco
nomic development and integration in the West African
subregion. Spatial interaction has been an important
and widely adopted concept in geography, economics, and
sociology. It is used to evaluate multicountry trade
agreements aimed at greater economic integration and co
xi
operation. More specifically, this study (1) sheds new
light on the questions of regionalism, (2) suggests a
new perspective on the dynamics of regional integration
and cooperation (RIC) in economic development, and (3)
examines the experience of the Economic Community of
West African States (ECOWAS) in its bid to integrate the
West African subregion. To this end, the study engages
in the following major tasks.
The first chapter adumbrates the need for such a
spatial interaction study and identification of the ma
jor problems of the West African subregion. The second
chapter comprehensively reviews literature on the theory
of customs unions and evaluates the traditional theory
of integration and its implications for less developed
countries. Chapter three provides a second, dynamic
theoretical perspective for RIC. In doing so, (1) de
velopmental aspects of theories of integration and (2)
"the dependency" school approaches are evaluated. This
chapter sheds new light on the process of integration of
the West African subregion. Chapter four examines the
constraints and obstacles to the participating states of
West Africa of regional systems, and how they are af
fected by internal political economic forces or condi
tions and external factors. Chapter five discusses the
experience of the Economic Community of West African
States (ECOWAS), particularly in the areas of trade and
development. This chapter evaluates the static aspect
of integration by considering the gravity equation mod
el. As one aspect of developmental theory, the dynamic
process of the integration--liberalization of trade
among the ECOWAS member states--is considered. This
chapter also includes a detailed study of historical,
ideological, and political factors that have a fundamen
tal role in the creation and perpetuation of a customs
union.
Chapter six considers a number of issues relevant
to the restructuring of existing transportation and com
munications networks in West Africa. In the discussion,
the constraints and costs of restructing the infrastruc
tural networks are assessed in light of ECOWAS goals.
Chapter seven analyzes industrialization as a
widely accepted public policy strategy for economic de
velopment of the individual national economies and inte
gration of the West African subregion. In the analyses
primary attention is focused upon the integration of so-
cio-economic policies for industrial location, industri
alization and regional development. Chapter eight sum
marizes the findings of the study and offers conclu
sions. It is in this chapter that public policy issues
are clearly accentuated, and past and present policy
strategies for integration are analyzed.
xiv
Chapter I
INTRODUCTION
1.1 STATEMENT OF TOE PROBLEM
This dissertation presents a multidimensional1
study of the problems of regional economic integration
among a group of sixteen countries of West Africa with
small national markets (see Figure 1.1) and uneven eco
nomic development. Each of these integrating countries
has already begun the process of import-substitut ion and
has entered the integration process in order to speed up
industrialization.
The need for a multidimensional study of the prob
lems of regional integration is a result of the follow
ing distinctive features of ,the Less Developing Coun
tries (LDCs) economies. (RIC). First, a range of
models, plans and strategies have been proposed and many
used in efforts to improve the economic and social con-
1 "Multidimensional" in this study refers to the
analyses of "static," "dynamic," and "spatial" aspects
of regional integration.
1
Figure 1.1 ECOWAS: Political Divisions and Ports
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ditions of the LDCs. Often, these models, plansvand
strategies are patterned after the experiences that have
been successful in the Developed Countries (DCs), of
Western Europe in particular. A careful look at the re
cent history of attempts to apply various types of RIC
by LDCs provides useful insights into the interplay be
tween theory and practice and conditions affecting the
applicability of regional economic groupings or arrange
ments patterned on the European experience to the LDCs.
Second, as manifested by the relative abundance of
"development models, plans, and strategies" in LDCs, the
goal of economic development would seem to have high
priority among competing objectives.
Third, most LDCs are of small "economic size" in
the sense that their national annual income and/or in
come per capita is low compared with that of the Devel
oped Countries. The limited size of their domestic mar
kets tends to place a difficult constraint on
development, particularly after the first phase of im-
port-substitut ion is completed. There are fewer than a
dozen LDCs today beyond this initial stage of the indus
trialization process (Argentina, Brazil, Egypt, Hong
3
Kong, India, Mexico, Singapore, South Korea, and Tai
wan).2 Fourth, there are a number of political factors
or forces working against integration among LDCs: bound
ary and other conflicts and rivalries (e.g. interest
groups) within each country and between countries of the
integrated region for regional dominance. For example,
the Treaty which created the Economic Community of West
African States (ECOWAS) provides for, among other
things, the abolition (i.e., between member states) of
obstacles which inhibit the free movement of persons,
services, and capital.3 But, according to Ezenwe (1983),
the indigenisation policies of Ghana and Nigeria failed
to take into consideration Article 27 of the Treaty when
Nigeria expelled Ghanian workers out of Lagos in order
to protect the interests of its citizens.4
2 Chen, Edward K. Y., et al. "Hong Kong," "Tai
wan," "Republic of South Korea," "India," "Egypt," "Bra
zil," "Mexico," "Argentina," and "Latin America." World
Development, vol. 12, No. 5/6 (1984), pp. 481-660.
3 John P. Renninger. Multinational Corporation
for Development in West Africa. Pergamon Press, 19 7 9., p .
32.
4 Uka Ezenwe. ECOWAS and the Economic Integration
of West Africa. New York: St. Martin's Press, 1983, pp.
137-154.
4
To the extent that regional groupings or integra
tion bring about long term benefits in terms of "econo
mies of scale" and "external economies" by virtue of en
larging the effective size of the integrated market, it
may speed up the process of economic development. But,
benefits to be derived by each of the participating
countries from regional integration and cooperation
schemes will depend upon all the efforts put into the
process. Regional integration and cooperation may over
come or reduce the basic dilemmas of "underdevelopment"
vis-a-vis "dependency." Certainly, the idea of economic
integration has become attractive to political and eco
nomic leaders of the Third World. However, it is gener
ally agreed that determining an equitable distribution
of benefits accruing to the member countries can become
a major obstacle to integration of the West African su
bregion, since certain members of ECOWAS were more ad
vanced than others prior to the formation of the group
ing.
Regional integration and cooperation has been an
analytical tool of economic growth and development poli
cy since WW II with the birth of the European Economic
Community (EEC) and the Council for Mutual Economic Co
5
operation (COMECON). The basic formulation of RIC
emerged out of reconstruction efforts in Europe in the
post war period. It began as a series of functional re
lationships among European countries which ultimately
were merged into a set of more comprehensive arrange
ments, including the European Common Market (ECM) which
was followed by the admission of the Parliament of Eu
rope . 5
The European success generated both an applied
model of RIC and a body of theoretical analysis which
seeks to explain and justify this form of politico-eco
nomic interaction among nations. The LDCs, in the light
of their unsuccessful experience with the more conven
tional models of neoclassical economic theory, have ex
plicitly argued that integration would not be sustaina
ble without a continuous commitment and manifestation of
political compatibility and/or support.6 Partly because
of the insufficiencies of political cooperation, the
5 Ali M. El-Agraa. The Economics of the European
Community, Second Edition. New York: St. Martin's
Press, 1985, pp. 11-38.
6 Constantine Vaitsos. "Crisis in Regional Eco
nomic Cooperation (Integration) Among Developing Coun
tries: A Survey." World Development 6, no. 6 (1978), p.
719.
6
success of RIC has been limited in LDCs.7 For instance,
the East African Community was established in 1967, by
the Treaty for the East African Cooperation between Ken
ya, Tanzania and Uganda. Incompatibility among the
three partners forced the EAC to disintegrate by the
early part of 1978.® After initial success the Latin
America situation has also been one of either a failure
or stagnation in the process of RIC. For example, in
dustrial groups of the three large countries (Argentina,
Brazil, and Mexico)9 showed virtually no interest in the
creation of a larger and competitive Latin American
Market. In the medium countries (Colombia and Chile)
the aim was viewed with considerable skepticism rather
than cooperation. In the smaller countries (Bolivia,
Ecuador, and Paraguay), the aim was to gain access to
the larger countries markets.
Since the collapse of regional supranational in
stitutions in East Africa and Latin America, researchers
in economics, sociology, and political science have be
7 El-Agraa, 1985, Op. Cit., p. 94.
8 Arthur Hazlewood. "The End of the East African
Community: What are the for Regional Integration
Schemes?." Journal of Common Market Studies, 18, no. 1
(1978), p. 40.
9 Vaitsos, 1978, Op. Cit., pp. 722-724.
7
gan to look critically at integration theory from a his
torical vantage point in order to gain some insights as
to the applicability of the theory in LDCs.
The original theory of RIC-- which came out of the
arrangements in Europe-- was Jacob Viner's (1950) cus
toms union (CU) theory.10 A customs union was later de
scribed by Balassa11 as the second stage of integration
after a free trade area (FTA). Thus, a CU not only has
zero internal tariffs, but agrees to apply a common ex
ternal tariff to the outside world. Most of Viner's
qualitative assumptions have been conducted in terms of
"trade creation" and "trade diversion," assuming nations
with mature or advanced economies and normal market
mechani sms.
Viner's formulation of trade theory acknowledged
that member countries of a customs union might not have
industrialized economies. The theory of customs union
10 Jacob Viner. The Custom Union Issue. New
York: Carnegie Endowment for International Peace, 1950.
Viner's work was the first theoretical formulation of
the customs union which later became the guiding princi
ple for most researchers on the issues of regional inte
gration and cooperation schemes.
11 Bela Balassa. The Theory of Economic Integra-
tion. Homewood, Illinois: Richard D. Irwin, Inc., 1961.
Balassa's Theoretical work began appearing in Kyklos
during the same year.
8
thus came to be seen by some development economists as
means of achieving economic development or dynamic effi
ciency within the economies of the developing coun
tries. 12
Typically, economic growth, narrowly defined as
measured by the gross national product (GNP), has been
equated with economic development.13 This is also im
plied by Table 1.1, which provides basic data for ECOWAS
member countries. The low level of per capita income
means weak purchasing power for the subregion which in
the short run, limits the process of industrialization.
But the analysis of integration among these coun
tries must go beyond such things as GNP or per capita
income to reveal many of the underlying constraints on
economic growth or development of the West African su
bregion. If one takes the basic data of Table 1.1 into
consideration, it is evident that differences in per ca-
12 S. K. B. Asante. The Political Economy of Re
gional i sm in Africa: A Decade of the Economic Community
of West African States (ECOWAS). New York: St. Martin’s
Press, 1986, pp. 10-12.
13 Charles P. Kindleberger. Economic Development.
New York: McGraw-Hill Book Company, Publishers, 1965,
pp. 3-60. This was also extensively discussed in M. D.
Little (1982), 3-15; and Balassa (1965), entire.
9
TABLE 1.1
Basic Data for ECCWAS Member Countries
(in Area Popula-
millions) (in tion
Population sq. Per Sq. Per Capita Government Date of
Country__________ 1986______miles) Mile Income________ Type_________ Independence
Benin 4.140e 43,483 94.9
Burkina Faso 7.080e 105,869 76
Cape Verde
- - —
Gambia, The .774e 4,361 172
Ghana 13.550e 92,098 142
Guinea 5.730e 94,964 59
Guinea-Bissau .858e 13,948 63
Ivory Coast 10.500e 124,503 85
Liberia 2.310e 38,250 60
Mali 7.900e 478,764 17
Mauritania 1.690e 397,954 4.
Niger 6.720e 489,189 14
Nigeria 105.450e 356,667 275
Senegal 6.980e 75,750 89
Sierra Leone 3.990e 27,925 134
Togo 3.120e 21,622 140
$ 290 (1983) Marxist-Lenist 8/1/8&
150 (1983) Military 8/5/60
255 (1985) Republic 2/18/65
420 (1980) Authoritarian 3/6/57
305 (1984) Republic Under
Military Command 1958
165 (1983) Republic 9/10/74
1,100 (1984) Republic I960
400 (1982) Military 7/26/1847
190 (1984) Republic 6/20/60
466 (1984) Military Republic 11/28/60
200 (1984) Republic 8/3/60
790 (1984) Military 10/1/60
380 (1984) Republic 8/2/60
320 (1984) Republic 4/27/61
240 (1985) Republic_________________
Source: The World Almanac and Books of Facts, 1988, various pages.
e: estimates
pita income, population size, types of government or
idealogical beliefs, can become major obstacles of the
process of integration or even forming a free trade
area(FTA), the first stage of an economic union.
The theoretical assumption in the present study is
that regional integration and cooperation among the de
veloping countries can provide long term economic and
political gains. These gains comprise both "dynamic
aspects" and "static aspects," although the static have
been overemphasized relative to the dynamic. Although
the question of whether "dynamic" or "static" aspects
are more relevant is, of course, an empirical issue,
even without concrete empirical evidence, the dynamic
apects are likely to be quantitatively of different or
ders of magnitude and qualitatively different than the
static aspects.
From a static vantage point, RIC is perceived as a
state of affairs in regional and international trade in
teractions leading to "complete integration" of national
identities. The dynamic view perceives RIC as a process
through which existing discriminations along political
boundaries are progressively abolished between the coun
11
tries which are brought together to form a union. For
the purpose of the present study the dynamic aspect of
RIC will be adopted. In this sense, the functional defi
nition of RIC will be the gradual but steady process of
harmonized tariff reduction along with the removal of
other barriers to trade between the member states of
ECOWAS.
A regional grouping such as ECOWAS can be analyzed
by the "gravitational model" expressed by Reilly's Law
which is, essentially, an information model relating the
population of two or more centers (or regions) in con
junction with the relative breaking effect of distance
between the centers.14 There is a causal relationship
between the various independent variables that explain
the relative degrees of integration among the West Afri
can States. This relationship is one of interdependence
rather than unilateral causation between the centers.
Although the participating countries can not avoid
economic costs associated with the process of regional
integration especially in the short and medium terms,
14 J. R. Boudeville. Problems of Regional Econom
ic Planning. George Square Edinburg: Edinburg Universi
ty Press, 1966, p.42.
12
the above theoretical assumption presupposes that there
are economic and non-economic benefits which the West
African subregion can potentially obtain from integra
tion over time. Specifically, to elaborate the above
theoretical assumption, the following questions will be
analyzed in each of the subsequent chapters. These ques
tions are: (1) Is there a limit to the differences in
levels of development and 'economic size' of members of
a grouping beyond which integration cannot work? (2)
Does regional economic^integration lead to some economic
gains, and if so, through what policy instruments? (3)
To what extent can a regional planning scheme (such as
that of ECOWAS) determine such matters as the location
of new industries to alleviate the problems of "disecon
omies of scale” and the industrial specialization essen
tial to achieve an acceptable distribution of the ben
efits of integration? (4) To what extent are political
and cultural incompatibilities major constraints in the
integration process? and (5) To what extent are member
countries willing to surrender their sovereignty to a
regional "supranational Institution?."
Because of the unsuccessful history of RIC efforts
since WW II, a body of literature has emerged which pro
13
vides a point of departure for an "alternative approach"
to the neoclassical "static equilibrium" approach in the
analysis of ECOWAS and, from a policy perspective,
reassesses the conditions (e.g.,- political compatibili
ty, economic complementarity, high level of trade among
intra-member countries, and so on,) under which region
al-level development may be applicable to LDCs develop
ment efforts in general, and ECOWAS in particular. In
this context, the present study is an attempt to explore
the nature of dynamic changes, to examine the "effects"
of different changes, to gauge the probability of their
continuance and to determine the resultant of all the
elements interacting together.
In this connection, it is of major interest to in
dicate that because of significant and fundamental eco
nomic and political differences between the economies of
the developed countries and that of the less developed
countries such as the West African subregion, the theory
of economic integration within the context of economic
development is different. In the less developed coun
tries, including the West African subregion, the objec
tives of economic integration are different, the condi
tions of economic integration are different, the
14
consequences are different, and the basis for analyzing
and evaluating the results of integration are different.
Hence, if economic development is taken broadly to mean
a fundamental structural change of the economies of West
African countries through industrialization and the re
sulting capability to improve the relative position of
the subregion, then, the objectives of integration in
ECOWAS must be pursued in a dynamic fashion.
In this study, particular attention will be given
to: (1) the use of spatial arrangements of regional eco
nomic linkages for specific long term political goals,
(2) both economc and non-economic constraints that can
exist for member countries individually, and (3) efforts
made collectively to accelerate the development of the
region. Hence, a multidimensional analysis of regional
integration is called for to shed new light on RIC.
1.2 THE PURPOSE OF THE PRESENT STUDY
1.2.1 Proposal
The purpose of the present study is to provide a
multidimensional analysis of regional integration and
cooperation conceived as an integrated framework. In
15
analyzing the evolution of the theory of RIC a review of
relevant body of literature will be examined. Several
approaches will be used to broaden the theoretical cri
tique and the policy implications of experiences of LDCs
in general and for the ECOWAS in particular. First, a
general review will be made of the results of formal ar
rangements which have been employed in Europe and Afri
ca. Second, one of the current systematic attempt of
RIC, viz., ECOWAS, the largest regional grouping in
terms of membership to utilize regional cooperation for
multiple objectives will be assessed. Finally, a de
tailed analysis will be made of the prospects for
ECOWAS, by examining some of the most critical issues
affecting regionalism in West Africa. By this review
the present study hopes to gain some insights from the
factors that have short-circuited the development pro
cess in the past, and to reach some conclusions as to
what forms of regionalism are most appropriate in the
West African environment.
The quest for regional integration (by each of the
sixteen member states), therefore, is a problem in po
litical economy. The creation of ECOWAS as a suprana
tional authority had been expected to lay the founda
16
tions of an ever closer regional cooperation among the
peoples of West Africa. Beyond this, ECOWAS had also
been expected to facilitate, foster, and stimulate eco
nomic development of the region as a whole.
In view of the vast nature of the subject matter
the scope of the present study will be limited to four
main issues which are crucial for RIC in a developmental
context: (1) the role of ECOWAS as an institutional
framework for the region, (2) the realignment of trade
patterns of the region, (3) the realignment of the in-
frastructure--transportation and communication of the
region, and (4) strategies for industrialization.
1.2.2 Explanatory Model
Regional integration and cooperation is a rela
tively new field of investigation in developmental eco
nomics. Thus, its contribution to development theory
has been limited. Hence, RIC strategists both in acade
mia and the real world are theorizing new methods of
analysis for which a common ground is yet to be found
which encompasses the various elements of integration.
In the present connection, a multidimensional ap
proach is adopted. In so doing, this approach adheres
to the analytical framework of static, dynamic and spa
tial aspects of regional integration. Although static
and dynamic aspects have been noted briefly earlier,
spatial is concerned with a systematic investigation of
relationships and structures of "space-economy." In
other words, spatial analysis over any given area is
concerned with the distribution of population and eco
nomic activities and the physical movements and interac
tions which connect them. The geographic analysis of
regional integration and change attempts to account for
alterations in the configuration of people, production
and power over time, by refernce to elements such as the
location of economic activities, the spacing and size of
settlements, the direction and intensity of movements of
people and goods, and the networks of transportation and
commun icat ions.
18
1.3 SIGNIFICANCE OF TOE PRESENT STUDY
A multidimensional approach to study of regional
integration and cooperation can establish a basis for
further research so that RIC may claim its appropriate
place beyond the notion of the "nation state." This be
comes very important in a historical context. For exam
ple, the establishment of ECOWAS as a regional entity in
many ways emerged out of the grueling activities of the
United Nations' Conference on Trade and Development
(UNCTAD) and the idea of collective self-reliance which
can be attributed to the 1973 declaration recognizing
that effective cooperation among the LDCs would further
strengthen their role in international economic rela
tionships .
The study of the regional integration of LDCs is
of vital importance in the formulation of theoretical
frameworks and public policy instruments for economic
development. The theoretical importance of RIC is two
fold (1) The focus on dynamic aspects should lead to the
analysis of the problems associated with national and/or
subregional economic development. The association of
economic development with the study of regional integra
19
tion should provide a more relevant approach for LDCs
than the traditional ones, i.e., static analyses of re
gional integration;15 (2) The interaction between eco
nomic (e.g., mobility of labor and capital across na
tional boundaries) and non-economic (e.g., the surrender
of some levels of sovereignty) factors must be under
stood to explain the dynamic aspects of regional inte
gration analysis among LDCs.
The present study will provide some underlying im
plications on the preferability for individual LDCs to
join integration schemes with other LDCs than with de
veloped countries, even if the loss of short-term rev
enues is siginificant.
1.4 SOURCES AND ORGANIZATION
The basic research for this study was based on the
academic literature in the field, and United Nations re
ports and reports of its regional organizations such as
the Economic Commission for Africa (ECA).16
15 Bela Balassa. Economic Development and Inte-
gration. Centro De Estudios Monetarios Latino-America-
nos: Mexcio, 1965, pp. 13-18.
16 Note: The researcher was unable to consult
such extremely important sources as the ECOWAS executive
secretary's annual reports; the series of the Communi-
20
The study is arranged into eight chapters. Chap
ter II reviews traditional theory of integration, and
its relevance to the Less Developed Countries. The aim
of this chapter is to point out the theoretical and em
pirical limitations of the static approach in studying
regional integration and cooperation schemes. In Chap
ter III, aspects of developmental theory of integration
are analyzed* The analysis of this chapter postulates
potential benefits which can be obtained from a develop
mental context. The fourth chapter, after a brief dis
cussion of the background through which ECOWAS was
formed, including a brief statement on its objectives
and organizational structure, will undertake a critical
evaluation of the literature of regional integration and
cooperation from the vantage point of ECOWAS on the one
hand, and Third World economies, on the other hand. In
Chapter V the "gravity equation" model is adopted to
evaluate the degree of integration on the basis of in
tra-ECOWAS trade interactions, i.e., the static aspects
ty's Official Journals; ECOWAS Policies and Program se
ries; and the recent special studies sponsored by the
ECOWAS Secretariat itself. The use of these primary
sources would have helped this study in providing deeper
insights into the operation and fortunes of ECOWAS).
These information could not be found in the United
States.
21
of integration of the West African subregion. This
analysis will be extended to the dynamic aspects of in
tegration-- trade liberalization strategies as prerequi
site for integration of regional or subregional econo
mies. Chapter VI deals with the realignment of West
African transportation and communication networks. This
chapter includes analysis of spatial distribution of
transportation and communications since these are essen
tial for the creation and improvement of trade relations
among the integrating states. The seventh chapter exam
ines the concept of industrialization and strategies for
regional industrialization, analyzing their goals, im
plementation and effects on the member countries of
ECOWAS. The final chapter, Chapter VIII, will contain a
brief summary, conclusions, and policy recommendations.
22
Chapter II
THEORETICAL PERSPECTIVES ON REGIONAL
INTEGRATION AND COOPERATION
2.1 THE NEED FOR CONCEPTUAL!ZATION
The purpose of this chapter is to review conven
tional theory of economic integration and discuss its
application to the West African subregion. The concept
and forms of economic integration denotes the bringing
together of parts into a whole.1 While the concept re
fers to the true fusion and unification of markets, the
principles of the common market can be expanded and ex
tended to cover the forms of economic integration which
will be discussed later.
Balassa2 presupposes that the formation of a large
market assumes the following:
(1) if the various regions or countries which would
be brought together by the pooling of markets have
much the same levels of economic and social devel
1 Bela Balassa. The Theory of Economic Integra
tion . Homewood, Illinois: Richard D. Irwin, Inc., 1961,
p. 1.
2 Ibid., pp. 104-112.
23
opment and financial resources, then there will be
no grave disparities in their competitive power;
(2) when the degree of disparity between the coun
tries or regions concerned is so great as to con
stitute virtually a difference in nature of their
standards of living and economic strength, then the
expansion of the market and the liberal principles
of free competition and better division of labor
and capital may not result in a restoration of the
balance between the various countries; in fact they
may even seriously widen the initial disparities.
In this connection, the unification of the sixteen
West African countries on their own would tend to aggra
vate or increase the imbalances that exists today be
tween them. Only within a framework of a larger and
more unified market will each participating country have
the optimum opportunities for developing its national
economy. Such extension of or enlargement of a geo
graphical area is itself complicated, as will be dis
cussed in some detail later, by the political, social,
and cultural problems of setting each of the participat
ing countries on the path toward a complete economic in
tegration. This includes differences in size and wealth
of the participants.
In this chapter, a review of the traditional theo
ry of economic integration is considered in several
steps.
24
First, the analysis will focus on the various way
in which the concept has been defined and the differenc
es among theorists in the areas of integration or coop
eration and integration as a process or performance.
The analysis will be concerned with the effects of both
political integration and economic integration. Second,
the theory of customs union, including the Vinerian
theory of integration, will be considered.
2.2 DEFINING INTEGRATION AND COOPERATION
The concept of integration goes back a long time,
although it has been used as an economic term only since
WW II,1 when it was used to explain one of the objec
tives of the programmes for the rebuilding of war-torn
Europe. Over time, however, its meaning has been al
tered in order to adapt to new circumstances.4 For the
purpose of the present study three major approaches ap
1 Isaac Cohen Orante. "The Concept of Integra
tion." Economic Inteqration and Third World Develop
ment . Westport, Connecticut: Greenwood Press, 1984, p.
51. Also, in The Economics of The European Community,
Second Edition, Edited by Pradip K. Ghosh. New York:
St. Martin's Press, 1985, p. 11.
4 Dharam P. Ghai. "Alternative Concepts of Eco
nomic Integration," in Economic Integration and Thi rd
World Development, edited by Pradip K. Ghosh. Westport,
Connecticut: Greenwood Press, 1984, pp. 67-70.
25
pear to dominate the conceptualization of integration
during the last four decades.
First, Sannwald and Stohler5 contributed two ap
proaches in defining the concept of integration: (a) The
functional method of integration presupposes the exis
tence of free competition in all markets— in particular,
in the market for productive factors. It postulates an
automatic integration through market process. (b) The
formation of supranational institution, unlike the func
tional method, postulates that integration requires co
ordination and unification of economic and social poli
cies.
Second, Balassa,6 one of the foremost integration
theorists, defined economic integration as both a pro
cess and a state of affairs. When viewed as process, it
encompasses measures designed to abolish discimination
between two or more economic entities belonging to dif
ferent sovereign states. When viewed as a state of af
fairs, it can be characterized by the absence of various
5 Rolf Sannwald and Jacques Stohler. Economic In-
teqration: Theoretical Assumptions and Consequences of
European Uni f ication. Princeton, New Jersey: Princeton
University Press, 1959, pp. 85-97.
6 Balassa, 1961, Op. Cit., p. 1.
26
forms of barriers (both economic and non-economic) be
tween independent sovereign economies. Moreover, Balas
sa, Kahnert, Stoutjesdijk, and Thomopoulos,7 makes the
the distinction between integration and cooperation,
which is qualitative as well as quantitative. For exam
ple, international agreement on trade policies consti
tutes a form of cooperation, whereas the abolition of
trade barriers is an act of economic integration.
Finally, another integration theorist, Overturf8
postulates a more generalized definition which states
that:
Economic integration would imply the greatest pos
sible division of labor, the fullest possible mo
bility of factors, and the least possible discrimi
nation within the grouping. Movement toward this
state may take place by various forms, or degrees,
of unification, including international trade inte
gration, factor integration, and policy integra
tion,... The phrase economic integration has only
fairly recently been used to denote the combination
of separate economies into larger groupings. As
such, its use in practice seem to refer either to
the state of being integrated or to the process of
achieving that state, and more than occasionally to
7 Ibid., p. 2. Also, in Economic Integration
Among Developing Countries, by F. Kahnert, P. Richards,
E. Stoutjesdijk, and P. Thomopoulos. Paris: Development
Center Studies, Organization for Economic Cooperation
and Development, 1969, p. 11.
8 Stephen Frank Overturf. The Economic Principles
of European Integration. New York: Praeper Publishers,
1986, p. 1.
27
both at same time.
2.2.1 Process or Performance
Apart from the question of the relationship of so
cioeconomic and political dimensions, there is also the
question of process or performance in understanding the
concept of integration. When economic integration and
cooperation are viewed as a process, they comprise dif
ferent actions undertaken by two or more states to elim
inate immediately or gradually barriers among them as
economic units. Correspondingly, for Orante,9 integra
tion is defined as "the process by which two or more
governments, with the aid of common institutions, adopt
joint measures to strengthen their political and econom
ic interdependence and thus obtain mutual benefits."
Thus, according to Orante, integration as a process pro
vides an appropriate long-term as well as short-term
time dimension involving integration activities which
might occur between two or more states.10 The mutual
benefits of such integration processes may include, (a)
economies of scale, (b) the increase in the bargaining
9 Orante, Op. Cit., p. 58.
10 Ibid.
28
power of the participating countries against third par
ties (usually the developed countries of Western Europe
and North America), and (c) indirect benefits (e.g., the
dissemination of market and non-market information). In
practice, however, the distinction between process and
performance is blurred.
The interpretation of the concept of economic in
tegration provided by Brewster and Thomas11 suggests a
clear departure from those of their predecessors. They
argued that economic integration is essentially "organ
ic.” They argued that "its methods and patterns of de
velopment are defined through the diffusion of attri
butes of strength and weakness throughout the integral
parts of a regional system." Thus, integration must be
viewed as a final product rather than a process or the
existence of integrating mechanisms. Hence, Brewster
and Thomas maintain that "by economic integration one
must refer to the consequence of any so-called integrat
ing mechanisms rather than the mechanisms themselves."
Clearly, for these two collaborators, if the mechanisms
11 Havelock Brewster and Clive Y. Thomas.
"Aspects of the Theory of Economic Integration." Jour
nal of Common Market Studies 8, no. 2 (December 1969),
pp. 111-112.
29
of integration are established but the effect is neg
ative with respect to the region and component units,
then the result is disintegration not integration.
Finally, Vaitsos12 views economic integration as
dynamically increasing inter-sectoral dependence in both
the regional economy and that of its constitutent units.
More specifically, Vaitsos states that economic integra
tion must be viewed as a dynamic process whose content
and social legitimacy depends upon: (a) the socioeco
nomic and political structures inherited from the past
of the group of countries; (b) the objectives set at
present with respect to the needs for development; (c)
new conditions which are likely to result in the future
including the internal dynamics and effects of integra
tion for social transformation, and (d) the enlargement
of overall possibilities for achieving development where
the whole exceeds and is qualitatively superior to the
sum of its parts. In examining the dynamic aspects of
inter-sectoral dependence in regional integration, a ru
dimentary understanding of political integration is in
x2 Constantine Vaitsos. "Crisis in Regional Eco
nomic Cooperation (Integration) Among Developing Coun
tries: A Survey." World Development 6, no. 6 (1978),
pp. 736-743.
30
dispensable in order to recast the relationship between
economics and politics of integration.13
2.2.2 Political Integration
In examining the concept of political integration,
one of the fundamental questions is: what theory and
practice of regional politics seem most likely to
strengthen integration and to sustain it during periods
of rapidly changing circumstances?.
According to Karl Deutch,14 the success or failure
of any political integration and how fast the process
will develop are likely to depend upon the degree to
which the integrating countries have already been linked
by similar languages, cultural patterns (e.g., marriage
between different ethnic groups, religion, etc.). In
13 Andrew W. Axline. "Underdevelopment, Depen
dence, and Integration: The Politics of Regionalism in
the Third World." International Organization 31, no. 1
(Winter 1977), p. 1. Also, in The Uniting of Europe:
Political, Social and Economic Forces, 1950-1957. Stan
ford, Stanford University Press, 1958, pp. 11-19, as
well as in "South-South Relations: The Economic and Po
litical Content of Interactions Among Developing Coun
tries," by John H. Rosenbaum and William G. Tyler in In
ternational Organization 29, no. 1 (Winter 1975), pp.
248-251.
14 Karl Deutch. Tides Among Nations. New York:
The Free Press, 1979, p. 287.
31
practice, these similarities do not seem to exist. The
sheer diversity of the West African subregion, not only
in languages and culture, but also in size and colonial
experience, is a serious obstacle to integration. The
subregion is the most varied in Africa as to the size of
countries, the level of economic development, and the
development of internal and external economic linkages.
As a result, it is generally believed that the absence
of homogeneity may hinder the process of integration
(although the language problem is not as great as in the
EEC) .
There are two major schools of thought dealing
with integration from the political perspective. They
are the Federalist (Maximalist) and the Functionalist
(Minimalist) schools of thought,15 whose basic postula
tions for integration strategies vary.
The first strategy, "Federalism," is a form of in
tegration that requires each of the integrating states
to surrender its national sovereignty to a supranational
institution. The nation-state becomes integrated polit
15 Domenico Mazzeo. African Regional Organiza
tions. Cambridge: Cambridge University Press, 1984, p.
3.
32
ically, economically and socially only when politics
rule over economics.16 Once the process of integration
begins, the difficulty is differentiating between a sov
ereign state and a non-sovereign state. Haas,17 a cen
tral figure in the non-functionalist school of regional
integration theorists, is concerned with "explanations
of how and why nation-states cease to be wholly sover
eign, how and why they voluntarily mingle, merge, and
mix with their neighbors so as to lose the factual at
tributes of sovereignty while acquiring new techniques
for resolving conflicts between themselves." The suc
cess or failure of an integration process would be meas
ured by the extent to which a transfer of authority from
individual states to common institutions had taken
place.
The second, "functionalist," strategy, emphasizes
quite different notion of integration. Functionalists
argue that integration should occur incrementally and
not wholly. Unlike the federalists, functionalist
stress the predominance of economics over politics,
16 Ibid., p. 4.
17 Ernst B. Haas. The Uniting of Europe; Politi
cal, Social and Economic Forces, 1950-1957. Stanford
University Press, 1958, pp. 4-11.
33
i.e., economic integration should precede political in
tegration.18 In practice:
regional cooperation has often combined federalist
and functionalist elements. This is particularly
evident in the first major attempt at regional co
operation in Western Europe: the creation of the
European Coal and Steel Community in 1952. Through
intergovernmental agreement, a supranational au
thority was established from the outset to regulate
a major sector of economic activities. The Treaty
of Rome of 1957 adopted a gradualist approach to
economic cooperation, but clearly proclaimed its
political, quasi-federal final objective.1’
Hence, functionalism entails capturing available
opportunities to link together particular activities and
interests step by step as the need arises and based upon
the acceptability of the arrangement to the integrating
states. Consequently, each state is given joint author
ity, and policy directives are limited to the area of
integration being sought at that point in time.
In general comparison of functionalist and feder
alists conception of political integration reveals at
least three marked differences.
18 Mazzeo, 1984, Op. Cit., p. 4.
19 Ibid., p. 5.
34
First, unlike the functionalist school of thought,
the federalists argue that the transfer of authority and
responsibility to a supranational organization is need
ed. For instance, Lindberg20 argues that "it envisages
a cumulative and expansive process whereby the suprana
tional agency (or organization) slowly extends its au
thority so as to prgressively undermine the independence
of the nation state."
Second, the federalists view regional integration
as a process in which political factors play supreme
role in the management of conflicts, controversies, and
crises.
Third, for the federalists, integration occurs in
crementally at times and other times in quantum leaps as
opposed to the functionalists perception that it occurs
only incrementally.
According to Balassa (1961, 1965) and the func
tionalists, political integration occurs only as a re
sult of increased economic interaction between the inte
grating states. Increased economic interaction occurs
20 L. N. Lindberg. The Political Dynamics of Eu
ropean Economic Integration. Stanford: Stanford Univer
sity Press, 1970, p. 77.
35
when each state in the integration process supports and
facilitates economic development within its national
boundaries. This increased economic integration is
achieved when cooperation efforts between participating
states moves from a "free trade area" to a "customs un
ion," to an "economic union and eventually to a "politi
cal union or federation" (Balassa, 1961). Although
ECOWAS, for understandable reasons, has not commited it
self to any form of poltical' union, it is anticipated
that effective economic integration can enable the su
bregion to bring about closer political and socio-cul-
tural ties which hopefully reinforce the politico-eco
nomic scheme itself. Based on the literature reviewed
so far, this is also the position of other theorists as
well as the current researcher.
2.2.3 Economic Inteqration
Following the classic conception of Balassa
(1961), integration has been denoted as "the bringing
together of parts into a whole." In an allied interpre
tation Gunnar Myrdal21 suggests that integration can be
21 Gunnar Myrdal. Asian Drama; An Inquiry into
the Poverty of Nat ions. New York: Twentieth Century
Fund, 1968, p. 11.
36
thought of as a social and economic process eliminating
barriers (social and economic) between participants in
economic activities. According to Myrdal, the economy
is not integrated fully or even partially unless all av
enues are open to everybody and remunerations paid for
productive services are equal regardless of racial, so
cial, and cultural differences. Myrdal, of course,
presupposes not only international, but also national,
integration. However, many mainstream economists con
sider only international problems when appropriating the
concept of integration. Still, other economists suggest
that the mere existence of international economic rela
tions may be used as a measuring yardstick of integra
tion among countries.
In view of the conflicting nature of the widely
used concepts, the need for a consistent definition was
indicated by Balassa (1961). Based on the idea that ec
onomic integration occuris in consecutive stages, a body
of literature exists dealing with the various stages in
the development of complete economic integration. This
body of literature is based on the concepts derived from
classical (Ricardian) and neoclassical (Heckscher-Oh-
lin) international trade theory. For example, Machlup22
37
postulates the content of economic integration as:
Movements of goods, services, people, capital,
funds and moneys across natural and political fron
tiers are what interregional and international eco
nomic relations are about and all these movements
are part and parcel of economic integration. Trade
is usually the quintessence of economic integration
and the division of labor in several of its aspects
underlying principle. This holds for intranational
as well as international trade.
According to this view point, the theory of re
gional economic integration rests upon concepts such as
comparative advantage, free mobility of factors of pro
duction, equalization of factor prices, etc., found in
international trade theory.
Within the domain of classical and neo-classical
economics, integration is viewed as occuring in five
consecutive stages (Balassa, 1961). Later this approach
became the point of departure for many other theorists'
analysis of regional integration and cooperation schemes
(Mazzeo, 1984; Robson, 1983; Lipsey, 1970, 1973; and
Machlup, 1977). Following the sequence of Balassa's
(1961) classic work (see Table 2.1), six ( with the
first stage of Balassa's formulation subdivided into two
22 Fritz Machlup. A History of Thoughts on Eco
nomic Integration. New York: Columbia University Press,
1977, p. 43.
38
Table 2.1
Economic Integration and the Removal of Discriminations
Stages of
Integration
No ■
Tariff
, or
Quota
Common
External
Tariff
Free
Flow of
Factors
Harmonization
of Economic
Policies
Unification
of Ploicies
§ Political
Institutions
1. Free Trade Area
(FTA) ,
X
2. Customs Union
(cud
X X .
3. Common Market
(CM)
X X X
4. Economic Union
(EU)
X X X X
5. Total Economic
Union (TEU) X X X X X
Source: Joseph S. Nye, "Comparative Regional Integration: Concept and Measurement",
International Organization XXII (Autumn 1968), p. 860.
stages for purposes of conceptualization) consecutive
stages are described as follows.
First, sectoral integration (SI) occurs when coun
tries eliminate trade barriers between them on a sector
by sector basis. It is the lowest form of integration.
The second stage is a free trade area (FTA). This ex
ists when states abolish trade obstacles among them
selves, but retain their independence in determining and
formulating trade policies with regard to other coun
tries outside the free trade area. However, such indi
vidual tariff systems may accentuate some problems for
the free trade area. For instance, suppose two coun
tries within the area continue to maintain largely dif
ferent import tariffs on a particular product against
the outside world after agreeing to free trade among
themselves. Imoprters in the low-tariff country will
then find it profitable to import this product from the
outside world only to re-export it to the high-tariff
country. Apart from distorting resource allocation in
production and transportation, such trading patterns be
tween integrating states will almost certainly strain
relations within the free trade area.
40
The third stage is the customs union (CU). A cus
toms union is fundamentally similar to the FTA except
that here participants agree to apply a common external
tariff to the outside world (non-union members). With
this uniform trade policy toward non-members, a CU inte
grates several countries into one unit. Theorists pos
tulate that the CU may negotiate as one unit in world
wide trade negotiation, perhaps trying to improve its
"collective terms of trade." Clearly, the customs union
is the most analyzed and described form of integration
in the literature. The theory underlying it will be
evaluated in the next section of this chapter.
The next stage of integration is the formation of
a common market (CM). It has all the features of a CU.
In addition, there is a free movement of the factors of
production (i.e., capital and labor) across national
boundaries within the integrated area. The CM has also
been widely studied by such theorists as Robson (1983,
1987), Lipsey (1973), Balassa (1975, 1963), Streeton
(1963), and Vaitsos (1978). Clearly, the relationship
between the members of a common market area is closer
than mere interdependence caused by free trade in prod
ucts. Their economies are merging into one integrated
economic region.
41
The next stage of integration is, then, the eco
nomic union (EU), in which all artificial discrimina
tions of resource allocation and transportations between
member countries are eliminated. The final stage of in
tegration is the complete form of integration (CEU).
This occurs when economic institutions (such as central
banks) and public policies have been unified to facili
tate the creation of a common monetary and fiscal sys
tem. It is at this stage that both researchers and
practioners tend to believe that integration will in the
course of time generate closer political and socio-cul-
tural ties which may reinforce integration.
Obviously, some form of market integration (whicm
may not include the sectoral form of integration) may
fall within the above categories. The first three stag
es deal, primarily, with trade and factor integration
and mobility. The success of such market integration
requires a complementary payments arrangement. Accord
ing to Ezenwe(1983), countries such as the West African
groupings that are forming common market schemes for the
first time may fall somewhere between the first two (FTA
and CU), with or without any appreciable levels of the
elements of the third categories.
42
2.3 TOE THEORY OF CUSTOMS UNION
The first international customs union, Zollverein,
was created by the merger of the Prussian and Bavarian
Customs Union in 1819. The customs union model of inte
gration and cooperation, however, began with the birth
of the Benelux Customs Union in Western Europe in 1948.
Benelux provided a rippling effect in other European
countries (Kohr, 1949). In 1950, the pioneering work of
Jacob Viner became a point of departure for both theo
retical and practical debates of customs union--first by
formalizing varying definitions.
2.3.1 Defininq Customs Union
A customs union has been defined by Viner23 as
meeting the following minimum conditions: (a) the total
elimination of tariffs between the member countries; (b)
the establishment of a common or uniform tariff on im
ports from a third country; and (c) the distribution of
customs revenue between the members in accordance with
an agreed formula. Following the above definition, Lip-
23 Jacob A. Viner. The Customs »Union Issue. New
York: Carnegie Endowment for International Peace, 1950,
p. 5.
43
sey24 provides a more succinct definition: "the theory
of customs union can be defined as the theory of geo
graphically discriminating reductions in tariffs".
Viner's (1950) analysis focuses on whether the es
tablishment of a customs union results in a change in a
nation's production which has the net effect of divert
ing purchases to lower or higher cost sources of produc
tion for: (a) a particular member of the customs union;
(b) the customs union as a whole; (c) non-customs union
members; and (d) the world as a whole. According to
Viner,25 the main purpose of a customs union and its ma
jor consequence for good or bad is to shift the source
of supply. This shift can either be to lower or higher
cost sources depending on the situation, to which the
study now turns.
24 R. G. Lipsey. The Theory of Customs Unions: A
General Equilibrium Analysis. London: Weidenfield and
Nicholson, 1973, p. 1.
25 Viner, 1950, Op. Cit., p. 43.
44
2.3.2 Trade-Creatinq and Trade-Pivertinq Effects of
Customs Union
Viner employs the notion of "trade-creation" and
"trade-diversion" as indices of the welfare effects of
customs union (although he does not suggest how, when
both effects are present, one is to be offset against
the other in order to determine which effect predomi
nates). In a customs union, trade-creation dominates
if, as a result of the union, there are commodities
which one of the member countries of the union begins to
import from a fellow member, and production is shifted
from higher cost producer to lower cost producers.26 The
opposite effect can also prevail. For instance, some
commodities which were previously imported from a non
member country, because that was the cheapest possible
source, including duty, will now be acquired from member
countries. Thus the shift in this case is from produc
tion by low cost producer non-member countries to a high
cost producer member country. More succinctly, Viner27
asserts that:
Ibid.,
Ibid.,
P<
P-
42.
44.
45
benefits from a customs union to the customs union
area as a whole derive from that portion of the new
trade between the member countries which is wholly
new trade (i.e., trade creation), whereas each par
ticular portion of the new trade between member
countries which is a substitute for trade with
third countries (i.e., trade diversion)... must be
regarded as a consequence of the customs union
which is injurious for the importing country, for
the external world, and for the world as a whole,
and is beneficial only to the supplying country.
One important conclusion to be drawn from Viner's
model is that trade creation increases welfare and trade
diversion reduces it with one possible exception. Pro
duction may be shifted to a high-cost production member,
who then becomes a lowest-cost producer as a result of
economies of scale arising from expanded output. How
ever, Viner30 does not see the benefit accruing from
this scale effect as clear cut; he merely sees that
there may be a possibility of gains, not a certainty.
Viner’s examination of the customs union in terms
of trade creation and trade diversion has been studied
by various critics. As a result, there have been impor
tant debates as to the inclusion of other factors beyond
the narrowly defined aspects of trade creation and trade
diversion effects of customs union so as to make the
30 Viner, 1950, Op. Cit., p. 46.
46
theory more applicable to the situations of LDCs, and,
specifically, to the situations of ECOWAS.
Viner postulates a free trade case, such that, the
effect of a customs union on efficiency in the alloca
tion of resources is uncertain; this is because a cus
toms union heightens, at same time, a movement toward
free trade and a movement toward increased protection.31
His analysis was later supplemented by Lipsey (1960,
1970), Meade (1955), Gehrels (1956), Johnson (1965,
1973), and Cooper and Messell (1965, 1975) who analyze
the consumption effects of the customs union to show
that Viner's treatment of the customs union is too lim
ited. The limited nature of Viner's analysis is due to
confining it to production effects only, assuming demand
curves of zero elasticity and supply curves of infinite
elasticity. Although the above writers have made con
siderable contributions toward the elaboration of the
analysis of the theory of customs union, it is the work
of Lipsey and Meade which stands out in most academic
literature.
31 Ibid., p. 46.
47
Meade’s approach is to classify a large number of
possible cases showing the factors which would lead to
an increase in welfare (trade creation) when a CU is es
tablished and to separate these from the factors which
would lead to a decrease in welfare (trade diversion).
Meade32 suggests that these two effects should not be
measured in terms of the size of trade diverted or trade
created only. Instead, he argues, a better measure is
to compare the product of trade diverted multiplied by
the rise in its cost, and the product of trade created
by the fall in its cost. Consequently, if there is a
net increase in the volume of trade the customs union
will have raised economic welfare.
The core of Lipsey's33 analysis rests upon rela
tive prices. It is not accurate to presuppose that com
modities within a customs union are consumed in fixed
proportions, independent of the structure of the rela
tive prices, as viner tacitly suggests. Lipsey propos
es, instead, that a customs union inevitably results in
changes in relative prices. Lipsey's argument leads to
some degree of substitution between commodities, viz.,
32 J. E. Meade. The Theory of Customs Union. Am
sterdam: North-Holland Publishing Company, 1955, p. 29.
33 Lipsey, 1970, Op. Cit., p. 20.
48
there will be an inclination to increase the volume of
existing trade with more of the cheaper commodities and
fewer of the more expensive commodities. Consequently,
there will be an increase in the volume of imports from
a country's union partner and a decrease in both the
volume of imports obtained from the outside world and
the consumption of home produced commodities. The
thrust of Lipsey's34 analysis is illustrated in Table
2.2, in a model containing a minimum of three types of
commodities: domestic commodities (A), imports from the
union partner (B), and imports from the outside world
(C) .
The relative price ratios in Table 2.2 demonstrate
a number of effects under the three conditions formulat
ed. First, in free trade, one would observe that opti
mum conditions have been fulfilled. Second, once a uni
form ad valorem tariff is placed on all imports, the
conditions of free trade are disturbed as depicted in
column two for the prices of goods from both B and C are
higher in A's domestic market than in the outside world
market. Finally, when a customs union is established,
the prices of imports from the union country (B) are re-
34 Ibid., PP. 28-36.
49
Table 2.2
The Relative Price Ratios for Members of a Customs
Union and a Non-Union Countries
Uniform ad
Free Trade
Valorem Tariff Customs Union
on all imports with country B
Pag Pai Pad Pa i Pad Pai
ii
Q
Pbi Pb d ^ Pbi Pbd Pbi
Pad
^Cd
1 1
I P CP
o >
H M
Pad ^
PCD
Pai
Pci
Pad
Pcd
Pai
Pci
Pbd
pBi
Pbd PBl Pbd Pbi
I I
D
£
Pci Pcd Pci Pcd < Pci
Source: r. r . Lipsey. The Theory of Customs Unions: A General
Equilibrium Analysis. London: Weidenfield and Nicholson, 1973,
PP. 28-36.
Subscripts A, B, and C refer to countries of origin,
" d " to prices in A's domestic market, and "iM to
prices in the international market.
50
duced so that the conditions under free trade are un
changed, but the tariff remains on imports from the out
side world (C) so that the third condition (see Table
2.2) is not satisfied.
In this connection, Lipsey35 argues that the cus
toms union moves "country A" from one non-optimal condi
tion to another and in general it is difficult to build
an argument on the direction of the effects of a customs
union on welfare. Hence, Lipsey34 argues that Viner's
criteria of trade creation and trade diversion must be
rejected as unsatisfactory indices of welfare changes
because, if real prices are affected by the customs un
ion, they do not cover all the major changes resulting
from an inter-country substitution, and because, even
when real prices remain constant, trade diversion may
either increase or decrease welfare if inter-commodity
substitution prevails. In other words, inter-country
substitution would result in trade creation or trade
diversion, as described by Viner, when the country which
is the source of supply for a good is substituted for
another. Inter-commodity substitution is the case where
3 5 Ibid., p. 34.
34 Ibid., p. 21.
51
one commodity is substituted for another as a result of
relative price shifts. Both cases lead to production
and consumption effects and not to the former only.
Therefore, the implication in this controversey is
that one has to consider both consumption effects and
production effects, because changes in consumption will
lead to changes in. production. According to Melvin
Kraus,37 this argument gives rise to two general conclu
sions which deserve to be quoted at length:
The first is that, given a country's volume of in
ternational trade, a customs union is more likely
to raise welfare the higher is (sic) the proportion
of trade with the country's union partner and the
lower the proportion with the outside world. The
second is that a customs union is more likely to
raise welfare the lower is (sic) the total volume
of foreign trade, for the lower is (sic) foreign
trade, the lower must be purchases from the outside
world relative to purchases of domestic commodi
ties. This means that the sort of countries who
ought to form customs unions are those doing a
higher proportion of their foreign trade with their
union partner, and making a higher proportion of
the total expenditure on domestic trade. Countries
which are likely to lose from a customs union, on
the other hand, are those countries in which a low
er proportion of total trade is domestic, especial
ly if the customs union does not include a high
proportion of their foreign trade.
37 Melvin Kraus. The New Protectionism: The Wel
fare State ar)d International Trade. New York: New York
University Pi'ess, 1978, p. 47.
52
Thus far, a great deal of the discussion and crit
ical examination of the Vinerian concepts has rested on
the welfare costs and benefits of the different conse
quences of a traditional customs union.
2.3.3 The Desirability of the formation of a Customs
Un ion
In the course of the customs union analysis it has
been shown that the simple comparison of trade creation
with trade diversion is insufficient to evaluate the ef
fects of a customs union. However, there is a general
consensus on the desirability of forming a customs un
ion. According to Sannwald and Stohler,3 8 the formation
of a customs union can be justified on the basis of the
following:
1. Each customs union requires a reduction of
trade barriers which leads to a primary expansion
of trade from which welfare gains can be increased.
2. The formation of a customs union will lead more
rapidly to an improvement in the standard of living
if at the beginning the economic structures of the
partners are very similar to each other (substitu
table), but can potentially supplement each other
well-that is to say, the two economies are poten
tially very complementary. In this case, a sharp
expansion of their mutual trade is possible without
diverting their imports or exports from other mar
38 Sannwald and Stohler, 1959, Op. Cit., pp.
68-71.
53
kets. This is difficult in practice.
3. A customs union will raise economic welfare if
each country is the other's principal supplier of
the products which it exports and if each country
is the other's principal market for the products
which it imports... The extent to which these con
ditions are satisfied depends on the structure of
trade between the countries at the moment in ques
tion, and
4. The greater the share that a customs union has
in production, consumption, and trade of the world,
the sooner It will lead to a rise in economic wel
fare. Ultimately, diversion of import and export
trade will no longer be possible when all countries
of the world are joined together in one union.
The narrowness of the domestic markets of the mem
ber countries have the effect of limiting the production
capacity of domestic-oriented industrial units. Conse
quently, small size markets negate economies of scale
without which industrial goods cannot compete effective
ly, particularly in smaller member countries like Benin,
Niger, Guinea-Bissau and the Cape Verde Island group.
Therefore, the ability of each of these smaller markets
to put manufactured goods on external markets secures to
their firms a much wider market and more sales potential
than may be found within the smaller markets.
54
L
2.3.4 Dynamic Effects of Economic Union
The propositions in the previous section imply
that those countries that are most likely to benefit
from the formation of customs union are those with fair
ly well developed domestic industrial infrastructures,
and also those countries engaged in much regional inter
country trade even before the formation of a customs un
ion. Because these conditions are unlikely to occur in
LDCs, they are not likely to benefit from establishment
of customs union. It is obvious that, based on Viner's
propositions one would conclude that in LDCs, a customs
union typically would lead to trade diversion rather
than trade creation since LDCs trade with Western ad
vanced countries vmore than they do with each other.39
Similarly, based on Lipsey's criteria, the formation of
a customs union in LDCs probably would not result in
welfare gains.
A number of critical responses have been advanced
regarding to the implications of traditional customs un
ion theory for LDCs. The traditonal customs union was
39 Michael Todaro. Economic Development in the
Third World. London: Longman, 1985, pp. 274-275. Also,
in Technology and Underdevelopment, by Frances Stewart.
Boulder, Colorado: Westview Press, 1979, pp. 157-184.
55
formulated with little or no consideration given to the
predominantly agricultural economies of LDCs. There
have been attempts to reformulate customs union theory
so that it can be applied to LDCs by incorporating
aspects of development theory into the customs union
theory (Balassa, 1965). Rather than focus on trade
theory (e.g., production effects) alone as traditional
customs union theory does, this school of thought is
concerned with industrialization and the saving of for
eign exchange through import-substitution and other con
ditions conducive to development. As will be discussed
in Chapter seven, this argument is centered around the
issue that there may be forms of customs union and cri
teria for evaluating their success other than tradition
al ones suggested above. Essentially, this argument
suggests that the application of the welfare criteria to
DCs is different from its application to LDCs. The
question of application has some, implications for how
one views the purpose of the customs union in theory and
pract ice.
In this connection, the most frequently used anal
ysis of the relationship between RIC and welfare is that
postulated by Balassa (1971). Welfare in economic inte
56
gration, Balassa argues, is denoted by (a) an increase
in the quantities of goods and services produced; (b) a
change in the degree of discrimination between domestic
and foreign trade; (c) a redistribution of income be
tween nationals of different countries; and (d) income
distribution within the individual countries. As
aspects of the static and dynamic effects, defined ear
lier, Balassa postulates two forms of efficiency that
lead to an increase in welfare--"static efficiency" and
"dynamic efficiency".
Static efficiency occurs when there is a more ef
ficient allocation of resources in an economy given a
fixed level of technology. This means that the poten
tial welfare of the society is increased through greater
efficiency in production and exchange of goods and ser
vices as a result of economic integration. Regional ec
onomic integration can, then, provide the vehicle to
foster efficiency in the allocation of resources by
reallocating factors of production towards least cost
producers and reallocating of consumption in favor of
low cost commodities, and, thereby, promoting improve
ment in the terms of trade.
57
Dynamic efficiency, on the other hand, is the re
sult of better resource allocation through growth. Spe
cifically, dynamic efficiency is concerned with the
methods in which integration alters possibilities for
economic growth (as measured by the GNP, GDP and produc
tivity indices) in participating countries, notably "in
tensive growth" in productivity, as opposed to "exten
sive growth" through expansion in the quantity of
resources. Thus, the main factors of dynamic efficiency
are the allocation of investment funds, technological
changes, and dynamic inter-country relationships in pro
duction and investment and social interactions between
the participating countries.
Moreover, according to Lizano,40 the dynamic view
of efficiency with regards to RIC does not have the same
meaning in LDCs as it does in DCs. While RIC focuses on
adjustments or redistributions of trade and consumption
patterns in DCs in order to achieve more efficient re
source allocation, RIC, in the LDCs, is perceived as a
vehicle for national and regional economic development.
40 Edwardo Lizano. "Integration of Less Developed
Areas of Different Level of Development," Edited by
Fritz Machlup, in Economic Inteqration World-Wide, Re
gional and Sectoral. New York: MacMillan Press, 1976,
p. 276.
58
To reemphasize what has been stated before, Lizano41
comments succinctly as follows:
With less developed countries it is much more im
portant to examine the opportunities that integra
tion opens for the growth and diversification of
their economies, through the possibility of estab
lishing new productive activities especially indus
trialization .
The political economy presupposition of this view
point stresses that industrial development and diversi
fication of the economy should be guided by a deliberate
economic policy of import-substitution. But mainstream
economists argue that as the 1950s and the 1960s wit
nessed, LDCs, except the now Newly Industrializing Coun
tries (NICs), have shown little or no success in such
deliberate economic policies.42 According to Cooper and
Massell,43 traditional customs union theory is essen
tially a disguised argument for free trade. What is
needed is an analysis of alternative policies for pro
tection and enhancement of the interests of the develop
41 Ibid.
42 Raphael Kaplinsky. Third World Industrializa
tion in the 1980s: Open Economies in Closing World.
London: Frank Class and Company Limited, 1984, pp. 1-24.
43 C. A. Cooper and B. F. Massell. "Towards a
General Theory of Customs Unions for Developing Coun
tries." Journal of Political Economy 73, no. 5 (Octo
ber, 196577 pi 462.
59
ing regions of the world.
Other theorists have also focused on both static
effects and dynamic effects of integration, with the
former is considered relatively short-term effects while
the later are viewed as long-term. For example, Ax-
line44 argues that the dynamic effects of integration
can be felt from the economic benefits to be derived
from the establishment of economic integration schemes
over a long periods of time. More specifically, Ax-
line45 observes that:
taken together with the shorter term effect ben
efits accruing from the static effects of integra
tion these gains provide a source of common inter
est around which a group of countries may be
motivated to undertake the political cooperation
required to launch and carry on such an enterprise.
However, it can be pointed out that social scien
tists, economists in particular, remain divided on the
issues of the positive contribution that could be de
rived from the dynamic aspects of economic integration.
The case for positive dynamic effects has been made by a
number of researchers, including Scitovsky (1958), Ba-
44 W. Andrew Axline. Caribbean Integration: The
Politics of Regionalism. London: Nichols Publishing
Co., 1979, p. 5.
45 Ibid.
60
lassa (1961), and Robson (1987). Others, such as John
son (1957), Kindleberger (1959), and Streeton (1964),
have been less optimistic.
To sum up, the preceding discussions show the ina
dequacy of the trade creation and trade diversion cri
teria as cicumscribed by the traditional theory, to
problems of LDCs' economic integration schemes. These
arguments suggest, though without proof, that the dynam
ic effects of economic integration are favorable to the
LDCs and possibly to the world's welfare. Thus, in the
process of examining Viner's celebrated work as a useful
theoretical tool in the analysis of some aspects of re
gional integration in LDCs, an alternative approach will
be analysed in the following sections. Integration, ac
cording to the alternative view, develops in stages from
its lowest to its highest forms (ala Balassa), including
the freeing of barriers to trade (trade integration),
the liberalization of factor movements (factor integra
tion), the harmonization of national policies (policy
integration) and finally the complete unification of
these policies (total integration). For the purpose of
61
the present study, the dynamic concept of economic inte
gration will be adopted--although in the long run the
line of demarcation between static-dynamic dichotomy is
blurred.
62
Chapter III
DEVELOPMENTAL THEORY OF INTEGRATION
3.1 INTRODUCTION
This chapter examines on alternative theoretical
perspective for evaluating the Economic Community of
West African States (ECOWAS). It is divided into four
major parts.
Part One, the introduction, begins with a discus
sion of why a developmental rather than a traditional
static theory of integration is more relevant in evalu
ating the process of integration, in LDCs in general and
ECOWAS in particular. In doing so, both economic and
political implications are briefly discussed.
Part Two focuses on economic integration and coop
eration among West African countries. Here, the contri
butions of some of the leading developmental (dynamic
aspects) theorists have been analyzed. Useful analyt
ical concepts discussed here, are the analysis of Mini
63
malist (static aspect ) versus maximalist (dynamic
aspect) approaches toward regional integration. This
analysis provides further explanation as to why the tra
ditional theory of integration has limited relevance for
evaluating LDCs in general and ECOWAS in particular.
Moreover, this part discusses the need for structural
and socioeconomic changes in ECOWAS with brief examina
tion of the "structuralist perspective" and the "depen
dency perspective."
Part Three discusses alternative theoretical ap
proaches for evaluating ECOWAS. Following Balassa's
analytical framework, the analysis adheres to the broad
er framework of developmental theory of integration as
an approach to economic development rather than as ’ a
tariff issue. Here, the study argues that regional in
tegration and cooperation for developing areas have ac
quired increasing siginficance since the late 1950s for
accelerating economic development. This part will also
argue that the process of integration affects economic
development of the participating countries in the fol
lowing dynamic ways: (a) the economies of scale which
will be brought about by the enlargement of the size of
the market for firms producing below optimum capacity
64
prior to integration. (b) the effects of economies of
scale on economic efficiency of the participating coun
tries and trade interaction among them.
Part Four summarizes the chapter's findings and
presents a brief conclusion: the developmental theory
of integration views integration as dynamic rather than
static. As noted above, the static aspect of regional
integration is viewed as a state of affairs where re
gional and international trade interactions can lead to
"complete integration" of national economies while the
dynamic approach views regional integration as a process
through which existing discrimination along political
boundaries is progressively abolished between the coun
tries which are brought together to form a union. In
this sense, the functional definition of regional inte
gration is the gradual but steady process of harmoniza
tion of economic and non-economic forces, and thus the
lessening of barriers among the member countries. The
implications of regional integration of LDCs in general,
and ECOWAS in particular, can best be considered within
a broader theoretical framework which will take into ac
count "economies of scale" resulting from a unification
of the markets of member countries. Hence, the analysis
65
of this Chapter is based on a developmental theory of
integration in its explicit recognition of industriali
zation and the structural transformation of economies of
LDCs, including ECOWAS, as development objectives. In
the process of achieving such development objectives,
various economic and political implications can be exam
ined.
3.2 ISSUES IN THE ECONOMIC INTEGRATION AND COOPERATION
OF LDCS
3.2.1 Economic Issues
Issues related to regional integration and cooper
ation for developing areas have acquired increasing sig-
inficance since the late 1950s. One major argument that
has dominated this discussion is that, in contrast to
the received viewpoint, the low degree of economic in
teraction in LDCs cannot be used as a necessarily per
suasive argument against integration. The purpose of in
tegration in the developing regions is the acceleration
of dynamic efficiency, intensive industrialization, and
growth. Therefore, the most important question is not
how the reallocation of resources will affect trade
flows after integration, but, rather, the possibilities
66
L
of expanding trade and the transformation of economic
structures concurrently.1 For example, intensive trade
among LDCs can stimulate economic development by sharp
ening constructive competition and optimum-size produc
tion units. The first positive outcome will be the uti
lization of the surplus capacity "existing in the various
industries, which have been built as a result of import-
substitution policies.
From a dynamic perspective, the enlargement of the
regional market will affect investment, particularly in
those areas where considerable economies of scale remain
to be exploited. To the extent that trade between LDCs
can expand, small inefficient monopolies can be elimi
nated. However, given that a major source of dynamic
benefits is to be derived from increased competition,
integration schemes proposed to date in LDCs thus far
have been disappointing. The number of complementary
arrangements that have been initiated into integration
unions of LDCs has been small. Thus, one might question
whether these unions will not end up in the opposite di
1 Winsome J. Leslie. The World Bank and Structur
al Transformation in Developing Countries: The Case of
Zaire. Boulder, Colorado: Lynne Reinner, Publishers,
1987, pp. 39-53.
67
rection by entailing a permanent high tariff against the
outside world, thus inducing countermeasures from the
developed market economies.2
Another significant argument for economic integra
tion and cooperation of LDCs is that an increase in the
size of the subregion's market will stimulate mutually-
supporting and complementary industrial structures with
in a subregional framework. The need and the methods
for developing such industrial structures is analyzed in
Chapter Seven of this study. Following Cooper and Mas-
sell,3 it can be concluded that the potential gain from
a customs union will be large if:
(a) there is a steeply rising marginal cost of pro
tection in the two countries, (b) the countries
have a strong preference for industry, (c) the
countries are complementary, and neither country
dominates the other in industrial production gener
ally.
2 Gerald Helleiner. "Aid and Dependence in Afri
ca: Issues for Recipients," Edited by Timothy M. Shaw
and K. Heard in, The Politics of Africa: Dependence and
Development. Canada: Dalhouse University Press, 1979,
pp. 10-16.
3 C. A. Cooper and B. F. Massell. "Towards a Gen
eral Theory of Customs Unions for Developing Countries."
Journal of Political Economy 73, no. 5 (October, 1965),
pp. 461-477.
68
Moreover, according to Mikesell,* traditional cus
toms union theory makes a number of generalizations
about the potential welfare gains that may accrue from
the establishment of a customs union based on existing
patterns of production and the proportion of trade among
partners relative to their total trade. First, if the
economies of the customs union partners are competitive
but potentially complementary, the regional trading ar
rangement is more likely to increase economic welfare.
Second, the higher the proportion of trade among part
ners relative to their total trade, the greater the wel
fare increase. Finally, the lower the proportion of
foreign trade of each member relative to purchases of
domestic commodities, the greater the welfare gain.
Unfortunately, many of these assumptions do not
fit regional groupings of LDCs. Unlike the developed
economies, the LDC tend to produce similar products and
as suggested earlier, there is little trade between them
(see Chapter Four and Five). They may also be very com
petitive with respect to the primary products that they
* R. F. Mikesell. "The Theory of Common Markets
as Applied to Regional Arrangements Among Developing
Countries," Edited by Harrod E. J. and Hague J., in In-
ternational Trade Theory in a Developing World. New
York: St. Martin's Press, 1965, p. 211.
69
produce for international markets.5 However, this com
petitiveness is not an advantage in the context of re
gional integration since the products in which they are
competitive, i.e., primary products, are not traded
among each other. Furthermore, the majority of LDCs
have little or nothing in the form of complementary
products (e.g., manufacturing products) which they can
trade with each other.4
Still, authors like Mikesell argue that it would be
incorrect to conclude from this that chances of achiev
ing welfare gains from integration are poor. Through
industrialization, Mikesell argues, LDCs can meet the
required conditions.7 That is, members of a customs un
ion composed of LDCs:
are actually or potentially competitive and cer
tainly all members of a group are potentially com
plementary. . . As industrialization proceeds, they
are going to become more competitive; but what they
should strive for is a pattern of investment that
will introduce a substantial degree of complemen
tarity in the future.
5 Frances Stewart. Technology and Underdevelop-
ment. Boulder, Colorado: Westview Press, 1977, pp.
164-179.
4 Michael Todaro. Economic Development in the
Third World. London: Longman, 1985, p. 276.
7 Mikesell, Op. Cit., 1965, p. 211.
70
Therefore, one can not draw an a priori conclusion
that there will be no welfare gains from RIC among LDCs
especially when the question of industrialization is
taken into consideration. Also, any significant region
al industrial policy must be approached through spatial
analysis of the region. Therefore, a reasonable conclu
sion concerning the effects of customs union of LDCs
vis-a-vis DCs is that the aim of this type of CU is to
divert the importation of non-input goods away from ad
vanced industrial countries. To the extent that this
diversion is from the advanced country to the most effi
cient producer of a given commodity among the union mem
bership, this is better than a policy of import-substi-
tution that will be followed by each country
individually. If all ,the member countries are of ap
proximately the same level of development:
First there should not be severe balance of payment
(BOP) problem between them, so they will be enjoy
ing the advantage of free trade.
Second, it enables the concentration of scarce for
eign exchange on input imports, thereby enhancing
capacity use and growth.
If the integrated area succeeds in achieving high
rate of growth, the DCs stand to gain from the program
71
as well as the union in the long run. Here, structural
transformation is concerned with a much narrower concept
of industrialization. It is the process by which an
economy develops from one that predominantly produces
agricultural and extractive activities to one in which
industry represents a major proportion or share of total
economic activity. Such a process is viewed not only as
a way of speeding up economic expansion but also as a
way of bringing about a general structural transforma
tion of the society.
3.2.2 Political Issues
Effective and successful economic integration de
mands much more than the elimination of barriers to ex
panding trade among the member countries and establish
ment of common tariff walls against non-member
countries. To provide all member countries with an
equal opportunity to benefit from the enlarged market,
the member countries must establish common financial and
fiscal policies. These policies must be jointly con
trolled to ensure an equitable allocation of investment
capital and removal of all barriers against the free
movement of persons within the Community. An effective
72
economic integration will ultimately require some degree
of political integration, expressioning itself in insti
tutional form. As noted by Cogrove and Twitchett,8 this
implies the evolution of a new international political
organization with supranational characteristics and ca
pacities. There are three criteria by which an interna
tional organization’s capacity to act effectively is de
termined: 9 (1) the extent of autonomous decision-making
power of such central institutions; (2) the extent to
which they perform significant and continuing functions
which affect international relations; and (3) the impor
tance attached to that institution by states, particu
larly its members, in the formation of their foreign
policies.
The functioning of an international institution
must be analyzed by the degree of its member's commit
ments in surrendering their respective sovereignties as
may be required for the good of the Community. Even
where members are willing to surrender some measures of
their sovereignty, the Community's performance and con-
8 Cogrove and Twitchett. The New International
Actors: The United Nations and the European Economic
Community. London Cl970), p. 12.
.9 Ibid.
7 3
tinuing role as a supranational subregional organization
will depend upon three factors: (1) the nature of their
commonly held objectives and functions in the subregion;
(2) the extent to which they impinge positively or neg
atively on the interests of other states; and (3) the
dynamic nature of the Community's leadership and its
support by political elites at the various organization
al levels. The point to be emphasized here is whether
certain member countries are sufficiently determined to
form themselves into an economic and political union
(e.g., CEAO versus ECOWAS), based on their perception of
common interests, needs, and shared expectations.
In concluding this section of the analysis, a
brief note connecting discussion of ECOWAS to the liter
ature and themes of Chapter II is in order. The criti
cal factor on which Viner's criteria (i.e., trade-creat
ing and trade-diverting production activities:
"production effects") and Lipsey's conclusions (i.e.,
inter-country substitution and inter-commodity substitu
tion: "production and consumption effects") were based
are among those LDCs, such as those of the West African
subregion, are said to be desirous of changing through
economic integration. However, these countries should
74
also aim at changing the structure of production and
trade, to obtain dynamic effects of integration efforts,
rather than merely static effects. The net effect of
such change will not be felt primarily over a short
period of time. For, as Mikesell has observed, the cre
ation of a customs union (CU) or free trade area (FTA)
usually involves relatively long time periods for the
benefits to be realized so that the initial impact, and
perhaps the most significant one, is an expectation re
garding future market opportunities rather than trade
volume or patterns. Therefore, the West African subre
gion (and other LDCs for that matter), must examine the
long term dynamic effects of economic integration. Ba-
lassa also questions the the relevance of the tradition
al customs unions theory developed by Viner, and its
subsequent extensions for the analysis of economic inte
gration of LDCs. His contribution to the theory of eco
nomic integration has become the most comprehensive
theoretical work on the relationship between integration
and economic development since the early 1960s and shall
be discussed in Part Three below.
75
3.2.3 Limited Relevance of Traditional Theory to LDCs
To summarize the discussion above, traditional
theory of economic integration is of limited relevance
to the process of integration of the West in LDCs for
the following reasons.
First, the traditonal theory of integration is es
sentially focused on the efficiency of resource alloca
tion and terms of trade as in the Ricardian comparative
advantage theory and neo-classical theory. This is fun
damentally a static or comparative static analysis.
Hence, the traditional theory of integration does not
penetrate adequately into the substantive issues of eco
nomic development, viz., how the dynamic process of in
tegration changes the structural conditions of produc
tion and technology, which will in turn facilitate the
dynamics of resource diversification and thereby the re
alization of economic development.
Second, traditional integration theory, by and
large, fails to address critical ‘issues of the distribu
tion of costs and benefits and the extent of their im
pact on the integration process. Moreover, x the theory
fails to discuss the role of local and foreign interest
groups in the integration process.
76
Third, the traditional theory fails to address is
sues related to infrastructural facilities (e.g., trans
portation and communication, and selection and location
of industries) which tend to limit the gain from econom
ic integration among the participating countries. This
will be demonstrated for the case of ECOWAS in Chapter
Five and Six in particular and elsewhere in general.
The removal of tariffs between Burkina Faso and Mali or
any of the other participating countries, for example,
would not add greatly to the market for industry estab
lished in any of these countries because of the lack of
transportation facilities between them.
Finally, except in abstract terms, the traditional
theory has neglected the issues of infant industry and
the role played by economic institutions in directing j
I
and facilitating their development.
The obvious conclusion from the above is that the
traditional theory of economic integration does not re
spond to the structural, spatial and/or dynamic problems
of LDCs such as the member countries of ECOWAS. Cer
tainly, it provides no panacea for evaluating the ra
tionale of integration among the member countries. This
77
has led a number of writers, like Robson (1987) Asante
(1986), Ezenwe (1983), Axline (1979), and Brewster and
Thomas (1979) to challenge the relevance of the tradi
tional theory of regional integration. Disenchantment
with traditional integration theory has provided ECOWAS
and other regional groups with ample justification to
articulate new approaches, as an extension or a branch
of development theory rather than the theory of interna
tional trade.10
The argument of the UNCTAD Secretariat11 for new
approaches as a means of accelerating economic develop
ment suggests that dynamic forces of integration must be
10 Peter Robson. The Economics of International
Integration, Third revised edition. London: Allen & Un
win, 1987, pp. 6-10.
11 Staff. "Third Development Decade: The Slow
Down", United Nat ions Chronicle, Vol. 21, No. 4 (1984),
pp. 1-16. The United Nations Conference on Trade and
Development (UNCTAD) has designated the 1960s, 1970s,
and 1980s as the First, Second, and Third Development
Decades, respectively. The goal of each of the Develop
ment Decade was to accelerate progress towards self-sus
taining growth of the individual countries and their so
cial advancement so as to attain in each under-developed
country a substantial increase in the rate of growth,
with each country establishing its own target, taking as
the objective a minimum rate of growth of aggregate na
tional income of 5 percent at the end of the First De
velopment Decade, and 7 percent at the end of the Second
Development Decade. These target goals have been diffi
cult to achieve by the majority of LDCs. The actual ec
onomic performance of the LDCs in the period since 1980
has been in in stark contrast to the growth path envi
78
considered as a means of: (1) enabling developing coun
tries to achieve economies of scale, (2) taking advan
tage of location and specialization, (3) enhancing effe-
ciency in industry, (4) reducing the external
vulnerability of the developing economies, and (5) in
creasing the bargaining power of the developing coun
tries. These dynamic forces of integration will be fa
cilitated by (i) political accommodations among the
participating countries, (ii) the harmonization and co
ordination of economic policies among the member na
tions, (i i i) establishment of an adequate infrastruc
ture, and (iv), development of both the agricultural and
industrial sectors.
There is, however, great concern about the exis
tence of the problems of "polarization effects" on the
process of integration in a region. A number of inte
gration theorists including Myrdal (1957), Hirschman
(1958), Balassa (1965), Kaldor (1971) and Robson (1987)
have argued that without deliberate public policy inter
vention intra-regional and inter-regional disparities
may increase rather than decrease. To explain the na
ture of regional or subregional disparities Kaldor uses
sioned by the UNCTAD Secretariat.
79
'the principle of circular and cumulative causation,'
which is closely related with the 'principle of increas
ing return'. In Kaldor's12 words:
These are not just the economies of large-scale
production commonly considered, but the cumulative
advantages accruing from the growth of industry it-
self-the development of skill and know-how; the op
portunity of ever-increasing differentiations of
processes and specialization in human activity.
However, according to Myrdal (1957), and Robson
(1987), initial differences can be reinforced rather
than offset by cumulative movements of labor and capital
from one part of the union to another part. Moreover,
the movements of these factors, for example, from poor
to rich areas of a union, may generate "increasing re
turns" which serve not to ameliorate existing dispari
ties in such areas as per capita incomes and growth
rates, as conventional integration theory seem to sug
gest, but rather to aggravate them. As a result, trade
between parts of a union may also widen rather than nar
row differences in comparative costs and may not neces
sarily be beneficial to all members of the union. The
remedy to regional disparities is therefore not to be
12 N. Kaldor. "The Case for Regional Poli
cies," Scotish Journal of Political Economy, vol.
17 (1970), p. 340.
80
found in the indiscriminate promotion of labor and capi
tal mobility. Robson13 suggested that:
It is useless to expect that factor mobility will
necessarily alleviate regional problems. Even if,
by increased factor mobility, income disparities
may be reduced, the political, social costs of ma
jor geographical movements of the population may be
too great. It is a combination of such political
and economic arguments that has in practice led to
the adoption of regional policies in many advanced
countr ies.
The problem of disparities in West Africa is even
more pronounced than in advanced countries. Hence, in
the context of ECOWAS, harmonization of national poli
cies of member countries to that of the subregion is
crucial in order to influence the location of new indus
tries among the different countries within the union.
In the following section, structural and socio-economic
changes as an alternative to the purely comparative
static approach (i.e., the traditional integration theo
ry) is discussed.
Robson, Op. Cit., p. 176.
81
3.2.4 Structural and Socio-Economic Changes
The analysis of ECOWAS also brings to the fore an
other consideration-structural and socio-economic chang
es- that is central to a more relevant perspective of
theoretical work on integration and cooperation. In ex
amining this perspective below, it is important to eval
uate the following question of structural and socio-eco
nomic changes of the less developed countries: what are
the joint activities for which a larger and protected
geographic region can (1) provide important benefits un
attainable through individual markets' export promoting
strategies and (2) promote comprehensive development
strategies based on the expansion of south-south inter
actions? . 14
The structuralist perspective is espoused by "de
pendency theorists" and "world system theorists." They
argue that integration can only be advantageous if it
leads to "structural transformation," viz., the realign
ment of the economies and infrastructure of the member
states and the region as a whole, such that there is
14 John H. Rosenbaum and William G. Tyler. Inter-
national Organization 29, no. 1 (Winter 1975), pp.
243-274.
82
greater economic independence and internal integration.
The later perspective differs fundamentally from the
neo-classical approach in which integration is supposed
to occur in countries that are developed or developing
along the path of the industrialized countries.15 The
neo-classical perspective is not concerned with the
question of underdevelopment and dependency as a struc
ture resulting from the integration of the LDCs into the
world economic system in a particular way.
However, according to the dependency perspective,
national economies of West Africa and other LDCs are
significantly determined by external market forces over
which the primary producers and society as a whole have
had little control. Because West African economies are
conditioned and limited, they are characterized as "de
pendent," where according to Thetonio Dos Santos,16 a
Brazilian economist, dependency causes "underdevelop
ment." Dos Santos defines dependency as:
a situation in which the economy of a certain group
of countries is conditioned by the development and
expansion of another economy, to which the former
is subjected... an historical condition which
15 Ibid., p. 720.
16 Theotonio Dos Santos. "The Structure of Depen
dence," American Economic Review. 60 (1970), pp. 38-40.
83
shapes a certain structure of the world economy
such that it favors some countries to the detriment
of others, and limits the development possibilities
of the subordinate economies.
As is the case for many LDCs, an individual West
African country closely linked to a single dominant for
eign country is almost inherently less likely to have
the "bargaining power" and freedom of action of one
whose foreign ties are dispersed among several coun
tries. For this reason, the idea of accelerated econom
ic development through collective self-reliance has
found a place in regional and subregional integration
schemes. Subregional groupings, such as ECOWAS, have
adopted important initiatives in order to improve their
bargaining positions in their dealings with dominant
foreign countries and transnational corporations.
Essentially, the strategy of collective self-reli
ance has become the preamble to the survival of any re
gional and subregional groupings and it is very much
connected to the basic notion of reducing dependency.
Collective self-reliance as a development Strategy can
hardly be comprehended outside of the "dependency frame
work." ECOWAS member countries and many LDCs beleive
84
that the ultimate realization of the benefits of inte
gration can only be made possible through the structural
transformation of their economies. Hence, collective
self-reliance is the antithesis of dependence.
3.2.5 Minimalist Versus Maximalist A1ternatives
During post-independence periods, individual West
African countries have functioned within global economic
markets and political environments over which they had
little or no influence. They, as many other LDCs, have
been decision-takers possessing few unilateral policy
options. Despite a widespread recognition of the need
for pan-African solutions, the inherited state structure
persists-an indication, in part at least, of the age-old
problems of restructuring the relations between sover
eign states once frozen into place. When the Organiza
tion of African Unity (OAU) was formed as a supranation
al institution, the aim was, and still is, to pool
together all sovereign African states in the spirit of
pan-Africanism (for ultimate political union). As a re
sult, some heads of state did seek to counter the drift
toward separate statehood before existing boundaries be
came barriers to easy intercourse. For example, Sene
85
gal's Leopold Senghor and Barthelemy Boganda of the Cen
tral African Republic favored federation at the regional
level. Other states insisted on a separate statehood,
thus maintaining a colonially-imposed poltical infra
structure. Kwame Nkrumah of Ghana advocated the "high
politics" of continental political unity while express
ing reservations about regional federation. Regional
unity might threaten continental cohesion by encouraging
the development of lesser loyalties.
Despite these different positions taken by the
various African leaders, they have continuously recog
nized that, while independence has been the primary ob
jective, African countries were largely artificial by
products of the colonial scramble of the period of
1884-1885. Many African countries, particularly, in
West Africa, are too small to be economically viable.
Therefore, the transformation of political independence
into economic independence necessarily requires deliber
ate and conscious efforts. If, for the time being, po
litical, economic and social conditions make the adop
tion of the Maximalist (or Federalism) approach to
achieve economic independence somewhat improbable (at
the continental or the West African level), it follows
86
that looser or interunit (Minimalist) arrangements or
alternatives seem to offer the widest scope for institu
tional experimentation in the prsent system of regional
ism.
But focusing on the efforts of ECOWAS to date, the
intra-regional trade of West African States is, to a
great extent, still divided into two major zones: the
French Franc zone and the British Sterling area. The
effects of such zonal intra-regional trade will be dis
cussed in Chapter five and seven. It would appear that
many of the factors which hindered intra-regional and
inter-zonal trade before independence are still strong
today. Additionally, ECOWAS confronts such problems as
the lack of adequate infrastructure such as roads,
rails, telecommunications and other links for the move
ments of goods and peoples, vested interest in the pres
ervation of the status quo, the persistence of semi-co
lonial ties, the stronger economic pull towards the
European Economic Community and North America than to
the countries in the region, the competitive structure
of industrial and natural resources, shortage of basic
statistical data for reliable assessment of probable re
percussions of the integration process, and lack of po-
87
litical will to surrender some elements of the national
sovereignty to a supra-national authority with powers to
take economic and social decisions on behalf of the re
gion as a whole.17
Nevertheless, the seriousness of the integration
process in West Africa is demonstrated in positive ways--
-for example, the coexistence of ECOWAS and the six-na
tion Francophone CEAO (Communaute economique de l'Af-
rique de l'Ouest) as regional economic cooperation
experiments in West Africa, and the ensuing interlocking
relationships, as member states of the latter grouping
are also signatories to the former. The character and
operation of the various intra-regional institutional
frameworks, including ECOWAS, have been a subject of
continuing debate among scholars and policy makers
alike, including Asante (1986), Onwuka and Sesay (1985),
OkOlo (1985), Browne and Cummings (1985), Lancaster
(1985), Adedeji (1983), Robson (1983), Ezenwe (1983),
Ojo (1980), Osagie (1979), and Renninger (1979).
Onwuka, 1985, Op. Cit., pp. 61-71.
88
As the debate continues around important issues of
regional integration and the building of a supranational
institution, the question that is most frequently raised
is whether ECOWAS can provide a countervailng bargaining
power or position. Put differently, what are the likely
effects of ECOWAS on West African economic development
and intra-regional trade?. In other words, to what ex
tent can the Community energize intra-regional trade and
cooperation by altering its present trade pattern which
is externally dependent? To what extent will this
course of action lead to economic independence of the
member states of the Community?.
Although detailed analysis of these questions will
be taken up in the chapters to follow, there are two im
portant features of West African trade which require
brief discussion here. First, most of the external
trade of individual countries in the subregion are car
ried on with non-African countries; the intra-regional
trade among West African States is very small. Second,
the small amount of trade that takes place in the subre
gion is largely on a zonal (i.e., constituting Anglo
phone and Francophone States) basis, with little inter
zonal trade going on between the Anglophone countries of
89
the Sterling area and the Francophone States of the
Franc area. Such trade related problems were formally
recognized as obstacles to the integration process in
1972, when Nigeria and Togo, belonging to different cur
rency zones, launched an agreement for promoting,
through their joint efforts, cooperation between them
selves and among the other West African States.18 The
efforts demonstrated by the contiguous countries (Nige
ria and Togo) became the beginning of ECOWAS and its
Treaty is a tribute to the wisdom and positive response
of West Africans to the overwhelming political and eco
nomic needs of their region.
Although the core of the Community's aim was to
promote cooperation and development in all fields of ec
onomic activity, particularly in industry, transport,
telecommunications, energy, agriculture, natural re
sources, commerce, monetary and financial questions, and
social and cultural matters, the efforts of ECOWAS, thus
far, remains an institutional experiment with looser
joint ventures as will be clear in Chapters Five through
Seven. Another major aim of the Community was also to
18 Uka Ezenwe. ECOWAS and the Economic Integra-
tion of West Africa. New York: St. Martin's Press,
1983, pp. 126-154.
90
increase and maintain economic stability in member
states by fostering closer relations among its members
thereby contributing to the process of integration and
cooperation. However, subregional and international ec
onomic and political conditions have not permited recog
nizable success for ECOWAS.
To this end, the Treaty recognizes that various
forms of bilateral and multilateral economic cooperation
exist in the region and that this provides hope for wid
er cooperation with an equitable distribution of ben
efits among member states. The ultimate objective is to
facilitate and stimulate the economic development of
West Africa and create a more homogeneous society lead
ing toward the unity of the region, i.e., a goal best
and most quickly achieved by allowing complete free
movements of goods, capital, and above all, people.
While all of the Community's aims are vitally important
to ensure the process of integration and cooperation,
the present study focuses on an analysis of the forma
tion of the customs union and its short-run and long-run
implications for the process of: (1) cooperation in the
determination of the Community's resources for integra
tion; (2) cooperation in industrial development policies
91
of the integrated regions; and (3) cooperation in trans
port and communications fields.
3.3 ALTERNATIVE THEORETICAL APPROACHES FOR EVALUATING
ECOWAS
The analysis and evaluation of ECOWAS’s problems
and prospects in the chapters to follow is based on the
assumption that economic integration, in the context of
ECOWAS, as in other LDCs, should be viewed as aji ap
proach to economic development rather than as a tariff
issue. Consequently, it brings together several aspects
of economic integration which could both improve the in
tra-ECOWAS and international trade and increase the lev
el of economic development of the region.
In examining the dynamic effects of integration,
the first factor is the economies of scale which will be
brought about by the enlargement of the size of the mar
ket for firms producing below optimum capacity prior to
integration. But while economies of scale have the ef
fect of enlarging the market area for the products of
individual firms, transportation costs act in the oppo
site direction. For example, Alfred Weber (1929) argued
that an optimum location pattern provides a balance be
92
tween economies of scale and transportation costs. Over
fifty years later, Mabogunje (1981) makes the same argu
ment. He argues that the developmental role of the
transportation network must be viewed in its relation to
other sectors of the West African economies. More fun
damentally, Mabogunje19 suggests that:
What needs to be emphasized is the importance of
the modes of transportation networks (particularly
the railroads and the river boats) to be effective
ly integrated into the national sectoral activities
and to be better connected with one another. The
objective of integration is better served not only
through expansion and reorientation of the route-
ways as appropriate, but specially through operat
ing a more flexible and responsive pricing system.
The provisions of less than optimum levels of
transportation facilities in ECOWAS today is said to
constrain the exploitation of economies of scale under
girded in Mabogunje's argument above. The relationship
between transportation and economies of scale establish
es the basis for the analysis of Chapters six and seven.
A second factor is the effects of economies of
scale on the economic efficiency of the participating
countries and trade interaction among them. This would
19 Akin L. Mabogunje. The Development Process: A
Spatial Perspective. New York: Holmes & Meir Publish
ers, Inc., 1981, p. 297.
93
mean that the the existence of intensive trade relations
among ECOWAS member countries can raise the potential
for each member country to specialize, dependent upon
the extent of the market.
A third, negative factor is the polarization ef
fect, which tends to assign functions and activities to
different centers in conformity with their present
standing among other candidate locations. Thus, there
is a the danger of polarization in ECOWAS related to the
different levels of economic development of the member
countries. For example, Nigeria, Cote d'Ivoire, Ghana
and Senegal are the most industrially advanced members
of the union. The remaining twelve are less advanced
having different degrees of development among them. As
long as differences in the levels of economic develop
ment exist among ECOWAS member countries, question of
integration must be addressed in a dynamic rather than
simply a static analysis approach.
From the perspective of a developmental approach
to regional integration and cooperation the goal of
ECOWAS and similar endeavors is collective self-reliance
rather than merely increase trade and greater welfare
94
based on trade relations. Collective self-reliance is
seen as an alternative to the structural dependence
which characterizes the relationship of the LDCs to de^
veloped countries.
3.4 CONCLUSIONS
The purpose of this chapter has been to identify
and discuss thoroughly the essential dynamic elements of
an alternative approach to integration.
The first conclusion is that, while the tradition
al theory of economic integration remains a useful ana
lytical tool, it is hardly applicable to the current
problems of RIC in ECOWAS, as in other LDCs.
Second, the alternative theoretical approach to
integration of LDCs such as West Africa starts from en
tirely different developmental assumptions. It is as
sumed in the analysis that there is valid case for pro
tecting certain economic activities in LDCs including
the West African subregion--particularly industries--ei-
ther for the purpose of increasing income or the rate of
growth and development or in order to achieve certain
non-economic objectives that are aspects of the integra-
95
tion process. The implications of this alternative ap-.
proach is that the rationale for economic integration in
West Africa is to be found within the context of econom
ic development theory rather than international trade
theory. The need for an alternative approach has been
postulated in line with the framework proposed by the
various integration theorists. That is, for RIC to be
viable both as a process and performance, there is a
need for a spatial arrangement approach in the analysis
of the community's resources.
96
Chapter IV
THE ECONOMIC COMMUNITY OF WEST AFRICAN STATES
(ECOWAS)
This chapter is primarily a description of ECOWAS
with respect to its background, structure and organiza
tional objectives, and key obstacles and constraints
facing it. The chapter is divided into three major
parts.
Part One describes the organizational background,
structure and objectives of ECOWAS. The organizational
background focuses on the origins of the idea of politi
cal and economic union which later gave birth to ECOWAS
as a supranational organization for the subregion. The
evolution of ECOWAS is discussed briefly. The structure
of ECOWAS is also described here; it includes four main
bodies of ECOWAS and four other technical and special
ized commissions with a brief description of the role of
each.
Part Two examines both existing and potential
problems of integration and economic development in the
97
subregion. In doing so, the study identifies and de
scribes a number of serious obstacles to integration and
economic development, including problems associated with
(1) the production of primary products (both agricultur
al and mineral) within the West African subregion, and
the fact that the economies of the ECOWAS countries are
therefore competitive rather than complementary, (2) the
inadequate transport and communications networks, (3)
the absence of a similar industrial climate or similar
industrial policies among the member countries of
ECOWAS, (4) the existence of rival integration schemes--
CEAO, the Mano River Union, and the Senegambian Federa
tion, and (5) the sheer divrsity of the West African su
bregion .
Part Three summerizes and concludes the chapter.
The findings of this chapter suggest that the obstacles
and constraints facing ECOWAS are complex and difficult
and will require greater efforts from the member coun
tries of ECOWAS.
98
4.1 ORGANIZATIONAL BACKGROUND, STRUCTURE AND
OBJECTIVES OF ECOWAS
The idea of the unification of Africa goes back to
the Pan-African Congress of 1945. The first such con
gress was held in Manchester, England, as a response to
the systematic exploitation of the economic resources of
the region by colonial powers.1 The Congress resulted in
the establishment of the West African Economic Union.
The cooperative movements that took place in the
pre-independence period did not have any significant re
sults. Once political independence was achieved in the
late 1950s and early 1960, however, West African States
intensified their efforts toward cooperation. The West
African Economic Community (CEAO) and the various bilat
eral trade agreements that exist today between the
French-speaking West African States are the results of
such efforts.2
1 Chimelu Chime. Integration and Politics Among
African States: Limitat ions and Horizons of Mid-Term
Theorizing. Copenhagen, Denmark: H. W. Recklametryk-The
Scandinavian Institute of African Studies, 1977, p. 140.
2 Peter Robson. Integration, Development and Eq
uity : Economic Inteqration in West Africa Africa. Lon
don: George Allen & Unwin, 1983, PP. 34-69.
99
ECOWAS culminates an evolutionary process which
goes back to 1958 when the Economic Commission for Afri
ca (ECA) was established as a regional Commission for
Africa under the auspices of the United Nations. In De
cember 1958, the West African Union was strengthened by
an apparant support of the first conference of political
parties in Africa held in Accra, Ghana.3 Among the sig
nificant regional issues discussed in this conference
were the removal of customs and other restrictions on
trade between African States and the conclusions of mul
ti-national payments agreements, with a view to stimu
lating economic intercourse followed by the establish
ment of an African Common Market.4 The idea of economic
cooperation received further impetus in in December
1962, when ECA's Standing Committee on Industry, Natural
Resources and Transport urged the promotion of subre
gional cooperation schemes.5 This led to the Lagos, Ni
geria, Conference on Economic Cooperation in West Afri
ca, held in November 1963.
3 Ibid., pp. 144-152; also in Asante, 1986, Op.
Cit., pp. 26-30.
4 Ralph I. Onwuka. The Future of Regionalism in
Africa. New York: St. Martin's Press, 1985, pp. 50-61.
5 S. K. B. Asante. The Political Economy of Re
gional i sm in Africa: A Decade of the Economic Community
of West African States (ECOWAS). New York; St. Martin's
Press, 1986, pp. 50.
100
Nevertheless, it was not until October 1966 that
initial discussions towards the creation of ECOWAS were
formalized at the Conference on Economic Cooperation in
West Africa held in Naimey, Niger.6 The eleven states
which attended the Conference formally adopted a provi
sion for economic cooperation among the West African
states. At the West African Conference on Economic Co
operation held in Accra, Ghana, in May 1967, Robert Gar
diner, the then executive secretary of ECA, presented a
document embodying the Articles of Association earlier
agreed upon at the Naimey Conference.7 The Accra Confer
ence subsequently adopted the Articles of Association
for the formation of an Economic Community. An agree
ment was signed by 12 (Benin, Cote d'Ivoire, Ghana,
Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Si
erra Leone, Togo, and Burkina Faso) of the 14 states of
the West African subregion. During the same period, a
meeting held in Bamako, Mali, among the heads of state
of the Organization of Senegalese River States, which
called for a regional grouping which would encompass the
whole of West Africa. In April 1968, a protocol was
signed. During and immediately after the Nigerian Civil
6 Ibid.
7 Ibid.
101
War, little progress made toward creating an economic
grouping in the West African subregion.® But in April
1972, the heads of state of Nigeria and Togo agreed,
once again, to the idea of an economic community that
would eliminate all types of barriers within the West
African subregion. After exhaustive negotiations with
the remaining thirteen West African states, Nigeria and
Togo provided the leadership for the signing of the
ECOWAS (CEDEAO in French) Treaty on May 28, 1975. Cape
Verde has since joined as the Community's sixteenth mem
ber.9 (see Table 1.1).
The emergence of political interdependence of West
African States (ECOWAS) resulted from the economic limi
tations of each sovereign state in determining its na
tional development.10 In a region where most of the
states are poorly and unevenly endowed by nature and
therefore externally aid-dependent, a purely national
strategy does not make much economic sense. As the
present study suggests, the formation of ECOWAS was a
8 Ibid., p. 51.
9 Staff. Africa: South of the Sahara, 1988. Lon
don: Europa Publications Limited, 1987, p. 192.
10 Peter Lionel Wickins. Africa 1880-1980: An Ec
onomic History. Cape Town, South Africa: Oxford Univer
sity Press, 1986, p. 231.
102
response to political and economic problems (i.e., the
fragmentation of the subregion into small domestic mar
kets) and was designed to shift the pattern of produc
tion and trade and to alleviate dependence.11 The con
cern over Africa's economic problem was further
enunciated by the Organization of African Unity (OAU)
which in May 1973, at its tenth summit conference in Ad
dis Ababa, Ethiopia, adopted an African Declaration on
Co-operation, Development and Economic Independence.
This declaration urged African States to accelerate in
ter-African cooperation efforts particularly in the mon
etary and communications fields.14
Subsequently, the West African Clearing House
(WACH) which was launched on July 1, 1976, by the West
African subregional Committee of the Association of Af
rican Central Banks, the first of its kind in Africa13
that later became the basis for negotiations for estab
lishing a single monetary zone. The West African Clear
ing House (WACH) oversees the problems posed by the ex
11 Asante, 1986, Op. Cit., p. 1.
12 Ibid., pp. 58-70.
13 Eghosa Osagie. "West African Clearing House,
West African Unit of Account, and Pressures for Monetary
Integration." Journal of Common Market Studies 17, no.
3 (March 1979), pp. 227-235.
103
istence of different currency zones in the region by
providing a facility through which members of the Clear
ing House can manage the use of foreign exchange re
serves and transfer costs. As will be discussed in some
detail in section 4.2, transcending economic, political,
linguistic and cultural barriers (i.e., economic and
non-economic barriers) by pooling together countries of
unequal endowment in national resources into a single
market area has involved considerable debate which con
tains both economic and political implications.
The Institutions of the Community. The ECOWAS
Treaty established four main bodies and a series of or
gans responsible for implementing joint policies, and
some advisory committees. The four main bodies are: the
Authority of Heads of State and Government, the Council
of Ministers, the Secretariat and the Tribunal (i.e.,
the Court of Arbitration) and the Fund (see Figure 4.1).
The Authority of Heads of State and Government, the Com
munity's highest authority, meets at .least once a year
and its decisions have to be unanimous. The Council of
Ministers consists of the ministers of foreign affairs
of all the member-states; it meets at least twice a year
and is responsible for promoting strategies to implement
104
105
Figure 4.1 Organizational Structure of ECOWAS
Specialized
Commissions
Tribunal
The Fund
ECOWAS
Secretariat
Council of
Ministers
Authority of
Heads of States
Social and
Cultural Affairs
Industry
Agriculture and
Natural Resource
Trade, Customs
Immigration,
Monetary and
Payments
Transport
Telecommunications
and Energy
the Community's objectives as well as formulating a com
mon external policy and coordinating the process of in
tegration. The Secretariat, headed by the Secretary-
General, appointed by the Authority of Heads of State or
government, is responsible for implementing the deci
sions of the Authority of Heads of State and the Council
of Ministers, provides Secretarial services to those
bodies, and carries out studies on their behalf. The
purpose of the Tribunal (or Court of Arbitration) is to
resolve disputes which may arise between member states
of the Community regarding interpretation of the Treaty
and the protocols.14 The Fund, administered by a Board
of Directors, is used to finanace projects in member
countries, provide compensation to members where neces
sary, guarantee foreign investments in member countries,
and help develop the poorer member countries. The au
thorized capital of the Fund was raised from US$90 mil
lion to $360 million in 1986. Its first loan was ap
proved in November 1982, in the amountfof $12.5 million
for the initial phase of a telecommincations improve
ments scheme involving seven member states. By the end
of 1985 a loan (totalling $6 million) had also been ap
14 Ibid. Also, in Asante, 1986, Op. Cit., pp.
212-216.
106
proved for the construction of bridges in Benin and ma
jor highways in Liberia, Mali, and Togo, and for feasi
bility studies on the proposed Trans-West African High
way (see Figure 6.2). Grants were also made to finance
studies by the Secretariat on energy and monetary af
fairs. The Fund's investment budget for 1986 amounted
to $25.7 million.15
In addition to the above institutions of the Com
munity, there are four technical and specialized commis
sions (see Figure 4.1) in ECOWAS: the Trade, Customs,
Immigration, Monetary and Payments Commission; the In
dustry, Agriculture and Natural Resources Commission?
the Transport, Telecommunications and Energy Commission;
and the Social and Cultural Affairs Commission. Each of
these commissions is composed of experts from all the
member states. Their duty is to draw up programs in
their relevant fields of competence and assess the im
plementation of such programs. There is provision for
the creation of other specialized and technical bodies
should the need arise. At its annual summit meeting
held in Freetown, Liberia, in May 1981, the Authority
approved the establishment of a Defence Council consist
Ibid.
107
ing of Ministers of Defence and Foreign Affairs of mem
ber states, and a Defence Commission comprising a chief
of staff from each member state.16
Objectives♦ ECOWAS, a supranational institution,
aims to promote cooperation and development in economic,
social, political and cultural activity, particularly in
the fields for which specialized commissions (see Figure
2.1) are appointed, to raise the standard of living of
the people of the member countries, to increase and
maintain economic stability, to improve relations among
member countries and to contribute to the progress and
development, not only of the subregion but also of Afri
ca as a whole.17 The Treaty contains a commitment to
abolish all obstacles to the free movement of people,
services and capital, and to promote the harmonization
of agricultural policies, common projects in marketing,
research and agriculturally based industries; joint de
velopment of economic and industrial policies, and elim
ination of disparities in levels of development; and
common monetary policies. Abolition of tariffs and oth
er impediments to trade among member states, and the es-
16 Ibid.
17 Asante, Op. Cit., pp. 210-234.
108
tablishment of a.common external tariff, are planned
over a transitional period (beginning May 28, 1979) of
15 years.18 At the 1978 Conference of Heads of State and
Government it was decided that from May 28, 1979 no mem
ber state could increase its customs tariff on goods
from another member. This was regarded as the first
step towards the abolition of customs duties within the
Community. During the first two years (from May 28,
1979 to May 28, 1981) import duties on intra-Community
trade were to be maintained, and then eliminated, in
phases over the next eight years. Quotas and other re
strictions of equivalent effect were also to be abol
ished in the first 10 years. In the remaining five
years all differences between external customs tariffs
were to be eliminated.15
The 1980 Conference of Heads of State and Govern
ment decided to establish a free trade area (FTA) for
unprocessed agricultural products and handicrafts begin
ning in May 1981. Tariffs on industrial products made
by specified community enterprises were also to be abol
ished from that date, but implementation of the above
18 Ibid.
15 Ibid., pp. 216-217.
109
trade liberalization policies was delayed by difficul
ties in defining the enterprises. An eight-year time
table for liberalizing trade in industrial products was
established: the more developed members (Cote d'Ivoire,
Ghana, Nigeria and Senegal) were to eliminate barriers
more quickly than the less developed. A compensation
procedure for loss of revenue among the less advanced
states resulting from trade liberalization was also
adopted.
The ECOWAS Treaty provides for compensation for
states which reduce import duties through trade liberal
ization and contains a clause permitting safeguard meas
ures for any country affected by economic disturbances
through the application of the Treaty. In 1983, a Con
ference held by the Heads of State and Government decid
ed to initiate studies on the formation of a single
ECOWAS monetary zone. In the same year, a programme was
approved for the establishment of a computer unit
(ASYCUDA) in Lome, to process customs and trade statis
tics and to calculate the loss of revenue resulting from
the liberalization of intra-ECOWAS trade.20
Staff (Europa), Op. Cit., p. 192.
110
4-2 PROBLEMS of economic development and integration
Although the need for closer economic cooperation
among the West Africa countries had been strongly enun
ciated before the signing of the ECOWAS Treaty, the ur
gency of integration was further strengthened by the
growing realization that the small size of most of the
economies of the subregion is a serious obstacle to rap
id economic development. As demonstrated by the tradi
tional theory of integration in Chapter II, there are
several conditions for integration to lead to a viable
economic development: (1) that the potential partners in
a customs union channel a significant proportion of
their trade with one another; (2) that their economies
be potentially complementary rather than competitive;
and (3) that external trade as a percentage of GNP be
relatively low.
For the most part these conditions are not charac
teristic of the West African grouping. Although the
traditional theory of integration can be useful since it
contains insights that are relevant to the West African
situation, a developmental theory of integration has
been preferred by ECOWAS as other LDCs, because it is
111
viewed as a means of accelerating the pace of economic
development. However, in order to explain the limited
success of the persistent efforts at economic integra
tion among the West African countries, many researchers
have examined some of the key obstacles and constraints
to the creation of a viable economic union in the West
African subregion.
The first problem is that West African countries
are mostly primary products producers, with the agricul
tural sector contributing between 19 and 50 percent to
GDP and employing between 56 and 91 percent of the labor
force,21 and their products are oriented to the devel
oped markets of Western Europe, North America and Japan
rather than those of West Africa. Even if barriers to
trade were removed, there would not necessarily be a
drastic change or expansion of trade. Because ECOWAS
member countries, for the most part, export primary
products, their economies are competitive rather than
complementary. This has important implications for the
subregion's integration efforts through trade liberali
zation strategies.
21 The World Bank. World Development Report 1987.
Washington, D.C.,. 1987, p. 206 and 264.
112
A technical problem related to trade liberaliza
tion strategies is the issue of a common payment system.
West African currencies, which are tied to the curren
cies of the developed markets of Western Europe, are not
reciprocally convertible. The establishment of the West
African Clearing House (WACH) on July 1, 1976 was later
reinforced by Article 38 of the ECOWAS Treaty which es
tablished a Committee of West African Central Banks to
determine a clearing system of payments for the subre
gion's trade and other transactions. The problem is
that a currency union is a very advanced form of inte
gration and requires certain necessary pre-conditions
(e.g., factor mobility, increased intra-regional trade,
and harmonization of financial policies).22 These neces
sary pre-conditions do not exist currently in ECOWAS.
A second major problem for ECOWAS is the issue of
transport and communications systems. The transport
system was, for the most part, built during the colonial
period in order to facilitate the export of primary
products (both agricutural and mineral extracts) to the
metropolitan centers of Europe. It is for trade among
22 Eghosa Osagie. "Monetary Disintegration and
Integration in West Africa," Nigerian Journal of Inter
national Studies, (July 1975), pp. 19-57.
113
the member countries of ECOWAS.
An intra-ECOWAS telecommunications system is yet
to be developed in order to facilitate the more effi
cient sharing of information. Chapter VIII, Article 40
of the ECOWAS Treaty provides the Community with a com
mon transport and communication policy in which member
countries gradually link the transport and communica
tions systems of the union through the improvement and
expansion of their existing transport and communication
links and the establishment of new ones as a means of
furthering the physical cohesion of the member countries
and the promotion of greater movement of persons, goods
and services within the Community.
A third major problem associated with economic in
tegration of the West African subregion revolves around
the development of a common industrial strategy. The
purpose of Chapter V, Articles 29, 30, and 31 of the
ECOWAS Treaty is to ensure that all ECOWAS member coun
tries have a similar industrial climate so as to make
for a smoother industrial development. Yet it is very
hard to imagine how a common industrial development pol
icy can be easily achieved in the short run in a region
114
pursuing contending political and/or ideological paths
to national economic development, especially between a
country which has pursued a capitalist mode (e.g., Cote
d'Ivoire) and countries which have experienced a thor
ough-going state intervention (e.g., Guinea and Benin).
The other member countries have given importance, al
though in varying degrees, to the desirability of indus
trializing their national economies via nationalization
and indigenization of leading economic sectors (e.g.,
manufacturing enterprises, insurances, transportation,
and so on) in the majority of the countries in the su
bregion. The realization of a common industrial policy
in West Africa should be viewed as a long term problem
and would require deliberate political and ideological
changes or at least a measure of working harmony among
the member countries.
The dominant obstacle facing ECOWAS is probably
the existence of other rival integration schemes--the
Communaute Economique de 1’Afrique de l'Ouest (CEAO),
the Mano River Union (MRU), and the Senegambian Confed
eration.23 The establishments of the MRU and the Sene-
23 The Mano River Union is a grouping that was es
tablished in 1973 between Liberia and Sierra Leone. It
involves a customs union and certain other forms of co-
115
gambia Confederation are viewed as obstacles to the suc
cess of ECOWAS, although to a lesser extent. Like CEAO
members, the members of these two unions are also mem
bers of ECOWAS, although belonging to various organiza
tion of the subregion creates obvious obstacles for
ECOWAS. Aware of such problems, Article 20, Section 3
of the ECOWAS Treaty allows member countries to belong
to other economic groupings so long as such membership
"shall not derogate from the obligations of that member
country under the ECOWAS Treaty."
Nevertheless, the CEAO is viewed as an obstacle
because it sees itself as a rival to ECOWAS.25 This
operation, including cooperation for the establishment
of "union" industries. In 1980, Guinea became a member
of the union officially. The Senegambia Confederation
was established in February 1981 to link Senegal and
Gambia which were arbitrarily separated by colonization.
The Senegambia Confederation faces, at least, one obvi
ous problem. That of an unequal partnership embracing a
more advanced member (Senegal-a former French colony)
and a less advanced member(The Gambia-a former British
colony). Given their colonial experience, bringing the
two countries together was not something that could be
done overnight. However, a number of tangible projects
have been completed since they established the Confeder
ation. For example, telephone and road links are esta-
bished between Bassey in The Gambia and Velingara in
Senegal. The two members have also linked the telecom
munication systems.24
24 Staff. West Africa, 6-12 March, 1989, p. 352.
25 Peter Robson. Inteqration, Development, and
Equity: Economic Integration in West Africa. London:
George Allen & Unwin, 1983. Also in Asante, Op. Cit.,
116
situation has produced considerable debate on the extent
to which the two organizations are compatible, particu
larly in the area of trade liberalization now being con-
i
sidered for implementation by both customs unions. Many
researchers of regional integration have emphasized that
there are no differences between ECOWAS and CEAO in
terms of their broad objectives. However, there are el
ements of potential conflicts.26
First, some students of integration contend that
the participation of the "regional superpower," Nigeria,
in ECOWAS and the fact that the former colonial powers
did not initiate cooperative economic activities but had
to react to it distinguishes ECOWAS from CEAO. While
ECOWAS was inspired and managed by African political
leaders, CEAO was a French-inspired organization, based
on France's fear of permanent detachment from its colo
nial holdings. Consequently, the CEAO States became
harnessed to the French system to a degree that made
them collectively dependent on France.
p. 164.
26 Asante, Ibid., pp. 164-168.
2 7 I bid.
117
A second possible source of conflict27 is differ
ences in the assessment of revenue losses, which are
calculated on the basis of contribution. In ECOWAS a
member country's contribution is specifically linked to
the margins of preference accorded to its own exports.
In CEAO contributions are determined on the basis of a
member country's share of manufactured exports to the
Community. Also, the ECOWAS Treaty does not provide
specific mechanisms or procedures for determining the
share of revenue losses and the provision of compensa
tion which is automatic and uniform under the CEAO Trea
ty. (b) a third problem, given the intense rivalry
which exists between ECOWAS and CEAO, is the fact that
both organizations are working to create a customs union
(CU). Although the creation of CU in CEAO had not been
achieved in 1986 as originally hoped for, ECOWAS has in-
visaged its CU formation in 1990. Should ECOWAS form
its CU first, this would indicate that the Anglophone
and Francophone countries have been able to minimize
their problems sufficiently to agree on a common customs
union. If, however, the CEAO CU precedes that of
ECOWAS, there appears to be room for a conflict of loy
alty between the two in those countries (Francophone)
that belong to the two bodies.
118
Finally, there is incompatibility in some of the
provisions of the ECOWAS and CEAO treaties, particulary
with respect to trade liberalization issues. For exam
ple, the CEAO trade liberalization scheme calls for
preferential trading through the use of the Taxe de Co
operation Regionale (TCR), whereas, ECOWAS invisages a
general free trade area (FTA) within a CU. .However, a
free trade area will exist only for goods "which are raw
produce," that is, unprocessed, unworked, and entirely
local goods.
The implication of the coexistence of the two lib
eralization schemes became more evident when, in May
1980, CEAO applied to ECOWAS for derogation with respect
to the implementation of the provisions of Article 20 of
the ECOWAS Treaty. The problems of derogation stems
from the fact that in 1976 CEAO instituted a tariff re
gime for the benefit of its members, involving preferen
tial taxation relating to imports of non-processed
goods--a system involving total exemption from entry du
ties and taxes--and the operation of a preferential re
gime of regional cooperation tax which contributes to
the Community's Development Fund.28 Although Article 20
28 Asante, Ibid., p. 165.
119
of the ECOWAS Treaty extends "most favored nation"
clause immediately to all the sixteen member countries,
the CEAO members feel that their intra-CEAO tariff poli
cy is more favorable than that of the ECOWAS, and would
neither eliminate it nor accommodate the other ECOWAS
member countries. Similar requests were made by the
MRU. Like CEAO, the MRU's problems of derogation stems
from the fact that it has instituted a tariff regime for
the benefit of its members (Liberia, Sierra Leone and
Guinea). The potential constraint of the ECOWAS dimen
sion operates because of the need for the policies of
MRU to be consistent with the provisions of Article 20
of the ECOWAS Treaty. Although the broader objectives
and approaches of ECOWAS and MRU are similar, the MRU is
already in breach of Article 20 of the Treaty.29 It is
probable that ECOWAS would accept MRU’s request for nec
essary waivers or derogations except perhaps for those
countries that fall into the least advanced category of
membership.
Realizing the seriousness of this issue and its
potential to circumvent the development of ECOWAS, a
seven-nation ECOWAS ministerial committee was estab
29 Robson, Ibid., p. 84,
120
lished in May 1981 to study the implications of the re
quests made by CEAO and MRU and to make recommendations
to the Authority of Heads of State of ECOWAS. According
to Ezenwe30 the following three measures were taken by
ECOWAS:
(a) To allow the simultaneous application of three
systems; CEAO and MRU to apply their internal regu
lations among their respective member countries; in
their relation with other ECOWAS member countries,
CEAO and MRU countries would apply ECOWAS regula
tions;
(b) To work towards the consolidation of the cur
rent rates and lists of products that constitute
the CEAO and MRU trade preferential systems. With
respect to the admission of new products, the two
organizations would apply ECOWAS rules; and
(c) To insist on the application of the Customs and
Statistical documents of ECOWAS as of January 1,
1982.
The resolution of each organization to maintain
its individual tariff regime while belonging to the all-
embracing ECOWAS implies that if these tariff measures
are adopted successfully, they will make the process of
integration very complicated for ECOWAS. This will ac
commodate interests in the short run, but will result in
generating conflict in the long run.
30 Uka Ezenwe. ECOWAS and the Economic Inteqra-
tion of West Africa. New York: St. Martin's Press,
1983, p. 146.
121
Another key obstacle to integration is the sheer
diversity of the West African subregion. The West Afri
can subregion is the most varied in Africa in terms of
size of countries (see Figure 1.1), the extent of eco
nomic development, language and economic linkages (both
internal linkages and external linkages). While it is
important to recognize the existence of potenial advan
tages of integration, there are also disadvantages when
such integration is based upon "unequal partnership."
One of the major problems of unequal partnership of any
integration schemes is the danger that the benfits of
integration will accrue only or mainly to the largest
and/or wealthier participating countries, and that the
least developed participating countries will find them
selves falling further and further behind. The sixteen
t
member countries of ECOWAS constitute a most glaring
case of an "unequal partnership." In theory economic
integration is likely to be more successful where the
partners are at comparable levels of economic develop
ment or where none of the partners is so large as to en
able it to pursue a national industrialization scheme
independently as an alternative to integration. Many
researchers have observed that Nigeria can, to a large
122
extent, go it alone, because it is endowed with rich
natural resources, including petroleum, and has about 70
percent of the population of the subregion, and accounts
i
for 69.33 percent of the subregion's GDP in 1984.31 It
has also the largest and most diversified industrial
sector. Given the tendency of industries to cluster in
few growth centers or growth points (e.g., Lagos, Accra,
and Abidjan), there is some fear that ECOWAS would be
unable to narrow the "economic gap" between its members.
So far, ECOWAS has not developed mechanisms to avert the
dangers of domination and unfair distribution of the
benefits and costs of integration.
Other observers of integration schemes contend,
however, that it is important for one country, or a
group of countries, to emerge as the "prime movers" of
integration efforts. George C. Abangwu32 asserts that:
there must emerge a dynamic center of gravity with
in the prospective integrative area: a country or
group of countries willing to bell the cat and act
as leaders in the process of integration.
31 International Monetary Fund. International Fi-
nancial Statistics Yearbook, vol. XL. Washington, D.
C., 1987, calculated from various pages.
32 George C. Abangwu. "A Systems Approach to Re
gional Integration in West Africa." Journal of Common
Market Studies 13, nos. 1 & 2 (1975), p. 131.
123
As pointed out in the preceding section, Nigeria
and Togo have played a very significant role in the
birth of ECOWAS and Nigeria's role has been very active
in negotiating the protocols and in maintaining the mo
mentum for integration in the subregion to date.
The stark reality of the problems identified above
sugget that implementation of the trade liberalization
decisions can be very difficult which leads to two im
portant questions: To what extent has ECOWAS has suc
ceeded or failed after fifteen years of existence? What
are the Community's priorities for integration?.
Dynamic as it was, it must be noted that what the
ECOWAS Treaty has produced since 1975 are mainly resolu
tions. It remains to be seen whether the spirits of
sixteen soveriegn states can be harmonized in the imple-
I
1 mentation of the ECOWAS objectives. Considering the
provisions of the Lagos Plan of Action which envisages
the establishment of an African Common Market (ACM) by
the year 2000, preceded by the establishment of subre
gional common markets like ECOWAS, member countries must
be aware of the fact that they cannot afford the back
tracking of the last fifteen years for too long if they
are to meet the continental target date.
124
Trade is the raison d'etre of the customs union.
But little progress has been made in ECOWAS. Tariff re
duction deadlines have been postponed a number of times.
According to the most recent protocol33 the trade liber
alization scheme is scheduled for implementation on Jan
uary 1, 1990, and $1.4 million has been set aside to
compensate any member country which experiences material
losses as a result. In December 1988, $6.2 million was
allocated by the 24th Ministerial Council for operation
of the ECOWAS Secretariat in Lagos. However, the group
continues to suffer financial difficulties due to tardi
ness of some member countries in paying dues. The
transportation and communications programmes are on the
top of ECOWAS priority list but the only advanced
project in the programme is the construction of a coast
al highway between Lagos and Nouakchott in Mauritania
(see Figure 6.2). Community participation has been very
significant in the construction of a bridge in Benin
across the Mano and Sazue rivers, as well as in Liberia,
in the Monrovia-Freetown portion of the highway.
33 Staff. West Africa, 20-26 March, 1989, p. 428.
125
4.3 CONCLUSIONS
This chapter briefly examined the provisions of
the ECOWAS Treaty as well as the decision-making process
of the Community. An attempt was made in the course of
this examination to indicate where the seeds or elements
of potential conflict exist between ECOWAS and other su
bregional organizations--the CEAO and the MRU. Other
actual or potential problems of ECOWAS are inadequate
transportation and communication networks and lack of
common industrial policies.
ECOWAS is the largest economic integration group
ing in the world in terms of the number of countries
which are members. While size can make for stability
when viewed against the background of the collapse of
the EAC, it could be an encumbrance, particularly so in
ECOWAS because of the nature of the decision-making pro
cess. In general if the institutional structures of the
ECOWAS and those of such African regional groupings as
the defunct East African Community (EAC) are compared,
it becomes immediately apparent that regional integra
tion schemes in Africa are structurally quite similar.
126
The discussion of the aims and objectives of
ECOWAS as enshrined in the Lagos Treaty on May 28, 1975,
provides a context for examining specific programs. The
following chapters will provide detailed examination of
the three main strategies of ECOWAS: trade liberaliza
tion and cooperation, transportation and communications
development, and industrialization.
127
Chapter V
OBSTACLES TO TRADE LIBERALIZATION AND ECONOMIC
COOPERATION
5.1 INTRODUCTION
Over the past two and a half decades, questions of
cooperation in trade and development among the Less De
veloped Countries have generated a growing body of anal- j
ysis and prescription. A number of schemes have been
initiated, and have experienced varying fortunes, rais-
i ing questions both of the efficiency of existing schemes j
and soundness of theoretical and policy arguments upon j
i
which they are based. The literature reviewed in Chap- !
ters Two and Three provided two contending integration
theories: (a) the traditional integration theory, a com- i
parative static analysis based on the customs union
theory which suggests that greater benefits could be ob-
f
tained by reducing tariffs on a non-discriminatory ba- !
sis, or by removing protection from domestic enterprises
altogether, and by importing domestic requirements of
the products of displaced industries from outside at
128
world market prices (Robson, 1980). Such gains are at
tributed to increased production arising from speciali
zation according to static comparative advantage. The
traditional theory analyses the effects of integration
mainly in terms of the "trade creation" and "trade div
ersion" that would result. In the Vinerian sense, spe
cialization in primary products by ECOWAS member coun
tries amounts to being more competitive than
complementary. This general state of competitiveness,
on balance, prohibits the welfare gains of economic in-
tegration among the ECOWAS member countries. As many of
the researchers cited in Chapter III attest, the Viner i-
an analysis has only limited relevance for the evalua-
tion of the key obstacles of integration of LDCs in gen-
eral and ECOWAS in particular.
The alternative analysis among ECOWAS begins from
an entirely different, developmental vantage point. It
is assumed that there is a valid case for protecting
certain activities in ECOWAS--particularly trade and in
dustrial enterprises--either for the purpose of increas
ing income or the rate of economic growth, or in order
to achieve certain non-economic objectives. The impli
cations of economic integration in these terms can best
129
be examined within a broader theoretical framework as
discussed in Chapter Three. The analysis of this Chap
ter adheres to the formulation of such a broader frame
work of developmental theories of integration in its ex
plicit recognition of trade and cooperation;
transportation and communication networks; industriali
zation and the structural transformation of economies of
member countries of ECOWAS. This entails that the ben
efits from integration of each of the above sectors must
be exploited on a mutual basis, by the exchange of mar
ket and non-market activities within a free trade area
or common market or some other preferntial area, so that
they can be achieved without endangering the structural
developmental objectives of individual member countries
of ECOWAS. j
I
The first part of this Chapter employs the "gravi
ty equation" model (static aspect) to measure the extent
to which trade flows among ECOWAS-member countries have
brought about relative degrees of integration and coop
eration. The second part (dynamic aspect of integra
tion) of this Chapter develops an argument on the rele
vance of trade liberalization policies which are
currently promulgated as a means to measure integration
among the participating states.
130
The basic principle for measuring the relative de
gree of regional economic integration is to bring to
gether, and separate in distinct geographic spaces, a
number of regional economic and political factors with
characteristics as close as possible to one another.
These characteristics include national income, popula
tion size, distances between trading member countries,
and so on. However, in analysing the relative degree of
regional integration between two or more countries,
there are two distinct problems, one "static" and the
other "dynamic."
The static problem is how to deal with an array of
characteristics associated with interactive processes.
The gravity equation model is one such static model
which is intended to explain these interactive processes
with some specified array of variables. The dynamic
problem is how to analyze the movements of physical and
human resources within a given political boundary and
between different homogeneous countries and how to con
sider what changes are needed to transform the static
form of interactive processes into a more developmental
(or dynamic) mode. Thus, the dynamic aspects of region
al integration and cooperation schemes are concerned
L
131
with an enlargement of the integrating community's eco
nomic activities.
In considering the effects of the movement of per
sons, or goods and services between the different homo
geneous countries of West Africa, it is thus necessary
to be clear as to what type of integrative relations
they presuppose and as a result how far they contribute
to the overall objective of the Economic Community of
West African States (ECOWAS).
This chapter will examine the degree of trade in
teraction among the West African countries. In doing
so, the analysis will be divided into four major areas:
(1) the "gravity equation" model, (2) ECOWAS trade lib
eralization policies and their limitations, and (3)
problems of external trade, and (4) conclusion.
5.2 THE GRAVITY EQUATION MODEL
The gravity equation model is a version of spatial in
teraction theory which provides a static view of devel
opmental relationships between two or more centers of
population, generally expressed in terms of the movement
of people, goods, or services. The degree of this in
132
teraction and the volume and diversity of the flow of
goods and services between the member countries of
ECOWAS, thus become a measure of regional integration.
More specifically, the theory of spatial interaction is
concerned with specific geographical complementarities
and the friction of distances which are brought together
in the gravity model.1 Thus, the gravity model has long
been recognized for its tractability and consistent em
pirical success in explaining many different types of
flows, such as migration, commodity shipment, the flow
of traffic, between two or more places or communities.2
In the present context, the study of regional trade is a
special case of the analysis of flows between the mem
bers of ECOWAS, for it involves not only the logic of
trade flows between the different centers within ECOWAS,
but the impact of political boundaries and regional al-
1 Ian R. Gordon. "Gravity and Demand Functions,
Accessibility and Regional Trade." Regional Studies 10
(1976), pp.25-37. Also in Maurice Yeates, An Introduc
tion to Quantitative Analysis of Economic Geography.
New York: St. Martin’s Press, 1968, pp. 134-141.
2 Josef. C. Brada and Jose A. Mendez. "Economic
Integration Among Developed, Developing, and Centrally-
Planned Economies: A Comparative Analysis." The Review
of Economics and Statistics 67, no. 4 (November 1985),
pp. 549-556. Also, a detailed analyses have been pro
vided in the following: (Bergstrand, 1985; Brada and
Mendez, 1983, Seninger, 1984; Haynes and Fotheringham,
1985; Geraci and Prewo, 1977; Aitkin, 1973; Linneman,
1966; Poyhonen, 1963; Tinbergen, 1962).
133 |
lignments as well.
Regional integration and cooperation among LDCs
has been the objective of extensive research. Much of
it has been devoted to the analysis of the costs and
benefits accruing from the formation of a multi-country
preferential trading area for the volume of trade be
tween participants* thus resulting in an increase in
trade flows accompanied by positive growth impacts be
tween participant economies. But multi-country trade
implementation aimed toward greater economic interaction
have been lagging among all regional groupings. Much of
the increased interaction among participating countries
is supposed to facilitate spatial-economic linkages be
tween member states, an effect which can be derived from
the intra-regional trade flow model.
The "gravity equation" model, as a measure of spa
tial interaction, has been derived from Newton's Law of
gravitation ( MiMj/dij ):4 where "Mi" and "Mj" represent
3 S. F. Seninger. "Economic Interdependence and
the Structure of Inter-Regional Trade in Central Ameri
ca." Environment and Planninq A 16 (1984),1605. Also in
Brada and Mendez, 1983, p. 589.
4 Martin Cadwallader. "Towards a Cognitive Gravi
ty Model: The Case of Spatial Consumer Behavior." Re
gional Studies 15, no. 4 (1981), pp. 275-284. Also in
Bergstrand, 1985; Brada and Mendez, 1985; Haynes and
134
a measure of mass at the origin and destination and "d"
represents the distance between the origin and destina
tion. Although the distance variable will always have a
negative effect on interaction, in some cases it may be
more negative than in others.5 The exponent on the dis
tance variable, "dij ," permits us to depict this vari
ability. The theoretical literature that has focused on
developing the correct exponent the gravity equation
model has been influenced by physical science interpre
tations, including the Newtonian analogy where the
square of distance variable, "dij , " is the appropriate
proposition.5 In empirical analysis, however, the expo
nent is generally understood "as the responsiveness of
interaction to spatial separation and is expected to
vary in terms of social context."7 Clearly The Newtonian
Law of Gravity has been significant for social scien
tists through the application and refinement of the
gravity model over the past fifty years. Its most re
cent use has been in regional and international economic
Fotheringham, 1984; Gordon, 1976; Wilson, 1971; and Poy-
honen, 1963).
5 Kingsley E. Haynes and A. Stewart Fothering-
ham. Gravity and Spatial Interaction Models. Beverly
Hills, California: Sage Publications, 1984, pp. 12-13.
6 Ibid.
7 Ibid.
135
analysis. The purpose of this chapter, in part, is to
demonstrate that spatial interaction models can be con
sidered as the basis of significant and tractable social
interaction theories. The gravity model is one example
of a spatial interaction model. The basic relationships
inherent in the gravity model are discussed below.
Using the population of each member country as a
measure of mass at the origin and destination, an inter
action energy factor (IEF) equal to (PiPj/dij: where
"Pi" and "Pj” represent the population of the trading
partners and "dij" represents the distance between them)
can be determined for each cell in the trade flow ma
trix.8 The IEF can be interpreted as an independent
variable accounting for the amount of trade flows re
flected in that cell.
A number of studies5 have determined that the
larger the "Pi" or "Pj," the greater will be the value
of the IEF and the greater the number of cells. Fur
thermore, the larger the distance between "Pi" and "Pj,"
the smaller the value and the fewer the cells. This can
8 Ibid., pp. 30-32.
5 Cadwallader, Op. Cit., pp. 202-204. Also in
Brada and Mendez, Op. Cit., 1983: 589-600, 1985:
549-552)
136
Figure 5.1: Interaction Matrix
Destination
PH
. Pi 2
Pi 3 •» «• • Pin
Pil
pi2
Origin Pi3
Xij
•
•
Pin
TABLE 5.1
THE RELATIVE DEGREE OF POTENTIAL INTERACTION INDEX FOR
WEST AFRICAN STATES
Country
Benin
4.972
Burkina Faso 1.268
Cote d'Ivoire 1.882
Gambia
0.080
Ghana
4.394
Liberia 0.283
Mali
1.372
Mauritania 0.173
Niger 1.871
Nigeria
12.992
Senegal 0.633
Sierra Leone 0.421
Togo 1.656
Source: Computed from 1986 Population Data of
Member Countries.
N
V " Pi Pj
X-jj = / . , where X-jj is an interaction indices bet-
j = 1 d — ween any pair of Cities in West Africa
Where, and P- are total populations of trading partners, and
d^j is the distance between them.
138
be illustrated by constructing an interaction index of
the ECOWAS subregion. This consists of summing for
center or cell "i" all the possible gravity-model inter
actions to "n" other centers. Thus, the potential (Xij)
from "i" to "n" centers can be represented by
(Xij=PiPj/dij) where each center on the map is treated
in turn as center "i," and the sum of all possible grav
ity-model interactions is computed for that center
(e.g., "Xij," in Figure 5.1 and any of the values in Ta
ble 5.1). This suggests that economic centers or cities
located close to other large cities will tend to have
large sums of all potential interactions; cities far
from large cities or economic centers will have small
potential interaction indices as shown in Table 5.1.
The IEF aggregates all information together into a
unified index. A general form of the interaction rela
tionship can be represented as:
(1)
X i j = ( P i . P j / d i j )
Where Xij represents a measure of the interaction be
tween member countries "i" and "j" ; "Pi" represents a
139
measure of the population term of total interaction as
sociated with country "i"; "Pj" represents a measure of
the population term of total interaction associated with
country "j" and "dij" represents a measure of the dis
tance, or generalized cost of transportation between ec
onomic activity centers of country "i" and country "j".
Correspondingly, Bergstrand (1985), Brada and Men
dez (1983, 1985), Fotheringham (1984, 1983a), Linnemann
(1966), Poyhonen (1963) and others have incorporated na
tional incomes of interacting countries in the basic
formulation of the general model for the structure of
regional or international exchange of goods and servi
ces. This basic formulation -can also be represented by
the basic relationships inherent in gravity models. In
a related context, the size of population in each of the
ECOWAS-member countries and their corresponding national
incomes and distances between them play an important
role in explaining the relative degree of integration
resulting from the flow of trades.
In its modified form equation (1) can be written
as:
(2) Xi j = (Yi . Yj . Pi . Pj . Dij)
140
As a l o g - l i n e a r m o d e l , t h e g e n e r a l m o d e l c a n b e e x
p r e s s e d a s f o l l o w s :
(3) Xi j = AO Y i b i Y j b 2 P i b 3 Pj b 4 Dijb5
Alternat ively:
(4) Log Xij= Log A +b1Log Yi +b2Log Yj +b3Log Pi
+b4Log Pj +b5Log Dij + Log eij
Where,
Xij= Value of Exports from Country i to Country j
A= Constant
Yi,Yj= Total National Income in the Exporting and
Importing Countries
Pi,Pj= Total Population in the Exporting and
Importing Countries
Dij= Distance Between Countries i and j
eij= Lognormal Error Term
The parameters ( b1 to b5 ) are the numbers which
describe the statistical relationship between the inde
pendent explanatory variables (Yi, Yj, Pi, Pj, and dij)
141
and the dependent explained variable (Xij). The size of
the log "A" depends fundamentally on a member country's
inherent tendency or productive capacity to make inter
actions with other member countries in the union..
Hence, the proposition states that "a poor country tends
to make far less interaction for any purpose than a vig
orous and prosporous country." The case of ECOWAS pro
vides an empirical illustration of this proposition.
While all participating members of ECOWAS are character
ized by common elements of underdevelopment, differences
in the actual and/or potential endowments of resources
are significant amongst the countries in the union.
Equation (4) is the most commonly applied model to
quantify the effects of intra-regional trade in order to
gain some insights as a basis for measuring the relative
degree of integration between member countries of any
given customs unions.
Linnemann and Professors Brada and Mendez, in par
ticular, have delineated significant theoretical assump
tions for each of the coefficients or parameters to be
estimated in equation (4).10
10 Hans Linnemann. An Econometric Study of Inter-
national Trade Flows. Amsterdam: North-Holland Publish-
142
The income and population variables represent es
sentially the integrating countries' endowments and
tastes. These endowments can bring about a number of
effects on the participating countries.
As the income of country "i" increases, production
of goods and services tend to increase. Some of the in
crease in production will be consumed at home, but not
all. Some of the increase in production will be export
ed to country "j". Because greater productive capacity
and national incomes are considered to foster greater
trade and development, the coefficients, bx and b2 are
expected to be positive. An equally important effect to
be considered here is that large countries tend to have
greater diversification of production and trade. Great
er diversification results from large populations which
are generally used to proxy country size, with more pop
ulous countries assumed to be larger in area and thus
endowed with greater quantity and variety of natural re
sources. This means that a greater proportion of na
tional demand is being satisfied from diversification of
production at home (i.e., country "i") while smaller
ing Company, 1966, pp. 37-56. This is also analyzed
with empirical findings in Brada and Mendez's articles,
1983, p. 590; 1985, p. 550.
143
countries (i.e., country "j") tends to pursue production
that rquires greater specialization and thus greater de
pendency on trade. If population increases in coutry
"i", country "j" will export by smaller amounts relative
to the exports from country "j" to country "i". Here,
b3 is expected to be negative, i.e., with every unit
increase in (log Pi), (log Xij) rises by bx ; when (log
Pj) increases one unit, (log Xij) rises by b2 • Inter
action thus varies directly with the masses of the in
teracting bodies. As (log dij) rises by a unit, however,
the value of (Xij) drops by b3>
Correspondingly, the population of the importing
country should have a positive effect on the volume of
trade, because larger population fosters a greater divi
sion of labor and diversity of production, enabling im
ports to compete with domestic goods at every stage of
the production process. Moreover, a large market better
compensates exporters for the cost of acquiring informa
tion and establishing a sales and distribution network.
In this instance, b4 is expected to be positive.
Finally, the distance variable represents resis
tance to trade amongst countries. Resistance has an ec
144
onomic and political element, consisting of transporta
tion and information costs; a structural element re
flecting differences in consumption patterns and re
source endowments as, for instance, between Nigeria and
Ghana, Nigeria and Mali, and so on; and a policy element
including the effects of economic integration. Clearly,
when interaction is sharply curtailed by distance, it
complicates trade and development policies, transporta
tion costs, and information about foreign market oppor
tunities, thus, bs becomes negative. In other words,
interaction between participating countries decreases
with distance. Thus, the gravity equation assumes that
the effect of distance varies smoothly and continuously
over geographic space. Political boundaries, however,
create discontinuities in patterns of interaction among
participating countries in different political environ
ments.
5.2.1 Empirical Results
Data were collected from the International Mone
tary Fund's Annual International Financial Statistics
Publications and the United Nation's Directions of Trade
Statistical Yearbooks for the world. Ten ECOWAS-member
)
145
countries were considered for the present analysis (see
Table 5.2), constituting 731 observations for periods
covering 1969 through 1985. A panel regression analysis
was used in this study for two reasons: (1) to examine
or evaluate the stability of the dependent variable over
a specified period of time; (2) A panel regression anal
ysis is a flexible statistical method for testing causal
propositions because it allows the introduction of mul
tiple independent variables, and because it employs data
at different points in time, reduces the likelihood of
false inferences due to reciprocal causality.11 The
gravity equation model was evaluated from the observa
tion of trade flows between nine of the sixteen coun
tries forming the customs union. Since ECOWAS was
formed in 1975, the data analysis is mainly for deter
mining the effects of trade on each of the countries
participating in the integration process. To this end,
using the gravity equation (4) model, the parametric
measures of each of the explanatory variables is re
gressed .
11 Christopher Chase-Dunn. "The Effects of Inter
national Economic Dependence on Development and inequal
ity: A Cross-National Study." American Socioloqical Re
view 40 (December 1975), p. 726.
146
147
TABLE 5.2
Regression Equation of the Gravity Model for Intra-
ECOWAS Trade Flows, 1969-1985.
Model LX - Ly1*LY2^LP1*LP2+LD12+e12
Coefficient Benin
Burkina
Faso Gambia Ghana Liberia Niqer Nigeria Senegal Toqo
b0
1.831
(1.035)
4.891
(0.630)
-15.169
(-2.983)
-0.296
(-0.110)
-9.488
(-1.301)
17.496
(5.024)
-4.032
(-0.993)
-1.103
(-0.581)
-9.549
(-3.733)
bl
-0.310
(-0.647)
-0.868
(-0.888)
0.236
(0.281)
0.423
(1.814)
1.128
(1.023)
-0.445
(-0.555)
1.846
(5.641)
-0.144
(-0.508)
1.755
(2.953)
b2
0.576
(3.208)
1.008
(3.432)
0.887
(2.124)
0.306
(1.438)
-0.134
(-0.369)
0.380
(1.260)
0.408
(1.316)
1.361
(6.832)
0.576
(1.836)
b3
-0.381
(-0.238)
5.306
(0.732)
-3.344
(-0.910)
-0.181
(-0.114)
2.540
(1.239)
-0.649
(-0.172)
-4.662
(-3.040)
0.227
(0.374)
-1.335
(-0.727)
b4
-0.572
(-2.185)
-0.862
(-1.536)
8.352
(2.523)
-0.282
(-1.104)
0.192
(0.585)
0.166
(0.315)
0.875
(1.555)
-0.465
(-1.977)
-0.717
(-1.682)
H
-0.567
(-4.241)
-2.493
(-9.001)
-2.017
(-2.185)
-0.836
(-4.241)
0.133
(0.203)
-2.628
(-6.169)
0.437
(3.876)
-0.749
(-3.947)
-0.718
(-4.931)
R2
DW
N
.31
1.879
101
.53
2.580
84
.76
2.783
33
.27
1.622
101
.34
2.563
50
.63
2.301
84
.78
2.405
67
.54
2.622
101
.45
1.847
84
Source: International Financial Statistics Yearbook, 1987, IMF, Vol. XL, Washington, D.C.
(Various pages) and Direction of Trade Statistics Yearbook, 1970 to 1986), (Various
pages).
NOTE: All variables are expressed in natural logarithms; estimation is fcy ordinary least
squares (CELS);
t - statistics are in parenthesis.
EOCWAS - member countries included in the estimation are: Benin, Burkina Faso, Gambia, Ghana,
Liberia, Niger, Nigeria, Senegal and Togo.
The result in Table 5.2 were reached after several
attempts with a wider range of additional independent
variables. It was hoped, for instance, to include some
measures of political variables (such as internal insta
bility variables; border dispute variables or some form
of diplomatic variables). The present study could not
pursue these variables for lack of data. Parameter es
timates in Table 5.2 contains the estimated values for
the gravity equation model for 1969-1985 period. The
values of the constant term of the equation are given as
logarithm to base 10. The figures in the brackets below
the parameters are the corresponding computed t-values.
As it was, the results using the gravity equation
model (4) were, in general, not encouraging; detailed
study of the individual ECOWAS-member countries is
clearly desirable as a follow-up. However, the examina
tion of Table 5.2 reveals some important trade implica
tions. That is, the parameter values differ signifi
cantly and systematically from country to country in the
subregion. In other words, the regression values of
each of the explanatory variable differs from country to
country. Making a comparison between parameters result
ing from a cross-section study and those found from time
148
series, however, will not be an easy and straightforward
matter as it might seem by looking at Table 5.2. There
fore, the analysis of this result will be confined to a
very general test as to the consistency of the results
obtained in the cross-section with theoretical assump
tion, on the one hand, and with the overall development
of trade in the subregion in the course of time, on the
other hand. This analysis of empirical findings has
been far from exhaustive, however; many interesting im
plications of the present results and further refine
ments of the analysis had to be left unexplored.
Of the coefficients measuring the effects of inte
gration, bj and b2 (incomes of the exporting and im
porting countries, respectively) have the expected
signs, positive, and are similar to those reported by
Brada and Mendez (1985). b3 (the population of the ex
porting countries) also have the expected sign, neg
ative. This coefficient which measured the size or pro
ductive capacities of the exporting countries remained
relatively stable over time. b4 (the population of the
importing countries), however, did not have the expected
sign, positive. It is conceivable to assume that colli-
nearity may be the major cause for the coefficient of
149
BETAS ( bs ) to be insignificant for the particular
periods regressed.
The coefficient of the distance variable, b5 f was
expected to be negative. However, as the regression
equation results show, the distance parameter is posi
tive for two of the nine ECOWAS-member countries (Libe
ria and Nigeria) evaluated. The other seven ECOWAS-mem
ber countries trade flow regression results adhere to
the basic theoretical assumptions formulated above. The
distance parameter is expected to be negative. As there
is no reason to believe that trade stimulating changes
in b5 has been offset by increasing artificial trade
barriers, the development of the subregional trade over
time is not only caused by changes in income (or domes
tic product) level and population size, but also by the
decrease in trade resisting forces. This makes it all
the more difficult to draw precise conclusions about the
values of the various parameters from the results in Ta
ble 5.2.
It seems obvious that distance as a proxy for
transportation cost, time, information, and opportuni
ties influences decision outcomes on which countries
150
should be trade partners and for what goods and servi
ces. And, given the quality and the availability of
transportation and communication networks in West Afri
ca, the constraints of distance on trade activities is
bound to be costly. The exporting countries need to be
aware of market variations within the union, to which
they may need to react immediately. It is also impor
tant to note that the levels of trade flows among the
ECOWAS-member countries is also suffering from the prob
lem of "complementarity." For example, adjacent coun
tries (e.g., Togo and Benin, or Ghana and Burkina Faso),
all at the same levels of the stages of economic growth,
may generate very little trade among themselves. Their
resource endowments and tastes are probably very simi
lar, as are the cultural antecedents influencing their
resource development. Each is likely to produce the
same commodities as its neighbors, to whom it will not
be able to sell them, and each will demand the same type
of imports, which neighbors cannot provide. Therefore,
trade between any pair of ECOWAS-member countries re
quires complementarity in their patterns of production
and hence supply and demand. And, much of the dilemma
for ECOWAS remains finding solutions to alleviate the
problems of complementarity.
151
While the gravity equation model is an attempt to
study the effects of trade flows on economic integration
vis-a-vis the effects of geographic distance, several
other factors may be more important than the inferences
that can be made from the above results. Brada and Men
dez12 argue that:
the extent to which the success of any regional in
tegration scheme can be attributed to the type and
extent of inter-member trade liberalization under
taken and the extent to which it is the fortuitous
result of the proximity or are high level of devel
opment of the integrating countries are relatively
unexplored issues despite their obvious relevance
to the success of further efforts at regional eco
nomic integration.
There is another obvious reason as to the mixed
nature of the regression results in Table 5.2. As in
most LDCs, West African production is primarily concen
trated in subsistence agriculture and in services, nei
ther of which enter into the subregional or internation
al markets to reflect any effect on integration. The
bulk (90 percent) of West African trade is thus with
12 Josef. C. Brada and Jose A. Mendez. "Economic
Integration Among Developed, Developing, and Centrally-
Planned Economies: A Comparative Analysis." The Review
of Economics and Statistics 67, no. 4 (November 1985),
pp. 549. Also a detailed analyses have been provided in
the following: (Bergstrand, 1985; Brada and Mendez,
1983, Seninger, 1984).
152
countries of different levels of economic development
notably with the developed economies of Western Europe,
North America and Japan, and consists of exchanges of
agricultural products and raw materials for manufac
tures.
Therefore, ECOWAS's quest for regional integration
and cooperation requires multilateral negotiation ef
forts to lessen obstacles to intra-ECOWAS trade. There
are a number of policy measures embodied in the treaty
of ECOWAS for this purpose to which the present analysis
will turn below.
5.3 ECOWAS TRADE LIBERALIZATION POLICIES AND THEIR
LIMITATIONS
From classical to contemporary economic thought,
trade has been considered as an "engine" of development,
which is expected to introduce elements of complementar
ities. Trade and development are seen as two sides of
the same coin: Trade brings development and development
in turn promotes or boosts trade. Consequently, the
patterns of production and trade have a very important
but varying impact (e.g., inward-looking trade policies)
| on the questions of trade liberalization for development
153
and regional intergration and cooperation in West Afri
ca .
In this section, we will examine the problems and
prospects of trade liberalization policies and their
limitations within the ECOWAS subregion and outside of
the union. In doing so, a number of issues will be ana
lyzed, including: (1) Why trade liberalization? (2) Can
the movement to free tade area (FTA) yield benefits to
the whole of West Africa? (3) How can this be implement
ed?. Uka Ezenwe13 in Trade and Growth in West Africa in
the 1980s, echoes the more generally accepted view which
suggests that development through trade is partly the
result of internal as well as external factors:
For West Africa, the internal and external factors
have combined to thwart recent efforts at trade ex
pansion and growth. On the domestic front, the
structural problems associated with over-extended
and insufficient public-sector institutions, the
neglect of export-oriented industries, the continu
ing biases in the incentive systems against agri
culture, and the improper mix of economic policies
have militated against modernisation. Similarly,
an unusual 'bunching' of unfortunate events in the
external sector which started in 1973 with the oil-
price increases, seriously hampered the post-inde
pendence drive towards consolidation and transfor
mation .
13 Uka Ezenwe. "Trade and Growth in West Africa
in the 1980s." The Journal of Modern African Studies
20, no. 2 (1982), pp. 305-322.
154
As the gravity equation model result showed, one
salient characteristic of the production and trade pat
terns of West African countries is that the levels of
exports and imports and the relative position of the
member countries of ECOWAS in overall subregional trade
vary widely. By and large, this variation can be at
tributed. to their past colonial legacy as well as their
current relationships. On a continental scope, accord
ing to Peter Robson,14 the African patterns of produc
tion and trade are divided into two groups.
The first group of economies, he argues, developed
mainly on the basis of growth of commercial-mining and
extraction or European agriculture enhanced by large-
scale capital injection. Robson argues that these econ
omies were dominated by European settler communities and
the African role was only marginal as wage earners. Al
geria, Zimbabwe, Zambia, Kenya, and Zaire were closely
associated with this category.
14 Peter Robson. Integration, Development, and
Equality: Economic Integration in West Africa. London:
George Allen & Unwin, 1983, p. 67.
155
The second group of economies (e.g., Ghana, and
Uganda) grew out of the development of a peasant agri
culture. Production activities of these economies cen
tered around cash crops for export. It is further ar
gued that the first group of economies have become
relatively more industrialized and have enjoyed faster
rates of economic growth than the second group of econo
mies. This is partly explained by the concentration of
foreign investments during the colonial periods in the
first group of economies.
If Robson's dichotomy is adopted as a first ap
proximation, the West African economies are characteris
tic of the second group. But even so, it must be empha
sized that both groups of economies share a heavy
"dependence" on foreign trade. A significant amount of
trade literature15 suggests that it is this export-ori
ented development together with other associated prob
lems of low-capacity-to-import, a structural but intrac
table phenomenon among African countries, which impose
an excruciating constraints on intra-regional and subre
gional trade and development activities. One of the
1S J. 0. C. Onyemelukwe. Industrialization in
West Africa. New York: St. Martin's, 1984, pp. 133-138.
156
most important effects of colonial rule was the organi
zation of direct and indirect control of the exports and
imports of the dependencies in a manner that tended to
perpetuate dependency relations in favor of the colonial
powers14 Onyemelukwe's empirical study indicates the
dire profiles of the intra-regional trade that exists
today. More specifically, Onyemelukwe17 observes that:
Two forms of international or external trade are
engaged in by West African countries. One is trade
with countries outside the African continent; the
other is with other African countries. While the
former has over the years developed on a very large
scale and has been the economic nerve centre of
each West African country, the latter has been on a
very small scale. In 1970, for instance, only 5.5
percent of Africa's international trade was intra-
African. By 1975 the percentage had declined to
4.3 percent which can be compared with 10 percent
internal trade in Latin America and 18.3 percent in
Asia at same period. A considerable part of this
intra-African trade has been in crude oil. The
bulk of the remainder comprises trade between land
locked countries and their coastal neighbours. The
main reason for low level intra-African trade is
the generally poor state of the industrial (manu
facturing) economy in most of Black Africa, partic
ularly West Africa.
Aside from the preceding discussions, intra-re-
gional and subregional trade has one more characteris
tic. The West African countries are not major trade
14 Ibid., p,
1 7 Ibid., p,
133.
131.
157
share of their mutual trade in total external trade is
insignificant, a mere 4.0 percent for the subregion as a
whole since independence. It is argued that the forces
that have conditioned the patterns of intra-regional and
subregional trade are mainly of two types: (1) tradi
tional, i.e., climatically induced specialization in the
production of tropical foodstuffs and certain agricul
tural products; and (2) the existence of preference sys
tems and monetary arrangements (i.e., between the Anglo
phone and the Francophone) among groups of West African
countries.18 Such arrangements primarily serve as
sources of raw materials for the factories of the vari
ous metropoletan centers of Western Europe.19 The at
tainment of political independence by the West African
countries since the early 1960s has not considerably al
tered their production and trade patterns.
18 Uka Ezenwe. ECOWAS and the Economic Integra- i
tion of West Africa. New York: St. Martin's Press,
1983, p. 28. !
19 Walter Rodney. How Europe Underdeveloped Afri
ca . Dar-es-Salaam: Tanzania Publishing House, 1973.
Also Wallerstein provides a wide range of historical i
depositions how the Developed countries became the
source of underdevelopment in LDCs, 1979. pp. 165-181
and 269-282.
158
The geographic and economic structure of contempo
rary West African countries is also shaped by two sets
of additional factors that are responsible for the com
paratively low level of subregional trade interactions
as evidenced by the gravity equation model earlier. The
first includes factors that currently act as a resis
tance to subregional trade. These include the non-com-
plementary production structure of the member countries
of ECOWAS. As indicated earlier, the economies of the
region are heavily concentrated in the production of
primary products which constitute a significant part of
member country's exports. The absence of complementari
ty between the products of each member country suggests
that they are highly competitive even for foreign mar
kets, and the effective demand for each other's primary
products within the subregion is limited.
Second, the most formidable factor that has limit
ed the intra-regional and subregional trade development
has been the inadequacy of transportation and communica
tion networks. The preeminance of trade relations be
tween ECOWAS-member countries and the advanced countries
of Western Europe and North America during the last
three decades has increased interest in the efficiency
159
and effectiveness of the transportation and communica
tion systems between Western Europe and ECOWAS member
countries. However, the transportation and communica
tion systems within the subregion of ECOWAS have been,
by and large, ignored until very recently. One of the
goals of the Community is to promote cooperation and de
velopment of schemes for joint ventures in transport,
communication, energy and other infrastructural facili
ties as well as the evolution of a common policy in
these fields, evident in the ECOWAS Treaty with its pro
tocols enshrined in Articles 40-47.
In general, the development and expansion of
(i.e., in the spirit of collective self-reliance) pro
duction and trade within the subregion of ECOWAS is con
strained by the inadequacy of the whole spectrum of
transportation and communication systems. What has
slowed down the integration process is the absence of
political will to drive home its "collective intention"
to achieve these various goals. Apart from the sover
eign character of member countries, the obvious division
of the subregion into French and English speaking zones,
an off-shoot of past colonial domination, continues to
pose major constraints. There is also poor financial
160
and resource bases of member countries which have re
duced the effectiveness of ECOWAS.
Even if these major impediments were mitigated,
there is still another set of factors that will be more
significant as disincentives to intra-regional as well
as subregional production and trade. This includes
trade barriers such as tariffs, export taxes, and quan
titative restrictions. Although the main thrust of
ECOWAS policy has been toward the lessening of this
problem and the removal of internal barriers to trade in
such areas as capital and labor mobility within a cus
toms union, rather than joint planning and implementa
tion of regional projects, the level of economic inte
gration achieved is limited, and already has given rise
to political tensions between unequal partners of the
subregion, for example, at the time of Nigeria's expul
sions of unregistered migrants from member, countries in
1983 and 1985. 2 0
There is still another impediment to the removal
of internal trade barriers. Most member countries of
ECOWAS, as is the case in most LDCs, depend heavily on
20 West Africa. West Africa, 30 June, 1986, p.
1363; 30 June, 1987, p. 1427.
161
customs receipts as a source of government revenues.
This, combined with the desire to protect domestic in
dustries, results in ordinately high levels of tariffs.
Until alternative sources of government revenue are
found within the subregion, the current tariff structure
of each member country is unlikely to provide a special
incentive to import from other member countries. What
is being hoped for from the subregion's integration pro
cess is that of a sustained common trade liberalization
policy which will ultimately provide member countries
with alternative sources of government revenues. The
simultaneous establishment of ECOWAS and the Lome I Con
vention (EEC-ACP association) in 1975 had been expected
to provide an institutional solvency for the problems of
LDCs, including the West African countries during the
recessionary periods of the early 1970s. However, when
the African, Caribbean and Pacific (ACP) countries con
vened in Lome, Togo for Lome III negotiations their
economies were in a precarious state. Of the 66 coun
tries which were linked to the EEC, 16 countries were
ECOWAS member coutries of which Nigeria was the only one
with a relatively booming economy during the interna
tional oil crisis. Unlike its predecessors (i.e., Lomes
162
I and II), Lome III had been considerably reformed con
sisting of new ideas of cooperation in trade and devel
opment with all the ACP group, particularly with the
countries most pressed by the recession.
However, trade between the ACP group and EEC had
been dominated by a small number of ACP countries, and
with respect to ACP exports, a limited range of prod
ucts. For example, about 70 percent of total trade be
tween ACP-EEC involved only 10 ACP countries.21 The new
approach under Lome III (e.g., particular kinds of de
velopment: sectoral activities, strategies, and
projects) were not equitably delivered. By far the most
important trading partner with EEC was Nigeria, averag
ing more than 33 percent of the ACP exports to, and im
ports from, the EEC.22 The Lome III convention was im
plemented during a time in which 44 of the 45
21 Tony Hill. Africa: South of the Sahara-1988. j
London: Europa Publications Limited, pp. 60-67. The j
Lome Convention, or Lome I was signed in 1975, followed j
in 1979 and 1985 by successor agreements, Lome II and j
III, respectively. All agreements were signed in Lome, j
the Capital City of Togo (a country also credited for
the joint sponsoring of the Treaty of ECOWAS). The Lome
Convention is largely a product of the EEC association I
policy which governed the aid and treaty ties between j
the EEC and the seventeen colonial dependencies of mem- j
ber states (ACP--African, Caribbean, and Pacific
States).
22 Ibid.
1
i
163
sub-Saharan ACP associates were contending with an ever
worsening developmental crisis. These countries have
been amongst the most vulnerable to terms-of-trade
shifts since the signing of Lome III. On average, the
ratio of export to gross domestic product (GDP) of Afri
can economies is among the highest in the Third World,
at around 25 percent. Manufacture goods account for
certainly no more than 5 percent of Africa's exports.
The only conclusion that can be stated from the above
grim ills is that the ACP groups are more dependent than
ever on Lome and the financial resources it make avail
able; a condition that is reinforced by reduced levels
of aid from other bilateral sources.23 Therefore, the
task of ECOWAS as an institutional force in operation
must be to reduce or possibly remove the conditions of
dependencies to stimulate not only subregional trade but
also intra-regional and international trade.
Moreover, if ECOWAS is to succeed in realising its
objectives, it will be through the development of in
frastructural links among members and through increased
industrialization to produce those goods and services
the free movement of which is also envisaged. To this
23 Ibid.
164
end, industrialization in ECOWAS will demand a conscious
and deliberate effort in re-orientation of trade and de
velopment patterns of its members. This conscious and
deliberate effort may depend upon the degree of commit
ment that must be shown by ECOWAS member countries.
Promoting intra-ECOWAS trade will depend on two factors:
(1) the extent to which the process of industrialization
in the Community is facilitated, and (2) policy measures
or policies undertaken to re-direct the pattern of trade
and remove economic and non-economic barriers to free
movement of products and factors. The first strategy is
a topic which will be taken up in Chapter VII. The sec
ond strategy will be investigated at some length in the
following section.
5.3.1 Trade Liberalization Problems and Prospects
The difficulty of establishing the necessary trade
liberalization has been one of the major stumbling
blocks to a harmonious development of groupings in LDCs.
In West Africa, trade liberalization embodies a signifi-
i
cant aspect of the subregional economic groupings. Ar
ticle 12 of the ECOWAS Treaty provided a 15-year time- j
table for the Community to eliminate all trade and |
165
development hampering barriers. However, setting in mo
tion this timetable contained in the Treaty for liberal
ization of trade of products originating within the
group and the establishment of a common external tariff
was first postponed by two years, from 1977 to 1979.24
There has been very little evidence that trade and de
velopment barriers have been reduced since the proto
col's rescheduling. Obstacles to harmonious trade lib
eralization most frequently discussed in the
literature25 can be divided into three major issues.
The first issue is whether the elimination of
trade hampering forces should be confined to a reduction
of tariff and non-tariff barriers or whether it should
also encompass direct measures of trade promotion, such
as long term supply and purchase covenants that would
avail importers with guaranteed supplies and exporters
with commodity markets. Because trading activities are
done predominently on the state level, LDCs insist on a
long term supply approach.
24 Robson, Op. Cit., pp. 114-116.
25 Stephen D. Krasner. International Regimes.
Ithaca, New York: Cornell University Press, 1983, pp.
278-296. Also in Jack P. Barnouin. "Trade and Economic
Cooperation Among Developing Countries." Finance and
Development 19 (June 1982), p. 26.
166
A second issue holds a preeminent position in the
North-South debate. Should tariffs be reduced product
by product or across-the-board?. Many favor an equiva
lent across-the-board tariff reduction for all products
and all countries. Barnouin2s points out that, because
of LDCs' deliberate and concerted efforts for industri
alization policies via the development of consumer prod
uct enterprises, protection is high in those products
which are the most susceptible to be exchanged or traded
among LDCs, and low or non-existent for intermediate and
capital goods for which the LDCs are yet to develop the
capacity to compete in international markets. Conse
quently, an across-the-board reduction of tariffs among
LDCs would not alter considerably the current situation
for intermediate and capital goods but it is hoped that
intra-Third World trade or exchange in consumer products
can be significantly enhanced.
A third delicate problem is how to manage tariff
preferences that LDCs have adopted in their respective
regional groupings. It is strongly argued that if indi
vidual members of any such groupings extend preferences
to the outside world (i.e., non-member LDCs in particu- I
26 Ibid.
167
lar) the effect could minimize the groups' ability to
flourish. To avoid such a predicament, Barnouin27 ar
gues, the regional and subregional groupings would need
to increase group preferences. However, as the the dis
cussion below suggests, the bringing of diverse sover-
eign-states into a unified free-trade-area (FTA) has en
countered a number of obstacles (i.e., tariff and
non-tariff barriers), thus hampering the strengthening
of existing regional and subregional trade and develop
ment arrangements.
5.3.2 Trade Liberalization Policies
It is in the context of the problems discussed
above that trade liberalization has become a very sensi
tive issue, subject to perennial negotiations, in the
regional integration and cooperation (RIC) scheme of
ECOWAS. ECOWAS's effort is to institute a comprehensive
trade liberalization and promotion programme with the
intention of establishing a free-trade-area (FTA) as a
guiding principle for the ultimate realization of an ec
onomic union (EU).
27 Ibid.
168
The realization of the objective of trade liberal
ization imposes a considerable task on participating
countries. To be sure, the willingness of each member
country must go beyond mere lip service at annual summit
conferences, and must be able to envision the long term
effects on the Community as a whole. For example, the
establishment of a common tariff upon imports of prod
ucts from third countries and the harmonization of other
tariff policies influencing imports and exports will re
move distortions (e.g., deliberate diversions of trade
acitivities from the subregion) in competitiveness among
the participating countries provided exchange rates are
allowed to adjust. Such policy instruments or arrange
ments also provide some protection to "infant indus
tries" within the enlarged Community at the same time
that a free trade area among ECOWAS member countries is
gradually approximated.
An effective trade liberalization scheme has po
tential benefits. First, a common tariff policy instru
ment will facilitate the full utilization of the re
sources of the Community, thus culminating in
specialization in productive activities among the coun
tries within the enlarged market. Second, it is equally
169
beneficial that the establishment of a common customs
tariff will reduce illegal market transactions, such as
smuggling across national boundaries. Third, trade lib
eralization is likely to enhance cooperation among mem
ber countries. It is less likely to seed elements of
political dispute. The fourth benefit is that trade
liberalization policies will stimulate development by
providing enlarged markets for firms or enterprises, and
enabling member countries to obtain commodities at lower
cost from the union market resulting from reduced trans
portation costs. The effect of trade liberalization
policies can give valuable stimulus to investment, stim
ulate measures of cooperation in production, and gener
ally assist to expansion in production. Such develop
mental cooperation is likely to facilitate the
development of transportation and communication networks
so that the expected major shifts in trade patterns and
volumes can be accommodated effectively. Fifth, if
trade liberalization policies are effectively implement
ed, developmental benefits in the form of new expanded
agricultural and industrial production, new technologies
via research and development, additional employment, and
further infrastructural improvements can be realized.
170
This is likely to stimulate greater trade and develop
ment. Greater trade will encourage greater interaction
amongst the member countries. Finally, the establish
ment of an effective trade liberalization scheme is
likely to encourage member countries to progressively
fuse their national economies for the creation of a com
mon market (CU) and ultimately to harmonize their social
polic ies.
It is in light of these potential benefits that
many grueling negotiations have taken place among the
West African countries since the inception of ECOWAS as
a subregional institution under the Lagos Treaty of
1975, providing a detailed programme for trade liberali
zation. The final agreement between ECOWAS member cou~
tries was officially approved in May 1980 in conformity
with Articles 12 and 13 of the Treaty which became oper
ational on May 28, 1981, in order to establish a free-
trdae-area (FTA) in West Africa by May 1989, which was
later later postponed for January 1, 1990.28 This Treaty
envisaged in Article 2, sub-section 2 and its relevant
protocols, that the Community shall ensure the elimina
tion of all tariff and non-tariff barriers on all Commu
28 West Africa, 1982, p. 1493.
171
nity originating products and the compensation of actual
revenue losses by member countries due to tariff reduc
tions. These general objectives of the ECOWAS Treaty
are explained in a rather detailed and programmatic form
in the Third Chapter of the Treaty, which lays down a
15-year timetable for liberalization of intra-Community
trade and the formation of the customs union (CU).
According to this agreement among the sixteen-mem
ber countries , all. tariff and non-tariff barriers were
to be eliminated without any compensation to any member
country which is considered as industrially advanced for
the region.29 As expected, it is with respect to indus
trial products that a number of difficulties had to be
contended with in order to minimize any delay in the im
plementation process of the Treaty's provisions. Hence,
a list of priority industrial products was developed by
the ECOWAS ministers in November 1981 (with reservations
from three of the CEAO members).30 Consequently, the
following two momentous decisions were made by the
ECOWAS ministers to facilitate the trade liberalization
29 S. K. B. Asante. The Political Economy of Re~
qionalism in Africa: A Decade of the Economic Community
of West African States (ECOWAS). New York: St. Martin's
Press, 1986, pp. 81-92.
30 West Africa, 6/7/1982, p. 1493.
172
objectives of the Community:31
1. It was decided that the Community-designated
priority products imported into the four more in
dustrially-advanced member countries of Ghana, Cote
d'lvore (Ivory Coast), Nigeria and Senegal be com
pletely liberalized over a four-year period start
ing May 28, 1981. Tariffs on such products import
ed into the remaining 12 less industrially-advanced
member countries were to be completely removed over
six years, commencing on May 28, 1981.
2. It was decided, also, that tariffs on all other
industrial products imported into the four more in
dustrially advanced member countries be completely
removed over a six-year period beginning on May 28,
1981; while for the advanced member countries an
eight-year period, starting from May 28, 1981.
Although implementation of these directives has
been postponed to January 1, 1990, they were intended to
facilitate the pace of tariff reduction and to allow
variations based on the priority established to indus
trial products and the country into which such products
were being imported. If a member country is said to be
industrially-advanced and is accorded with higher prior
ity, then it is expected that the tariff elimination
process would be faster.
31 Asante, 1986, Op. Cit., pp. 95-96.
173
Perhaps the most momentous Community decision on
trade liberalization has been a call for elimination of
non-tariff barriers to subregional trade in light of one
of the most complicated geo-political patchwork patterns
of colonization and legacy of borders in all of Africa.
It has been argued that the non-tariff barriers must
precede the tariff barriers if the latter were to be ef
fective. There are various reasons enumerated in the
literature, such as non-economic centrifugal forces op
erating on the sociocultural spheres which are undermin
ing the cooperative efforts of the West African subre
gion. According to Ezenwe,3 2 these forces are: The
African languages spoken in West Africa are as many as
150. Religions too are numerous, and nationalism (or
what Western writers refer to as tribalism) is strong in
the larger communities. Customs differ widely within
each country and among countries, while the level of
literacy varies in the same vein. Political systems
pretend to Western-oriented liberal democracy, but they
are still 'unpolished' and undergoing an evolutionary
process. Needless to say, the political stability of
some of the regimes in the subregion, specially the mil
32 Ezenwe, Op. Cit., p. 41.
174
itary juntas, is very uncertain. English or French is
spoken by the literate West Africans, but inter-personal
and inter-country contacts, despite some marked improve
ments since the formation of ECOWAS, are still hampered
by the Anglo-French cultural divide bequeathed by the
colonial system. The strains and the stresses arising
out of these non-economic factors, while not insurmoun
table, have tended to reinforce the economic obstacles
to integration. Accordingly, the Community agreed to
begin the elimination of all types of non-tariff barri
ers on May 28, 1981, and to complete the process by all
member countries within four years.
During its annual summit conference at Cotonou in
May, 1982, the Community introduced some modifications
on the matter of currency convertibility within the en
larged market. The Community determined that foreign
exchange restrictions on current transactions shall only
be eliminated after non-economic forces are reconciled
among all members. In its sixth Summit33 meeting of May
28, 1983, the Community further introduced a much more
politically and strategically sensitive decision (i.e.,
in some or most member countries the ownership of major
West Africa, 6/6/83, pp. 1332-1333.
175
manufacturing enterprises is foreign) that relates to
the implementation of a single trade liberalization
scheme for industrial products originating from ECOWAS
member countries. In accordance with this decision, the
Community reaffirmed the basic spirit of the 1975 Trea
ty, such that all ECOWAS member countries must work to
wards the creation of a customs union (CU).
The success of such negotiations in the subregion
depends upon how the various other institutions respond.
Currently, in West Africa, there are over 30 intra-gov-
ernmental organizations, operating side by side with
ECOWAS. The most significant are the most political
ones--the Communaute Economique de l'Afrique de l'Ouest
(CEAO), the Mano River Union (MRU), the Council of En
tente, the Senegambian Confederation. Adebayo Adedeji,
the Secretary of the Economic Commission for Africa
warned that the threat posed to integration efforts by
this multiplicity of institutions, unless justified, may
undermine the very existence of ECOWAS. Professor Ade
deji sees little or no movement34 toward unity. ECOW
AS's trade liberalization efforts which were scheduled
34 West Africa, 7/20/87, p. 1380; 7/27/87, p.
1427.
176
to start (by stage) in 1981 have never materialized, and
the source of blockage is said to reside in the Commu-
naute Economique de l’Afrique de l'Ouest (CEAO).35 The
above initiatives call for the CEAO in particular to
merge its objectives and aspirations with those of
ECOWAS so as to avoid duplications of efforts.
Another recent article, in West Africa (June 30,
1986:1366), reminded ECOWAS policy makers that the pre
dicament confronting the West African integration pro
cess goes far beyond trade liberalization efforts. More
specifically, the article observed that:
West Africa, far from moving toward the formation
of a homogeneous economic grouping, leans toward
consolidation of historically conflicting inter
ests. Economic powers outside Africa whose respec
tive interests have split the region into many eco
nomically non-viable states, do not appear to be
prepared to allow their client-states to move to
ward an economic union which might further the eco
nomic and. social advancement of the countries in
volved or improve the standard of living of the
peoples of the region.
Hence, for ECOWAS to endure and flourish, the mem
ber countries must show some poltical determination to
tansform the Community from a relationship of ’ ’dependen
cy" to a relationship of "interdependence” with their
35 West Africa, 7/20/87, Ibid.
177
European economic powers. Accordingly, ECOWAS ministers
went a step further in the trade 1iberlization process
by adopting the following three important decisions.
First, is the decision which relates to the "Rule
of Origin for Community Trade."36 This defines the prod
ucts originating from member countries that qualify for
trade liberalization within the subregion. Although the
ECOWAS Treaty has no provision with respect to the ori
gins of input for the manufacturing of a product, the
protocol had an amendment governing national participa
tion. This is, without a doubt, an important aspect of
any regional or subregional integration and cooperation
scheme, primarily in facilitating the process of indi-
genization of the ownership of productive resources in
each of the member countries.
The second decision is concerned with the determi
nation of appropriate levels of national participation
in the equity capital of industrial enterprises whose
products benefit from preferential duties. In other
words, the products eligible for free trade within
36 Carol Lancaster. "ECOWAS at Ten." African Re- i
port 30, no. 4 (July/August 1985), p. 71. Also in West
Africa, 1982, p. 1369.
178
ECOWAS must be produced in enterprises or firms which by
1989 have 51 percent national ownership of capital.37
While there are considerable advantages to be derived by
Nigerian business owners, the disadvantages will be ab
sorbed by businesses in Francophone member countries,
since many of these are largely French-owned.38
The third decision is concerned with a plan for
compensation for revenue loss resulting from policy im
plementation of the trade liberalization program. The
implementation of this scheme will involve extensive co
operation among the ECOWAS countries, since it requires
an improvement in the quality of trade and fiscal data
from member countries. Briefly, the mechanism states,
among other things, that compensation for any losses due
i
to tariff reduction will be paid from the ECOWAS Fund (
i
only to those industrial products originating within the j
1
subregion. j
i
In this context, ECOWAS is the most ambitious un
dertaking of regional integration and cooperation
schemes among African countries and one of the largest
of its kind in LDCs. A successful implementation of
37 Lancaster, 1985, Ibid., p. 71.
38 Ibid.
179
this enterprising program during the ten-year timetable
(May 1979-May 1989) had been expected to complete the
first stage of economic integration, namely, the free-
trade-area (FTA) of the subregion, providing a market
for over 150 million consumers within the West African
Community.
5.4 PROBLEMS OF EXTERNAL TRADE: SOME IMPLICATIONS FOR
ECOWAS
The role of international trade in the development
process of a given society or region is a subject of
considerable controversy, and is an important issue in
the debate between the various (Primary-Export-Led
Growth; Import-Substitution; Outward-Looking Develop
ment) strategies of development. For example, a tradi
tional Western view, based on classical economic theory
and the experience of major industrially-advanced coun
tries, is that international trade brings gains to a
country. Put differently, it was a standard view to
prescibe that the path to economic development could be
guided most rapidly by following comparative advantage
principles (i.e., for the LDCs to export primary prod
ucts, mainly foods and raw materials), raising per cap-
180
ita income, and stimulating structural change as a re
sult. Although some countries such as Ghana, Nigeria,
Cote d'lvore have undergone significant structural
changes as a consequence of primary exports, these
changes have propelled them only partially.
However, since the late 1960s, much of the debate
on the role of international trade has, in fact, arisen
from the apparent failure of such trade to act as an
"engine of development" in many developing countries.
j
The initial expansion of the export sector in LDCs often J
failed to stimulate widespread growth and development-
and indeed it has been argued that its overall impact
may have been harmful to LDCs with the result that in a
great number of them, the export sector was an "enclave
of development" aimed at the largely traditional, sub
sistence economy. Within West Africa, international
trade is relatively little developed for several rea
sons.
First, the countries of the subregion are not, as ev
idenced by the gravity equation model earlier, eco
nomically complementary in any marked degree, ,
i
Second, their structures of demand and production of j
goods and services are not such that they can provide !
major markets and sources of supply for one another, (
181
Third, complementarity of economic activities has not
been accentuated within the West African countries as
among the trade corridor of each.
Consequently, most home-produced goods and servi
ces are local rather than subregional or regional in
scope. And yet, the subsequent growth of large-scale
enterprises in West Africa since the late 1950s has
gradually cheapened the local character of trade in lo
cal products within countries of the subregion, and it
has nurtured schemes similarly to enlarge markets that
would cater to over 150 million consumers in West Afri
ca. The significance of external trade of the subregion
varies from year to year and from country to country.
For instance, the average annual growth rate in the vol
ume of exports (i.e., excluding the subregion) of ten of
the sixteen countries of the subregion was found to be
lower in 1970-1979 than in 1960-1970. The export growth
✓
rate has actually been negative in eight of the coun
tries during the 1970s.39 External trade performances
were also profoundly different among countries of the
subregion. For example, in 1960, Nigeria supplied to
3 9 UNCTAD. Handbook of Internat ional Trade and
Development Statistics Tables 3.1, 3.2, 3.5 and 3.6,
1986 and 1985, various pages.
182
external markets 36 percent of the total dollar value of
the subregion’s exports. Ghana was the second dominat
ing country in the subregion, providing 22 percent of
the exports during the same period. Almost two decades
later, the character of external trade reflected a much
more and clearly defined dominance. In 1979, the Nige
rian share was more than doubled to a thundering 74 per
cent. Nigeria and Cote d’lvore together supplied 86
percent, while the Ghanian share dwindled to less than 5
percent for the same period. The other 12 countries
(except the Cape Verde islands) together scrambled for
less than 10 percent of the total external trade of the
subregion.40 While Nigeria continues to dominate the ex
ternal market, Ghana has been replaced by Cote d'Ivoire
by a considerable margin, 3.7 percent and 11.9 percent
respectively. Senegal's share of the external market
for the subregion's export was a mere 2.2 percent for
the 1980-1985 period.41
An equally surprising variation in West Africa’s
external trade has been in the composition of exports.
The exports of the subregion are still predominantly un
40 Ibid., various pages.
41 UNCTAD, Supplement, 1986, Tables 1 and 2.
183
processed, at best partially processed agricultural and
forest products and minerals. But while the values of
exports of minerals in 1960 accounted for less than 20
percent of the total value of exports from the subre
gion, by 1979, their share rose to 75 percent, the con
tributing factor being the increase in the volume and
prices of Nigerian oil exports. Clearly, one of the ma
jor distinguishing feature of the West African trade
performance is the increasing domination of the Nigerian
exports of petroleum products since the end of the
1960s, with 60 percent of its exports going to the Unit
ed States and the Caribbean markets and 30 per cent to
West Germany, France and the Netherlands.
The external trade of the subregion is still in
tensely oriented or directed toward the developed mar
ket economies of Western Europe (especially EEC), the
United States, and Japan. What is more important, is
the limited diversification of the export sector and of
its direction in world trade can be partly explained by
the West European intervention through international
market forces. Some proponents argue that the associa
tion of the West African countries with the EEC under
the Treaty of Rome in 1958, and the latter Lome Conven
184
tions (I, II and III) has facilitated the pace of West
African trade diversification, especially that of the
Francophone countries. An association with the EEC en
sued by the formation of ECOWAS may be viewed as an "en
gine" of institutional change, which frees each of the
member countries in the' union from the limitation of
forced trade bilateralism with the two major former co
lonial powers--Great Britain and France. But, this type
of unequal partnership or integration might be resisted
in favor of the development of complementary economic
activities within the subregion. During the 1960s and
the 1970s, the policies of international integration of
African economic activities with Western Europe have
been opposed by both individual countries as well as the
African continent as a whole.
In other words, most African governments often ar
gue, then and now, for international political non-a
lignment and geo-political neutrality. However, nearly
every country, on the continent is firmly in the Western
economic sphere. For example, during 1984 and 1985, 70
percent of Africa's exports went to the industrially-ad
vanced countries of Western Europe and North America
(with the U.S having commanded the largest share). Dur
185
ing the same period, Africa's imports (71%) came prima
rily from these countries (with the largest supply com
ing from France).42 As a whole, the arguments for and
against African customs unions, such as the Economic
Community of West African States (ECOWAS), the Southern
African Development Coordination Conference (SADCC),
have become the arguments for and against protection of
African industries against imports.
Individual countries in the subregion have often
wished to protect new industrial or economic activities
in their territories, and they have looked fervently, at
least in principle, on schemes for regional customs un
ion (e.g., CEAO or ECOWAS). But simultaneously, they
have sought free or preferential access for their ex
ports to the markets of their trading partners in West
ern Europe. To a considerable extent, these apparently
inconsistent or dualistic objectives have proved harmon
ious. The reasons lie in the nature and scope of the
subregion's exports, which are mostly non-competitive
with European production, and the readiness of the West
European governments to allow breaches in, and finally
retraction of, the principle of reciprocity in their
42 Ibid., Tables 3.1-3.6 various pages.
186
trade agreements with Africa.
It is in light of the foregoing that proponents of
the European Economic Community and the African-Caribbe-
an and Pacific (EEC-ACP) countries association argue
that the effects of trade arrangements since 1958 be
tween EEC and West African countries have been trade-
creating for the latter. Proponents further argue that
the effects in EEC member countries have conceivably
been trade-diverting at the expense of non-ACP LDCs.
The extent to which the effects in EEC can be trade-cre
ating in the future will essentially depend upon how ef
fectively the Lome III provisions are implemented. Nev
ertheless, it has already been stated that the
preferential trading arrangements between EEC and the
West African countries have been formally in accord with
efforts economically to bring the West African countries
together as a customs union since early 1959. But, the
EEC-ECOWAS relationships raise some fundamental ques
tions. For instance, can such relationships facilitate
(or stimulate) the realization of the objectives of
ECOWAS' strategy of collective self-reliance, or its
goal to function as an independent supranational entity?
To what extent does the present relationship constrain
187
the transformation of ECOWAS in the long run? What can
we expect from EEC when its members form a single Euro
pean Market in 1992?. These are questions to be noted
by leaders of the West African countries as they negoti
ate multilaterally and bilaterally with EEC and EEC mem
ber countries respectively.
The ultimate objective of the Treaty of ECOWAS was
to establish an economic union in the West African re
gion. However, as was said earlier, the major benefits
expected lie in trade diversion to the benefits of new
industrial activities, particularly large-scale enter
prises, which would be protected by common external tar
iff. For now, at least, a common external tariffs
mechanism or policies have not gone further than the
drawing board of the ECOWAS office. Consequently, for a
considerable time, anticipated benefits from integration
may not be realized in any measurable degree. When the
transportation networks are fully developed, however,
the benefits occur on several dimensions besides the
simple reduction of transport costs ( usually affected
by energy costs). In addition to transportation costs,
such transport service attributes as travel or shipment
time, dependability and frequency of service, safety and
188
comfort, among others, are important benefits from
transport improvements. In many cases, these other di
mensions of transport services are relatively more im
portant than the transport cost itself. Other benefits
accrue in broader economic development of the West Afri
can subregion. One is through the benefits provided at
the microlevel (i.e., sectoral level) to transport sys
tem users as a result of system improvements. The other
is through the transport service sector's upstream
links43 to the transport equipment sector and beyond, to
other more basic industrial sectors. Occurring primari
ly at the sectorwide level, these linkages can be in
strumental in stimulating broader industrial development
to penetrate new export markets for some of the ECOWAS
member countries (e.g., steel, rubber products and
transport equipments). These industrial products are
also necessary inputs for the development and expansion
of transportation. The role of these backward linkages
(potential and existing) can not be discounted in plan
ning regional integration which will be taken up in
chapter six.
43 "Upstream links" refers to the demand by trans
port services for output of equipment, materials, and
services by other economic sectors, used for the provi
sion of transportation.
189
5.5 CONCLUSIONS
The preceding analysis indicates that we are far
from celebrating any success stories on ECOWAS's trade
programs. However, the Community has been building the
institutional framework essential for the creation of a
customs union. The nature and scope of obstacles that
ECOWAS is likely to encounter in the implementation of
its trade liberalization programs will require some lev
el of trade-offs between nationalism (i.e., sovereignty)
and subregional development. To this end, it may may be
illuminating to summarize some of the major obstacles
facing ECOWAS.
First, in a strictly national context, the tariff
is a form of taxation which enables national governments
of each member country to obtain revenues to and allo
cate them on the basis of national priorities. However,
regional cooperation imposes an element of constraint on
the freedom of action by each respective government,
since the ECOWAS Treaty on common tariff is established
by agreements of the member countries, implying that any
modifications to this common agreement can only be by
common pursuasion and understanding.
190
The second major obstacle is the existence of dif
ferences in significance and structure of tariffs and
quantitative restrictions amongst ECOWAS member coun
tries before the signing of the Treaty. Here, again,
national differences act as an impediment and prohib
itive influence upon the decision making processes of
ECOWAS. The extent of these national differences is
greatly influenced by the level of economic development
of each member country. For example, it is argued that
a rich country like Nigeria relies less on tariffs and
import restrictions, import charges, and fiscal taxes
than the poorest member countries, say, Burkina Faso or
Mali. At the technical level, there are also differenc
es in customs and statistical nomenclatures and methods
of standards by which statistics are compiled.
It is in light of these major obstacles that
ECOWAS must be judged. But on the whole, the "lack of a
uniform Community system of customs and internal indi
rect taxes" as well as the "lack of a clear distinction
*
in the tax systems of several ECOWAS member countries
between import duties and internal indirect taxes" have
severely constrained the adoption and implementation
191
process of the trade liberalization program.44 Although
the ECOWAS Treaty provides a very comprehensive set of
programmes in the field of trade and customs, the suc
cess of its trade liberalization programmes would essen
tially depend upon the types of choices ECOWAS members
must make. More specifically, Robson45 observes that:
the Community appears to have a choice between a
high-risk strategy of securing formal commitments
to the existing liberalisation programmes in the
hope that concomitant measures required to provide
the Community with a coherent set of policies can
subsequently be implemented before present incon
sistencies and inadequacies become too manifest, or
alternatively accepting that the programme needs to
be modified. Desirable ingredients of an alterna
tive strategy would be built-in incentives to at
tain balanced development, or else safeguards that
the less developed members can independently oper
ate in the prior phase of negative integration,
perhaps on the lines of those found in CEAO. Given
proper leadership, such a programme might provide a
better framework within which functionalist inte
grative forces could operate. The strategy of pro
moting trade liberalisation along the present lines
without concomitantly phased positive policies
promises to be a recipe for stagnation. In any
event, a reconsideration of strategy and procedures
seems urgently necessary if the integration process
of the Community is to be given a renewed momentum
and an improved course. Expanded role for the
ECOWAS Fund should be an important ingredient of a
new deal.
44 Robson, 1983, Op. cit., p. 116.
4 5 Ibid., pp. 122-123.
192
While the obstacles facing ECOWAS are great, the
pace of implementation of the Community's policies guid
ing the trade liberalization program also leaves much to
be desired. Hence, greater political commitment by mem
ber countries is a requisite for ECOWAS to succeed. Ef
fective implementation of trade liberalization programs
are said to generate a greater incentive for investment
as well as policy measures for greater cooperation in
subregional and intra-regional coordinated activities
which ultimately tends to lead to the development of
other measures to expand economic activities in the su
bregion. This is likely to depend, significantly, on
the development and implementation of parallel measures
to expand industrial production, and to improve distri
bution through the realignment or improved transporta
tion and communication systems.
193
Chapter VI
THE ROLE OF TRANSPORT AND COMMUNICATION
NETWORKS IN REGIONAL INTEGRATION
6.1 INTRODUCTION
The analysis of Chapter Five suggests that trade
and economic development and/or integration of any soci
ety or any region is a difficult process which depends
upon several interacting forces. In examining one of
these interacting forces, (i.e., the transportation and
communications sector), the analysis draws upon develop
mental theories of integration. Unlike the traditional
comparative static analysis which is concerned mainly
with international trade and static equilibrium analysis
in which "transportation cost” is taken as a proxy for
"distance," the application of developmental theories of
integration in the analysis of transportation and commu
nication networks in regional integration scheme re
flects a long term process with dynamic effects.
194
It is generally agreed that inadequate transport
and communications facilities tend.to limit the gain
from economic integration among LDCs in general, and
ECOWAS in particular. For example, the mere removal or
elimination of tariffs between, say, Nigeria and Mali or
Nigeria and Niger would not add significantly to the
market for industry established in either Nigeria, Mali,
nor Niger. The reason is that there is currently no re
liable direct means of surface transport between the
countries mentioned above.
Although each of the individual countries has a
set of national objectives and policies for the creation
of transport infrastructure that would facilitate eco
nomic development, the subregion's integration process
require that the national objectives of each country be
linked with the goals or objectives of ECOWAS.
In doing so, the analysis of this chapter chapter
is divided into four parts on the basis of issues in
volved in the process of transportation and communica
tion development. Part One, the introduction, discusses
the importance of transportation and communication net
works, indicating why networks are considered among the
195
high priorities of the ECOWAS programmes. It also dis
cusses the development of these sectors in a historical
perspective, including the "ideal-typical sequence" mod
el of transport development and its implications for the
development and expansion of transportation and communi
cation networks of the ECOWAS subregion. Finally, it
notes that current economic development and integration
process of the subregion is conditioned by defective
networks inherited from the colonial periods, and that
the major economic centers of West Africa, Lagos, Abid
jan, Dakar, Conakry, Freetown and Cotonou are also suf
fering from the absence of usable road sytems which con
nect them.
Part Two examines two of the most significant
transportation and communication proposals--the trans-
African Highway (TAH) and the Pan-African Telecommunica-
tions(PANAFTEL) network with its complementary project
of the Regional African Satellite Communication Systems
(RASCOM). Their expected contributions when completed
are to provide adequate access for the movement of peo
ple, goods or services from country to country within
the subregion, and thus some degree of dynamism to mem
ber countries interaction.
196
Part Three is concerned with the costs and the
problems of financing the needed transportation and com
munications systems of ECOWAS.
Part Four focuses on Nigeria's role in the devel
opment and expansion of the transportation and communi
cations sector in the subregion. The analysis of this
section will also show that by virtue of its size (in
terms of population and wealth) Nigeria's role in the
development and expansion of the transporation and com
munication sectors is considered very crucial. Finally,
it provides some evidence on the significance of inter
dependence among the West African countries by illus
trating various types of joint development projects un
dertaken among several member countries of ECOWAS. Part
Five summarizes the chapter's findings.
6.1.1 Importance of Transportation and Communication
Networks
Transport and communication networks are paramount
to the success of the integration process in West Afri
ca. As in most LDCs, the transport and communication
sectors are inadequately developed and are weakly con
nected with other sectors of the West African economies.
197
It is for this reason that the Treaty of ECOWAS has made
the transport and communication sectors among the high
priorities of its programmmes to stimulate the integra
tion process.
In this section, it is important to analyze the
relevant patterns of transportation linkages and flows
and understand the role they play in economic develop
ment and regional integration processes in relation to
issues raised in the introduction. The development and
modernization of transport is interlocked very closely
with the economic development of a society as a whole,
as demonstrated in the now developed countries of West
ern Europe, North America and Japan which are character
ized by the unbroken flow of their peoples and goods and
services from region to region and country to country.
These countries could not have enjoyed the high per cap
ita income, greater spread of income distribution, ur-
banization-suburbanization, and regional mobi1ity--all
of which resulting in national and regional integra-
tion--without improved and expanded transportation and
communications network. For national and regional eco
nomic integration, transport and communications develop
ment and modernization become "necessary conditions,"
198
although not in themselves "sufficient conditions" for
economic growth and development as a whole. Hoyle1 ar
gues that:
The transportation network is one of the key ele
ments in the infrastructure required in the process
of development from an agriculturally-based to an
industrially-oriented society; and this demands
priority attention from LDC governments. The in
ter- relationships between transport and develop
ment have occupied much attention both in advanced
and less-developed countries, and constitute a
field of considerable practical as well as theoret
ical importance. The interaction between the level
and pattern of transport resources and the average
level of living of the population of an area is a
critical factor affecting economic and social prog
ress and must be taken into account at all stages
of national and regional development planning.
The practical and theoretical importance of trans
port and communications development has been pointed out
by the Economic Commission for Africa (ECA) since the
early 1960s.2 ECA argues that the development and mod
ernization of transport and communication networks are
necessary prerequisites to the integration of national
and regional economic, social and political activities.
The planning, programming and implementation of these
1 B. S. Hoyle. Spatial Aspects of Development.
New York: John Wiley & Sons, 1974, pp. 11-12.
2 Economic Commission for Africa. E/CM. 14/63.
Clearly, with the formation of this regional institution
of the United Nations came also the awareness of many of
the political economy problems of Africa as a whole.
199
type of infrastructure nurtures development at least in
three distinct ways.
First, transportation improvements increase inter
actions between two or more economic centers. It en
ables raw materials and intermediate products from vary
ing locations to be transformed and combined through an
industrial process. It further mobilizes final goods
and services to their users both locally and abroad
subsequently expanding the geographical size of markets,
thereby making possible the scale of production and op
eration that contemporary industries frequently require.
Second, transportation is also basic to the polit
ical and social infrastructure. It facilitates the
movement of people, and the flow of information and
ideas as well as goods and services, thereby promoting
the political and social integration of regions or su
bregions, ultimately, increasing the levels of basic
health provision, education, and awareness of people who
would otherwise been isolated and remain undeveloped.
Finally, transportation can be a moving force in
industrialization through its basic requirements for in
frastructure and equipment, at least some components of
200
which require considerable levels of industrial capacity
to produce, thereby permitting a potential opportunity
for industrial progress. The role of transportation in
a developing region such as ECOWAS is of major signifi
cance for both social and economic transformation or
progress. There is a strong case in favor of African
governments cooperating in the improvement of transport
facilities. Because transportation and communication
networks are so important in regional integration pro
cesses, and they are related to regional as well as na
tional economic development in a variety of ways, the
ECOWAS Treaty in Chapter VIII has called for the gradual
development of common infrastructural links among the
sixteen member countries.
Transportation networks can be viewed as spatial
structures or arrangements which permit linkages between
various economic centers. According to Mabogunje,3 spa
tial structure is defined as:
"...The ordered relations which exist between indi
vidual spatial forms or elements and the whole of
which they are a part. These forms are concrete
physical manifestations such as farmlands, hamlets
and villages, fences and roads, factories and
shops, towns and cities, railways and waterways and
3 Mabogunje, 1981, Op. Cit., p. 55.
201
a host of other shaped matters serving human socie
ties in establishing a complex set of beneficial
relations with the natural environment.
"...it is, of course, the relations between the in
dividual forms which define the nature of the
structure and determine the order of its complexi
ty. Such structural relations tend to show a high
degree of constancy and continuity overtime, large
ly because of the reflexive interactions between
spatial and social structures."
It is in this context of spatial interaction that
transportation and communications development play a
significant role in nurturing economic development by
way of its "backward" linkage in the economies of West
African countries, in particular, those with relatively
developed economies (such as Nigeria, Ghana, Senegal and
Cote d'Ivoire). Backward linkage refer to the transport
sector's need for production and technological develop
ment in other more basic sectors of the economy. For
example, steel, cement, machinery, petroleum products,
rubber, etc., are basic requirements for a transporta
tion network and industrial development.
For transport development to cause economic devel
opment through its backward links, those links must re
sult, at least, in:
(1) economies of scale in the region's industries,
or
202
(2) the development of new industries in the region
whose real costs of production are lower than the
costs of importing that product from a third coun
try outside of the union.
Although the transport sector's backward links can
induce economic development, these are difficult to
specify and quantify. The extent of the transport sec
tor's backward links in the overall economy depends
greatly on the degree to which the region's transport
equipment sector is given the impetus to develop. In
West Africa, there is no transport sector that depends
on the manufacture of new equipment. The region's sup
ply is largely from imports. However, there is great
potential in the middle-income countries of Nigeria,
Cote d’Ivoire, Senegal, and to a lesser extent Ghana
where the region's transport equipment manufacturing
sector can develop as part of the overall industrial de
velopment . 4
The formation of ECOWAS in May 1975, represents a
collective effort and/or strategy to change its tenden
cies in the spatial distribution of economic activities
within the enlarged market areas of the West African su
4 Staff. West Africa, 11/28-12/04, 1988, pp.
2224-2225.
203
bregion. An economy which is expanding will almost cer
tainly necessitate additional transportation facilities.
Failure to provide the minimum threshold in the capacity
of transportation system will create "bottlenecks" and
may ultimately hinder growth of the economy. As stated
earlier, the present transport and communications sys
tems of West Africa are dreadfully inadequate and unsui
table for intra-ECOWAS interaction. According to Ez-
enwe,5 they illustrate greater heterogeneity and
irrationality than, say, in Northern or Eastern Africa
(e.g., see subsection 6.1.2).
Hoyle6 distinguishes between two fundamental phas
es in the evolution of today's transport systems in
LDCs. These two stages are comparable to the first,
second and third stages described below in Taaffe, Mor
rill and Gould's model. First is the provision of a
very rudimentary transport system, which involves the
construction of rail arteries, modern roads and port fa
cilities, and relates frequently to the earlier periods
of the colonial era. Second is the elaboration of the
5 Uka Ezenwe. ECOWAS and the Economic Integration
of West Africa. New York: St. Martin's Press, 1983, p.
140.
6 B. S. Hoyle. Spatial Aspects of Development.
New York: John Wiley & Sons,1974, pp. 43-47.
204
transport systems associated with "the later years of
colonial dependence and to a period of political inde
pendence."7 This phase is assumed to involve the im
provement or expansion of the basic system of transport,
which permits the region to achieve a higher degree of
economic development. However, the geographical pattern
of economic activities in West Africa still suffer con
siderably from defective transportation networks devel
oped during colonial times when investments in transport
and communications went chiefly into the provision of
international rather than local demands.8
Expansion of transport facilities in West Africa
has also been described in terms of the "ideal-typical
sequence"9 of transport development put forward by
Taaffe, Morrill and Gould in 1963 (see Figure 6.1).
This sequence views the expansion or enlargement of a
transport network as a spatial diffusion process exhib-
7 According to dependency theorists, particularly
those focusing on Latin America, political independence
must be accompanied by economic independence. For this
reason, many propose disarticulation of relationships
with former colonial powers.
8 J. 0. C. and M. 0. Filani. Economic Geography
of West Africa. New York: Longman Group Limited, 1983,
p. 120. .
9 Edward J. Taaffe, and Howard L. Gauthier. Geog
raphy of Transportation. Englewood Cliffs, New Jersey:
Prentice-Hall, Inc., 1973, pp. 45-49.
205
Figure 6.1 Idealized Process of Transport Development
A A A A A ( ! > A A A A
* * Tjf ...° — — \*T,s
N« a C X C Ka
----0—
n v —^ f t f t > — n
^ Scattered porta p Beginning* of interconnection
c
o
' * i
Ifoo alff a
- T p 1 y --o— - T p a X -
Penetration .line* and port
Q Concentration
Complete interconnection
b
n ^
S' *
i-*
^ a
J i l l ’
q Development of feeder*
Emergence of high- priority
p ‘Main Street**
Source: B. S. Hoyle. Transportation and Development.
New York: Harper S Row Publishers, Inc., 1973, p. 147.
206
iting certain broad regularities. Using data mainly
from Ghana and Nigeria, representative of the West Afri
can coastal countries, in 1973, these researchers de
scribed six sequential phases of transport network de
velopment (See Figure 6.1 below). It is save to suggest
that the extent of transport development in the more ad
vanced countries of West Africa may be characterized by
stages two, three, and four.
The first phase is a pre-colonial period, which
has a scatter of coastal ports and trading hinterland,
each linked by short and inconsequential routeways, with
little connection or interaction between them. In the
second phase, two ports (Pi and P2) begin the emergence
of initial penetration and/or interaction links with two
hinterland nodes (II and 12) either for political rea
sons or to extract valuable agricultural and mineral re
sources and to facilitate their movement from the hin
terland to the coastal ports. In the third phase,
increased interaction permits greater emphasis on in
creasing the size of the two terminal ports (PI and P2)
by expanding and extending their hinterlands at the ex
pense of smaller ports, thus culminating in the develop
ment of feeders and new small nodes at strategic loca
207
tions along the major interaction routeways. The fourth
phase is marked by a greater emphasis on the development
of lateral routeways, thus facilitating and stimulating
the competitive positions of the two main ports and the
hinterland terminal points. This is further enhanced by
the development of nodes with their own hinterlands on
the main penetration lines. In the fifth phase, com
plete interconnection occurs amongst all the major nodes
and economic activity. The final phase is marked by
some centers already at their peak and a further devel
opment of high-priority linkages with other centers.
This model of transportation development has been
challenged in the literature. The strongest criticism
is that of Hay,10 who suggested that the model is hardly
representative of other places outside of Ghana and Ni
geria, since it was based mainly on historical data from
Ghana and Nigeria.
A second problem is that the model fails to take
into account the lasting effects of the colonial trans
portation structure. The colonial powers created spa
10 Allan Hay. Transport for the Space Economy; A
Geographical Study. London: Macmillan & Company, 1973,
p. 81.
208
tial organizations or arrangements which operated
through corridor-type transportation networks in which
transportation lines linked areas which provided them
with adequate supply of agricultural and mineral prod
ucts and the exchange of manufactured products with the
subregion. As political independence approached West
African countries found themselves increasingly at the
mercy of their former colonial masters for planning,
programming and budgeting the building of the transpor
tation infrastructure.
By focusing only on the growth in network density
and volume of traffic, this model misses the point that
one important weakness of colonial transportation sys
tems is their inadequate interlinkage and their limited
integration into total spatial economic arrangements of
the West African subregion. To build on the colonial
system could mean to ignore the important centers of
population and their potential for economic development.
As population increases in an area the demand for trans
portation also increases; as new transport lines are
built into the area, a greater population increase is
encouraged, which in turn, demands for still greater
transportation. In that sense, the model has artifi-
209
cially separated these two effects: the ideal-typical
sequence considers transportation development or expan
sion as though it were independent of the spatial dis
tribution of population. The spatial development of
transportation and population might be, stimulated
through time by using each stage in the process a set of
probabilities dependent upon the transportation and pop
ulation pattern of the previous stage, thus bringing the
essentially random nature of transporation development
into the model. In this context, a transportation model
should provide an initial perspective on the development
and expansion of transportation in LDCs in general, and
ECOWAS in particular.
The analysis in this Chapter takes into account
the problematic role of colonial and post-colonial
transportation networks for inducing processes of self-
reliant development and integration of the subregion of
West Africa. Developing the right type of decision for
a new perspective on the development and expansion of
transportation in ECOWAS has a clear colonial policy im
plication. McCall11 observes that:
11 M. K. McCall. "Political Economy and Rural
Transport: An Appraisal of Western Misconceptions," An-
tipode: A Radical Journal of Geography, vol. 9, no. 3
210
Colonial transport investment was primarily a tool
to promote economic, social and political underde
velopment, by giving access to more profitable
sources of raw materials and extending the market
for the metropole's manufactured goods...In no case
did the foreign builders intend the railways to
serve the interest of the population through whose
territory they passed...Thus, the initial decisions
made by technologically advanced colonial powers
have had very long term effects on the subsequent
development and structure of the space economy,
through the operation of geographical inertia, cu
mulative causation or deviation amplification. Re
gional imbalances and lopsided spatial structures
are concomitant with core-periphery effects, the
scale economies of capitalism, accumulation of cap
ital, "chains of exploitation," and so on.
6.1.2 The State of Transport Facilities in West Africa
For more than two and a half decades the politi
cally independent countries of Africa have made efforts
to transform their societies from the age of "animal-
drawn carts" into the age of "jet transportation". And
yet, ECA's Survey of Economic and Social Conditions in
Africa for 1986-1987 observes that "most African coun
tries today are in the first stage of mechanized road
transport" (i.e., the age of immobility and pover
ty,...with a minimum of travel and access to informa
tion).12
(December 1977), p. 102.
12 ECA. Survey of Economic and Social Conditions
in Africa, 1986-1987. E/ECA/CM.1474. Addis Ababa,
211
Ezenwe argues that the inactiveness of the West
African transportation and communications systems clear
ly suggests the subregion's continued dependency on ex
ternal assistance. More specifically, Ezenwe13 observes
that:
almost 90 percent of the goods and merchandise of
West African countries is transported by sea, and
of this traffic, 97.5 percent is carried by non-Af
rican shipping lines. As for road transport, not
only are the road links sometimes non-existent but
where they exist they are frequently not all-weath
er roads. Apart from the external orientation of
African railways, links between them are complicat
ed by differences in specification, while in the
case of airlines more than 85 percent of the subre
gion's international traffic is carried by non-Af
rican airlines; routes are to Europe and North
America... An intra-West African telecommunication
network is yet to be well developed. Yet poor com
munications involving time-consuming procedures and
insufficient information-sharing can only retard
economic growth whereas high intra-ECOWAS transport
costs may give natural protection to a number of
small-sized plants outweighing the benefits of
economies of scale.
In short, the economic development and integration
process of the ECOWAS is conditioned by defective trans
port and communication networks inherited from the colo
nial era. For example, the railways are simple vertical
lines built during the colonial period in order to bring
out the agricultural and mineral riches of the hinter-
Ethiopia, 1988, pp. 152-153.
13 Ezenwe, Op. Cit., p. 40.
212
213
Figure 6.2: Map Showing Railway Networks in ECOWAS
Member countries
NEGAL
TA
A
' V ' J
IVORY
LI8ERIA
Q fC O W A S EH3c,a o
T
Econom ic Communities in West Africa
214
Table 6.1
Road Networks in Selected African (1985) and Latin American
(1980-1983) Countries.
(in kilometers)
Region/
Subregion/
Total, Percentage Network
Density 2/
Country
All Roads
Paved
AFRICA
North Africa
Algeria 73751
55.0 0.03
Egypt
30S76 49.5 0.03
Morocco 57892 46.0
0.13
Sudan 6599 59.0 0.00
Tunisia 26200
54.0 0.19
TOTAL
195018
52.7 0.07
West Africa
(ECOWAS)
Renin
7435 11.0
0.07
Rurkinn Faso
b/ 8794
15.7 0.03
Cote d'Ivoire F/ 53608
7.0
0.17
Gambia
2388 21.0
0.27
Ghana b/ 28330
25.0 0.15
Liberia
F/ 7122
5.3 0.05
Mali
13133 11.1
0.01
Mauritania 7335
21.5
0.01
Niger
18966
17.0
0.01
Nigeria
108830 65.1
0.12
Senegal b/ 14056
26.4
0.07
Source: Economic Commission for Africa. E/F.CA/CM. 14/4. Survey of Economic
and Social Conditions in Africa, 1986-1987 p p . n r r a : for Latin
America,Statistical Abstract of Latin America, vol. 26, p. 26.
a. Total length in km. of all roads per sq. km, of national territory, b, estimated.
215
Table 6.1 Road Networks in Selected African (198S) and Latin American
(1980-1983) Countries.
(in kilometers)
Region/
Subregion/
Country
Total,
All Roads
Percentage
Paved
Network
Density
AFRICA
(ECOWAS)
Sierra Leone 7168 16.8 0.11
Togo 7000 22.7 0.13
TOTAL 284145 20.4 0.00
East and South
ern Africa
Angola
72300 12.0 0.00
Botswana 8026 23.0 0.01
Dj ibouti 2805
7.1 0.15
Ethiopia 37871
34.0 0.0.3
Kenya 65260 12.5 0.11
Lesotho 4250
11.5 0.14
Madagascar 49638
0.08
Malawi
12192 21.4 0.10
Mauritius 1783
02.0 0.96
Mozabique 19990
25.0 0.04
Somalia 21297
27.6 0.03
Swaziland 2723
19.0 0.17
United Rep.
of Tanzania 81895 3.0 0.09
216
Table 6.1 Road Networks in Selected African (1985) am! 1 -it in American
(1980-1983) Countries.
(in kilometers)
Region/
Subregion/
Country
Total,
All Roads
Percentage
Paved
Network
Density
Bast and South
ern Africa
Uganda 28332
22.0 0. 22
Zambia
37310 15.0 0.05
Z imbabwe 77929
17.0 0.20
TOTAI.
523689
22.9 0.15
SOI mi AMERICA
Latin America
Argentina 21230S 26.0
0.08
Bolivia 40969 4.9 0.04
Brazil 1437574
8.0 0.17
Chile
79010 11.0 0.11
Costa Rica 29094
10.0 0.57
Dominican Rep, 17362 29.0 0.36
Ecuador 3S718 16.0 0.13
F . l Salvador 12149
14.0 0.41
Haiti 3688
18.0 0.13
Honduras 12058
16.0 0.11
Mexico 214403
46.0 0.11
Paraguay 11320
19.0 0.07
Uruguay 49R13 20.0 0.27
Venezuela 63050 38.0 0.07
TOTAL 2218513 19.6 0.19
land (see Figure 6.2). The colonial transport and com
munication networks would not be able to accelerate the
integration process vis-a-vis economic development of
the union as a whole. It is in light of this defective
transport and communication networks that a number of
proposals are being considered currently to alleviate
the infrastructural problems. Although ECOWAS has pro
posed a railroad network, at least, connecting the lit
toral states, as in the case of road transportation.
Rail systems have received very little attention to link
the West African subregion because of increasing fear of
competition from road systems.
These, too, are still underdeveloped, although the
individual national governments have been making sus
tained efforts since the 1950's to improve and enlarge
them. The majority of existing roads except for sur
faced or paved roads are out of commission during the
rainy season.14 If network denisty is used as a criteria
14 To evaluate accurately the magnitude of the ex
istence of competition between roads and rails is no
easy matter for, at least, the following easons: (a) few
statistical data are as yet available on the growth of
road or rail traffics, (b) statistical data on the
amount of freight carried by either road or rail in
terms of passenger per mile and tonage of goods per mile
performed are lacking for the Community.
217
for the evaluation of road and rail transport develop
ment in West Africa, a comparative study of selected
countries within Africa and Latin American countries
suggest that the development of road transport system in
West Africa is relatively weak (see Table 6.1).
The major economic centers of West Africa, Lagos,
Accra, Abidjan, Daker, Canakry, Freetown and Cotonou are
also suffering from the absence of usable road systems
which connect them to each other. It is in these eco
nomic centers where most of the member countries indus
tries are located and they have large populations (in
excess of 9.8% of the respective totals) which are in
creasing by leaps and bounds because of the rural exodus
leaving most of the hinterland less productive.
The formation of ECOWAS accentuated as never be
fore the absence of any planned development of transport
and communication networks in the vast areas of Africa
and articulated the urgent need for intra-regional and
interregional highways of all kinds given colonial lega
cy of vertical development of transport and communica
tion.3 -5
15 Guy Arnold, and Ruth Weiss. Strategic Highways
of Africa. New York: St. Martin's Press, 1977, p. 139.
218
Both rail and railroad systems have been proposed
to link the major coastal cities as well as other cities
of West Africa. The proposed trunk road networks (Map 3
in Figure 6.3) consists of two major traffic flow pat
terns which will interconnect the capitals of member
countries. The first network interconnects Nouakchott,
Dakar, Bamako, Ouogadougou, Niamey and N’Djamena, capi
tal of Chad. This network interconnects other northeast
and North African countries, including Egypt, The Sudan,
and Libya. The second network .interconnects Nouachott,
Dakar, Conakry, Freetown, Abidjan, Accra, and Lagos.
This network will be connecting Lagos with six other Af
rican countries (Cameroun, Chad, The Central African Re
public, Zaire, Uganda and Kenya). The proposed railway
systems to be build along the coast of West Africa will
wlso link the major economic activity centers and coun
tries (see Figure 6.3). Map 4 shows proposed railway
line interconnecting economic centers of the littoral
countries of West Africa. When this project is complet
ed, it will link with existing national railways of the
member countries with the objective of facilitating and
stimulating interaction among them.
219
Figure: 6.3 Prposed Transport Networks of ECOWAS
MAP 3
W e s 1 A f r t o n S t a t e s lECOWAS)
B a m a k o
A c ao idjon
MAP 4
Economc Community of West African stntfcc /rrn u /A c t
PROPOSED NEW f R U N K RAILW AY I IN P ^ < E C 0 W A S >
j
r —
220
6.2 ECOWAS PROPOSALS FOR TRANSPORTATION AND
COMMUNICATION NETWORKS
in order to insure that the transport and communi
cations sector will contribute to the socio-economic in
tegration of Africa and to the promotion of intra-re-
gional and interregional trade, several proposals have
been advanced in the Lagos Plan of Action (LPA).16 Here
two of the most important proposed transportation and
communication projects-~both of them aimed at stimulat
ing intra-regional and interregional 1inkages--are dis
cussed as they relate both to West Africa and other re
gions of the continent, and the economic implications of
these proposals on West Africans development and inte
gration processes will be assessed.
14 The Lagos Plan of Action (LPA) was jointly
sponsored by the Economic Commission for Africa (ECA)
and the Organization of African Unity (OAU) through
meetings and consultations among African development ex
perts and governments and was adopted in a Lagos meeting
in April 1980. The intent of this declaration was to
suggest steps to be taken by African governments towards
the achievement of the objectives of social, economic,
and political development.
221
6.2.1 A Proposal for Regional, Subregional and Inter-
State Transport Links
The most important proposal of the transport net
work in the integration scheme of West Africa is the
highway system. This system is a continental program
which requires high cost building and maintainance. The
goal of the Trans-African Highway (TAH) program is to
interconnect or link the regions of the continent. To
date, there has been a very insignificance intra-region-
al road-building to link adjacent member countries, and
various trans-African highway (TAH) projects to link re
gions of the continent by improved road networks,
planned under the auspices of ECA in 1971. By 1974 a
little progress had been made. Although it had been
hoped that the project would be completed by 1978, it is
still not finished due to financial and political obsta
cles that are facing ECOWAS as in other parts of the
cont inent.
However, the extent to which the TAH promotes in
tegration of the continent is widely debated. For exam
ple, Arnold and Weiss17 argue that:
17 Arnold, and Weiss, 1977, Op. Cit., pp. 158-159.
222
The trans-African Highway has a long way to go be
fore it starts boosting international trade between
its seven members (Kenya, Uganda, Zaire, The Cen
tral African Republic, Chad, Cameroon and Nigeria).
'Stretches of the proposed road in Zaire and Came
roon in 1973 registered an average of only one ve
hicle a day and in other stretches the ratio was
between one and ten. Only at the two ends was
there a major difference: the Lagos end registered
an average 10,000 vehicles a day, the Mombasa end
6000. The number fell rapidly thereafter as the
inland journey proceeded. The growth of the road
must depend upon how viable it is for each of the
six countries it passes through.
If the countries affected by the implementation
process of the TAH are expecting short term benefits
only, however, the chances of sustaining the process of
linkage can be thwarted. What is more important in the
process is that the TAH is bound to act as a growth net
work, easing the mobility of people and resources, thus,
stimulating economic activities that have not taken
place among the seven member countries in early periods.
In other words, it represents the cooperation of seven
national road projects into a web of all-weather links
between the seven countries thus becoming a vent for
trade activities among them. In the long run it could
play a vital role in energizing other projects. Eventu
ally, the TAH should have extensions to the trans-Sahar-
an road from Algeria to Nigeria; to the Kenya-Ethiopia
223
Highway; and possibly even further south through Tanza
nia and into Zambia.
If those countries through which the TAH passes
should eliminate barriers among them, it is hoped that
the movement of persons, goods, or services will be
stimulated by lessening transportation costs. Also, the
TAH acts as growth network through economies of scale in
the production of goods and services which are being ex
changed between intra-region and inter-region groupings.
6.2.2 The Communications Infrastrueture--The Pan-
African Telecommunications (PANAFTEL) Network
West Africa is still very underdeveloped in tele
communications. For example, the means of communica
tions between individuals or groups of people are, by
and large, through face-to-face contacts. The posses
sion of telephones, telegraphs, radios, and television
services is clearly a luxury or a "status symbol." The
underdevelopment of the communications infrastructure
has emanated from the types of relationships between in
dividual West African countries and their respective
former colonial powers.
224
As illustrated in Taaffe, Morrill and Gould's
analysis earlier in this Chapter, the simple transport
network devised by colonial powers within their colonies
in West Africa was also true of the international commu
nication network or structure they developed. That is,
they simply connected cities in their colonies such as
Lagos and Abidjan to their respective metropolitan capi
tals, London and Paris. Consequently, in West Africa it
is often simpler to get a line to Europe than to Lagos
from Abidjan or vice versa. This preposterous dependen
cy on former colonial powers indicates the extent to
which West Africa's development and regional integration
process is hampered. Onyemelukwe and Filani18 argue
that:
In the post-independence period radio and televi
sion broadcasting services have grown substantially
in some countries, but the number of receivers and
the ratio per population are still very low--in
1970 there were about five radio receivers per 100
people and 0.15 television receivers per 100 inhab
itants. Satellites are the newest telecommunica
tions media, offering many channels for speech and
television transmission. One of the satellite
earth stations in Africa is located in Nigeria and
this is focused towards an Altantic satellite.
However, these satellite facilities are not well
developed for international communication. Tele
phone subscribers in Lagos (Nigeria) can make in
18 Onyemelukwe, and Filani, 1983, Op. Cit., p.
121.
225
ternational telephone calls to Europe and the Unit
ed States fairly easily through the INTELSAT earth
station near Ibadan; but they cannot speak to other
parts of the country for weeks on end. Whereas it
is possible for Nigerians in and around Lagos to
watch the Apollo moon landing, the Olympic games or
the World Cup live on television screens, millions
of other Nigerians, especially in rural areas,
still do not know what a television set is.
The Pan-African Telecommunications Network
(PANAFTEL) was conceived in the 1960s as a continental
program. Article 46 of the ECOWAS Treaty urges that the
PANAFTEL Commission establish links necessary for the
economic and social development of the West African Com
munity. Member states shall coordinate their efforts in
this field and in the mobilization of national and in
ternational financial resources. As a continental pro
gram, the basic commitment of PANAFTEL is to link indi
vidual national networks within the region and to
provide international services to the neighboring coun
tries of West Africa as well as extending such service
to Mombasa, Kenya.
This continental project19 is to be undertaken in
two steps;
19 ECA. (E/ECA/Cm.14/4), 1988, p. 163.
226
First, for short and medium transmission distances,
the PANAFTEL routes are used to transmit to more
than one country, and
Second, satellite communications circuits are used
for longer distances as well as shorter distances
involving inter-linkages between the various subre
gions in the continent.
To this end, the ECA survey reported that at the
end of 1986 approximately 43,000 kilometers of transmis
sion links had been installed, constituting 35,000 kilo
meters of microwave (electronic transmission dishes
built above ground) and 8,000 additional kilometers of
submarine20 ("Submarine" refers to underwater or under
ground transmission cable lines). To complete these ba
sic networks, they need some 8,000 kilometers of terres
trial route, seven international switching centers and
four satellite communications earth stations. Some of
these linkages were to be completed at the end of
1987.21 Although current information on the extent of
completion of some of these projects is not available,
the subregion's financial and political problems have
undoubtedly complicated the implementation of these
projects.
20 Ibid., p. 164.
21 Ibid.
227
Despite the obvious problems of not meeting target
dates, the program clearly recognizes the fact that in
ter-country links are necessary extensions of national
communication networks and consequently has developed a
number of key national projects that either form parts
of or are vital for the inter-country links.22 In order
to meet the growing communications demands of Africa, in
1986, it was decided to establish the Regional African
Satellite Communications Systems (RASCOM), not as an al
ternative to PANAFTEL, but as complement. RASCOM is a
regional project intendend to serve the West African su
bregion. The feasibility study of the RASCOM project
was cofinanced by contributions from the Federal Repub
lic of Germany, Italy, OAU, United Nations Development
Program (UNDP), ITU and UNESCO and was estimated to cost
j
approximately US $6 million (1981 value).23 To implement I
the RASCOM programme, it was suggested that the member
governments of ECOWAS increase their capital expenditure
on the transport and communications sector. When com
pleted, it is expected that RASCOM would be an efficient
and economic addition to existing networks, including
broadcasting, to serve the subregion of ECOWAS as a
22 ECA. (A/40/735), Ibid., p. 6.
23 ECA. (E/ECA/CM.14/4), Op. Cit., p. 166.
228
whole by means of appropriate technologies.
6.3 FINANCING WEST AFRICA'S TRANSPORTATION AND
COMMUNICATION SYSTEMS
The overall transportation and communication net
works of the West African subregion is expected to cost
several billions of dollars. According to the 1987-1988
Survey of Economic and Social Conditions in Africa,24 it
is estimated that:
the implementation of the Decade programme was di
vided into two phases, the first phase covering
1979-1983 and the second phase 1984-1988. The re
sults of phase I were fairly encouraging, though
far from satisfactory: less than 50 percent of the
finance required was obtained ($7 billion out of
$15 billion programmed) (sic). Consequently only
476 (44 percent) of the original 1,091 projects re
ceived partial or total financing; and only 10 per
cent of the financing available was allocated to
regional and subregional projects, compared with 26
percent allocated to them in the original planning.
At 31 July 1987 111 (11 percent) of the 1,049 phase
II programme projects were reported as completed
and a further 261 (25 percent) as under implementa
tion. The financing secured had reached a cumula
tive total of $5,891 million, of which $2,233 mil
lion or 38 percent came from African governments.
A year previously, their share had been $1,798 mil
lion out of $4764 million-likewise 38 percent.
These data show the high level of commitment to the
development of transport and communications on the
part of African Governments, as well as making
clear the need for continued support by the inter-
24 ECA. (E/ECA/CM.14/4), Ibid., p. 167.
229
national community to supplement their efforts. It
should not be overlooked that, with only 17 months
to run until the end of the Decade, the $5,891 mil
lion secured represented only 32.2 percent of the
(revised) cost of the phase II programme, i.e.,
$18,255 million (sic).
The above discussion of the transportation and
communication sectors is based on an earlier ECA plan
adopted by African Transport-Ministers in 1977. By
1979, 550 projects had been approved as ready for imple
mentation at a total cost of US $8.3 billion. A further
221 projects of infrastructure development were estimat
ed at US $600 million, making a total of approximately
US $9 billion of which US $6 billion had been pledged,
partly in the form of bilateral and multilateral assis
tance, and partly by Nigeria (for its own national pro
gram under the 1979 plan). Such sectoral activities are
a good indication of what can be done at the intra-Afri
can level to energize economic progress continentally.25
Aside from multilateral and bilateral financial
assistance, financial support is provided by the member
countries of ECOWAS (see Tables 6.2, 6.3, and 6.5)
through their contributions to the ECOWAS Fund and to
the ECOWAS transportation and communications projects.
25 Ibid.
230
Table 6.2 shows amount paid for 1911, 1978 and 1979
budgets of the ECOWAS Fund. According to Ezenwe,26 as
of October 19, 1983, contributions to the Fund's called-
up (subscribed) capital stood at US $44,550,242.66 (See
Table 6.5). While this amounts to only 8.9 percent of
the Fund's authorized capital, it is, however, nearly
89.10 percent of the called- up capital. The remaining
10.9 percent of the called-up (subscribed) capital has
to come from Mali, Mauritania, Burkina Faso, Liberia and
Gambia; all of the other countries have contributed.
Despite the outstanding debts on the called-up
capital, the fact that all the member states of ECOWAS
have contributed indicates their commitment towards the
Fund. However, as demonstrated in Table 6.3, member
countries have, by and large, failed to meet their fi
nancial obligations for the telecommunications projects.
The commitment of member states for the development of
communications projects encounters three major problems:
26 Uka Ezenwe. "Trade Liberalization and Finance:
The ECOWAS Experience," Towards an African Economic Com
munity (Lessons of Experience from ECOWAS)--Proceedings
of an International Conference. Lagos: Nigerian Insti
tute of Social and Economic Research, 1986, p. 121.
231
TABLE 6-2
CONTRIBUTIONS TO THE FUND'S CALLED-UP CAPITAL
AS AT 19TH OCTOBER, 1983
( in U.S. Dollars)
MEMBER STATES ALLOCATION AMOUNT PAID % PAID
BENIN 76,305 76,305 100.00
CAPE VERDE 8,717 8,717 100.00
COTRE d'lVOIRE 330,655 330,655 100.00
GAMBIA 66,133 66,133 100.00
GHANA 328,112 328,112 100.00
GUINEA 73,761 73,761 100.00
GUINEA BISSAU 38,153 29,581 77.53
LIBERIA 170,415 170,415 100.00
MALI 48,325 48,325 100.00
MAURITANIA 91,567 91,567 100.00
NIGER 53,412 53,413 100.00
NIGERIA 834,270 834,270 100.00
SENEGAL 137,349 137,349 100.00
SIERRA LEONE 111,915 111,915 100.00
TOGO 91,567 91,567 100.00
UPPER VOLTA 66,133 66,133 100.00
TOTAL 2,526,790 2,518,218 99.66
Source: Akinola A. Owosekun. Towards an African Econ
omic Community (Lessons of Experience from
ECOWAS): Proceedings of an International Con
ference. Lagos: Nigerian Institute of Social
and Economic Research, 1986, p. 125.
TABLE 6-3
STATEMENT OF CONTRIBUTIONS BY ECCWAS MEMBER STATES
TOWARDS ECOWAS TELECOMMUNICATION PROJECTS
AS AT 25TH MARCH, 1983
RATIO
%
CONTRIBUTION
U.S. $
PAYMENTS
U.S. $
PERCENTAGE
OF TOTAL
CONTRIBU
TION PAID
AMOUNT
OUTSTAND
ING (US $)
PERCENTAGE
OF TOTAL
CONTRIBUTION
OUTSTANDING
BENIN 3.0 105,000 105,000 100.00
CAPE VERDE 1.0, 35,000 21,000 60.00 14,000 40.00
COTRE d'lVOIRE 13.0 455,000
- - 455,000 100.00
GAMBIA 2.6 91,000
- - 91,000 100.00
GHANA 12.9 451,500 271,500 60.13 180,000 39.87
GUINEA 2.9 101,500
- - 101,500 100.00
GUINEA BISSAU 1.5 52,500
- - 52,500 100.00
LIBERIA 6.7 234,500
- 234,500 100.00
MALI 1.9 66,500 15,988 24.04 40,512 75.96
MAURITANIA 3.6 126,000
-
_
126,000 100.00
NIGER 2.1 73,500
- - 73,500 100.00
NIGERIA 32.8 1,148,000 197,539 17.21 950,461 82.79
SENEGAL 5.4 189,000
- -
189,000 100.00
SIERRA LEONE 4.4 154,000
-
- 154,000 100.00
TOGO 3.6 126,000 126,000 100.00
- -
UPPER VOLTA 2.6 91,000
- - 91,000 100.00
N)
04
0 4
TOTAL___________________ 3,500,000 737,027
Source: Same as Table 6.2, p.126.
2,752,973
(1) irregularities in financial flows of monthly
scheduled contributions of member countries. The
immediate consequence of this trend is that the
Fund is often forced to resort to short-term bor
rowing mainly from (a) the ECOWAS general fund, (b)
Federal Government and (c) the banks to sustain the
Community in operation. For the most part, these
lenders are also contributors to the ECOWAS Fund.
(2) decisions which have been ratified (on the free
movement of persons, non-aggression, and the proto
col on privileges and immunities) are not strictly
observed.
(3) the divided loyalty on the part of some member
countries between the Community's contending organ-
izations--CEAO and ECOWAS.
Tardiness of members in the payment of their sub
scriptions is one of the factors militating against the
planning, programming and implementation of decisions on
many of the Community's integration projects. This is,
perhaps, by far the most dangerous impediment facing
ECOWAS. The ECOWAS Treaty allows member states (as in
the case of CEAO member states, or MRU member states) to
belong to other economic groupings provided that such
association does not "derogate from the obligations of
that member country under this Treaty" (Article 20, sec
tion 3). An equally major impediment facing ECOWAS is
the total removal of barriers to the formation of free
trade area (FTA). The free trade area protocol was
signed with three distinct phases: abolition of tourist
234
TABLE 6.4
Developing Africa: value added in transport and ootmunication
services by subregion and economic grouping,
1985-1987
Percent
age
1985 1986 1987 growth
VA P VA P VA P 1986 1987
Subregion
North Africa 8,306 50 8,557 51 8,805 52 3.0 2.9
West Africa 4,447 27 4,271 26 4,230 25 -3.9 -1.0
Central Africa 1,066 6 1,046 6 1,053 6 -1.9 0.7
East and Southern
Africa 2,738 17 2,823 17 2,902 17 3.1 2.8
Economic
groupings
Major oil
exporters 5,522 33 5,370 32 5,316 31 -2.7 -1.0
Least developed
countries 2,351 14 2,344 14 2,466 14 -0.3 5.2
Other countries 8,684 53 8,983 54 9,208 55 3.4 2.5
Developing Africa 16,557 100 16,697 100 16,990 100 0.8 1.8
Source: Economic Commission for Africa. Survey of Economic and Social
Conditions in Africa, 1986-87. Addis Ababa: ECA, 1988, p. 152
Notes: VA = Value added in millions of dollars at 1980 factor cost;
P = Percentage of regional total; 1987 data estimated.
235
TABLE 6. 5
CONTRIBUTIONS TO THE BUDGET OF THE FUND, 1977-79
AS AT 19/10/83
( in U.S. Dollars)
MEMBER STATES RATIO ALLOCATION AMOUNT PAID %PAID
BENIN 3.0 1,500,001 1,500,001 100.00
CAPE VERDE 1.0 500,000 375,000 75.00
COTRE d*IVOIRE 13.0 6,499,978 6,499,978 100.00
GAMBIA 2.6 1,300,000 581,212.23 44.70
GHANA 12.9 6,449,979 6,449,979 100.00
GUINEA 2.9 1,450,092 1,450,097 100.00
GUINEA BISSAU 1.5 750,000 750,000 100.00
LIBERIA 6.7 3,350,000 2,144,078.33 64.00
MALI 1.9 950,000 5,052 0.53
MAURITANIA 3.6 1,800,000 309,428.10 100.00
NIGER 2.1 1,050,000 1,050,000 100.00
NIGERIA 32.8 16,399,945 16,399,945 100.00
SENEGAL 5.4 2,700,000 2,700,000 100.00
SIERRA LEONE 4.4 2,200,000 2,200,000 100.00
TOGO 3.6 1,800,000 1,800,000 100.00
UPPER VOLTA 2.6 1,300,000 335,472 25.80
TOTAL 100.0 50,000,000 44,550,242.66 89.10
Source: Akinola A. Owosekun. Towards an African Econ
omic Community (lessons of Experience from
ECOWAS): Proceedings of an International Con
ference. Lagos: Nigerian Institute of Social
and Economic Research, 1986, p.123.
visa requirements, right of residence and right of et-
sablishment. However, between 1983 and 1985, the Nige
rian government was seriously tested when it expelled
Ghanian workers from Lagos. The existence of divided
loyalty of the members of CEAO, MRU and the Senegambia
Confederation between their respective subregional or
ganizations, on the one hand, and ECOWAS, on the other
hand, has become a major obstacle for ECOWAS' success.
In 1984 (the most recent data), for example, the
Fund (whose task is the management of the Community's
funds) made available a number of members funds to fi
nance their transport and communications projects, in
cluding $45,000 to Liberia for a feasibility and engi
neering studies of the Tappita-Tabli-Cote d'Ivoire
border road; $110,000 to Mali for feasibility study of
the road from the border with Senegal to Bamako through
Kenieba and Kita; $235,000 to Togo for the engineering
study of the road from the Ghana border to the Benin
border through Nope and Agbanakin; $2.5 million to Libe
ria for the Freetown-Monrovia highway; and $1.5 billion
(sic) FCFA to Benin for the construction of the bridge
on the Sazue and Mano Rivers.27
27 ECA. (E/ECA/TCA/26), p. 15.
237
Additional financial supports and complementary
services28 (as enumerated below) have also been extended
to ECA by donors and financial institutions for the fea
sibility study of transport and communications projects
in Africa during the 1984 period, including:
(1) The Italian Government has agreed in principle
to finance the African Highway Master Plan Study;
(2) The Canadian Government is committed to fi
nance the pre- feasibility study of the Cario-Gabo-
rone Trans-East African Highway (TEAH);
(3) A joint study to evaluate the performance of
the PANAFTEL Network was carried out by ECA and the
Brazilian Government, and
(4) A program of assistance from India in the
fields of training telecommunications and the manu
facture of telecommunications equipment.
These instances of international assistance, when
completed, are expected to greatly improve transporta
tion and communication linkages within ECOWAS and be
tween ECOWAS member countries and other regions of Afri
ca (e.g., the Lagos-Mombasa Trans-African Highway
discussed earlier). Also, given other factors such as
an increase in the size of markets and factor mobility,
the intra-ECOWAS and intra- African trade and develop
ment should increase.
28 Ibid., p. 23.
238
The overall performance of transport and communi
cation services within ECOWAS is shown in Table 6.5 in
terms of value added. The total contribution of this
sector to the gross domestic product of the subregion
grew by 0.8 percent in 1986, a slightly higher rate than
the annual average of 0.7 percent realized in 1980-1985,
but far below the production of 2.8 percent given for
earlier periods.29 The estimate for 1987 reflects an in
crease compared with 1986 of 1.8 percent. This will be
compared to the earlier period of 1980-1986. In all,
the slight improvement in the past two years despite the
efforts of the United Nations Transportation and Commu
nications Decade for Africa (UNTACDA) is due to the low
level of the aggregate economic activity as a result of
a continued economic crises and the unfavorable interna
tional economic environment. Consequently, the sectoral
share in gross domestic product remained unchanged at
around 5 percent during the 1985-1987 periods.10
29 ECA. (E/ECA/CM.13/3), Paragraph 340.
30 ECA. (E/ECA/CM.14/4), Op. Cit., pp. 151-152.
239
6.4 NIGERIA'S ROLE IN TRANSPORTATION AND COMMUNICATION
NETWORKS DEVELOPMENT
Nigeria's contribution to the development of the
transportation sector is crucial. For example, Nigeria
has nearly completed a number of projects in this sector
within its geopolitical boundaries:31
Trans-Saharan Highway (Algiers-Lagos) extending for
6,620 Km of which 1,300 Km have been completed
within Nigeria. This road runs from Kongolam to
Kano, Kaduna, Tebba, Ilorin, Ibadan and Lagos.
Trans-Central African Highways, (Mombasa-Lagos The
Nigerian portion of this highway runs from Lagos to
Mfum on the Cameroon border. The construction or
rehabilitation of the various parts of this highway
have been completed with the exception of Benin-A-
saba section of the highway,
Trans-West African Highways connecting littoral
states of West Africa, Nouakchott-Lagos, the sec
tion within Nigeria, namely, Lagos-Badagry-Semi-
Pogi Carriage-Way, was completed and officially
opened to traffic in 1979 (see Figure 6.2).
Nigeria has recognized that the poorly developed
infrastructure generates negative externalities unless
these proposed projects are complemented by key support
ing programmes. To this end, Nigeria has established
two training centers for transport and communications
personnel.
31 OAU, 1982, Ibid., p. xii.
240
The first is the Railway Training Institute, es
tablished at an estimated cost of 10.3 million Naira
(National Currency of Nigeria). The institute is de
signed to meet specific needs, such as:
(i) to provide facilities for mid-career training
and retraining of middle and top management person
nel considered essential for the maintenance,
growth and survival of the railway industry,
(ii) to ensure the Nigerianization of a large num
ber of vacancies in the engineering field where
there is great dependence on expatriates, and
(iii) to provide for staff development and expan
sion on planned basis.
Nigeria has also initiated other projects, includ
ing: (1) the development of the Port of Koko as a na
tional project with a subregional impact, in that it re
lieves considerable traffic pressure on Lagos and Port-
Harcourt for serving other land-locked countries like
Niger and Burkina Faso; (2) the development of river
transportation on the Benue and Niger Rivers. On both
theoretical and practical grounds, it is argued that one
of the goals of transportation development is to diver
sify the modes of transport systems, such that the aver
age cost of travel will be greatly reduced. Inland wa
ter transportation is considered to be the lowest form
241
(i.e., the inland water transport system has not been
developed for extensive use) of transport system.32 It
is hoped that the diversification of the transportation
systems will mean employment-creation as well as trade-
creation for the region's economies.
Nigeria's assumed leadership in the development of
transport and communications networks in the region has
led some to argue that Nigeria's motives are accentuated
by its desire to become a regional power. It is also
true that in regional groupings such as ECOWAS, large
countries like Nigeria, whose patterns of development
have attained a certain stage, are likely to reap the
benefits from integration and cooperation in joint ven
tures more than small countries like Benin, Togo, or
Gambia. Consequently, the lessons that can be derived
from other groupings is that ECOWAS must establish a
fair and acceptable distributive mechanism to ensure an
equitable distribution of the benefits and costs of in
tegration. In most of the literature examined, it is
observed that failure of a participating country to link
its national development objectives to the objectives of
ECOWAS will lead to the disintegration of the Communi
Ibid., p. 213.
242
ty's institutional framework. More specifically, Owose-
kun33 suggests that:
(a) individual member countries' internal develop
ment efforts and policies should be adhered to
those of the Community;
(b) individual member country governments should
accept a single supra-national authority whose de
cisions must be binding on all the members; and,
(c) individual member countries should honor all
obligations promptly, e.g., regular statutory con
tributions.
Some have argued that Nigeria's contributions and
other initiatives should not be viewed as excluding the
rest of the region's infrastructural planning. For in
stance, both the Benue and Niger Rivers extend far be
yond the geopolitical boundaries of Nigeria. While Ni
geria's short term investment in the inland waterways
project, which will make the rivers navigable, for exam
ple, may be viewed as having a national objective, there
are long term potential benefits that will be derived
from these projects by the member countries who are di
rectly and indirectly associated with the waterways
projects, particularly, as they coordinate their indus
trial policies for integration of the Community, at lea-
33 Owosekun, 1986, Ibid., p. 133.
243
Figure 6.4: Nigeria’s Major Inland Waterways
st, those member countries (Guinea, Mali, Burkina Faso,
Niger, Benin and Nigeria) bordering the two rivers (see
Figure 6.4).
The mere economic size and population of Nigeria
are viewed as a threat for other West African countries.
It is argued that Nigeria may create in the ECOWAS mem
ber countries fears of political and economic domina
tion .
However, as stated in Chapter Two, the thepry of
economic integration permits flexible forms of regional
cooperation. In the short run, the economic size of Ni
geria must be viewed as an asset to the region in mat
ters of initiating and financing intra-regional infra
structures as briefly illustrated above. Although
Nigeria, as any other prominent country of a union, may
not desire to absorb a disproportionate share of the
costs of any joint projects, she may have the resources
which enable her to be effective in underwriting loans
made to other member countries for joint projects. So
important is Nigeria to the whole region and to some ex
tent to the rest of Sub-Sahara Africa and so typical are
her transport and communications obstacles and con
245
straints that Nigeria’s problems can be reasonably gen
eralized in terms of West Africa as a whole. Udokang34
suggests that:
Whatever the case, the fear of Nigeria as an ele
phant which has to be watched lest it should tram
ple upon the weaker members of the Community can
only be dispelled by Nigeria herself. If Nigeria
offers creative and effective, yet non-arrogant,
leadership, a leadership aimed at maintaining the
integrity of the Union and guiding its goals, thus
enabling it to adapt to new and changing needs and
circumstances, she may unwittingly endear herself
to the other member states. This is not the same
thing as saying that no disagreements should or can
exist on specific issues of policy. It is the fact
with which such disagreements are handled and re
solved, without allowing them to undermine the fun
damental structure and unity of purpose of the Com
munity, that constitutes the indispensable quality
of sagacious leadership.
When all is said and done, the point must be made
that the element of self-interest has tended to make Ni
geria see the survival of the West African Economic Com
munity as the real guarantee of her own economic and po
litical survival. If Nigeria offers creative leadreship
aimed at maintaining the integrity of the union, guiding
its goals, enabling it to deal effectively with new de-
34 Okon Udokang. "Nigeria and ECOWAS: Economic
and Political Implications of Regional Integration," in
Nigeria and the World: Readings in Nigerian Foreign Pol
icy, edited by A. B. Akinyemi. Ibadan, Nigeria: Oxford
University Press, 1978, p. 77.
246
mands of resulting from integrative activities, then the
other countries will become almost unconsciously en
deared to it. Asante35 asserts that Nigeria's
role in ECOWAS, like that of the United States in the
contemporary Western world, may probably be aptly de
scribed as one of leadership without dominance.' How
ever, Nigeria's leadership without dominance has been
questioned by many researchers and politicians. It is
safe to say that given the future prospects of implemen
tation of the spirit of trade liberalization protocols
in January 1990, only Nigeria will be able to dispell
the mistrust of others.
6.5 CONCLUSIONS
This Chapter has been concerned with the state of
transportation and communication linkages in West Africa
and their role in facilitating economic development and
economic integration of the subregion. The present
state of transport and communication infrastructure in
member countries of ECOWAS is inadequate to accomplish
35 S. K. B. Asante. The Political Economy of Re
gionalism in Africa: A Decade of the Economic Community
of West African States (ECOWAS). New York: St. Martin's
Press, 1986, p. 150.
247
the various objectives of the Treaty. Communication by
road between member countries is minimal as only few
roads traverse the respective territories.
The transport programme which was launced in 1980
covers transportation of all types (i.e., land, air, wa
ter, and sea). The most advanced in this sector is the
construction of the Trans-West African Highway between
Lagos and Nouakchott (see Figure 6.3). Although there
has been active participation of the West African Commu
nity, these projects are far from palying any signifi
cant role in linking the subregion.
The telecommunication programme was adopted in May
1979 to improve and extend the existing networks. The
work currently in progress (e.g., the PANAFTEL and
RASCOM) is to establish direct operational links between
the sixteen ECOWAS capitals by 1989. However, the cur
rent study has not been able to determine the extent of
progress for lack of current information from the Secra-
triat of ECOWAS. The ECOWAS report provides very scanty
information on the stages of development in telecommuni
cations attained in West Africa as in other parts of Af
rica. However, the ECA report indicates that despite
248
installation of a substantial amount of equipment with
transmission systems linking almost all ECOWAS members
physically, only part of the network is operational.36
In every ECOWAS member country of the subregion
the construction, improvement, and maintenance of trans
portation and communication networks is likely to absorb
a large share of the ECOWAS Fund. However, the long run
benefits are hoped to outweigh the short run costs which
may be difficult for the Fund to raise. Unless member
countries of ECOWAS show a conscious and deliberate ef
forts in supporting the subregion's transport and commu
nication networks, industrial policies and programmes,
the basis of the subregion's economic development and,
therefore, integration will be stifled.
36 ECA. (E/ECA/CM.14/4), Ibid., p. 164.
249
Chapter VII
THE ROLE OF INDUSTRIALIZATION IN THE REGIONAL
INTEGRATION OF ECOWAS
7.1 INTRODUCTION
This chapter focuses upon one aspect of regional
development, namely, integration of the Economic Commu
nity of West African States (ECOWAS) through industrial
ization. In doing so, the analysis emphasizes on cer
tain important aspects of the spatial dynamics of
industrial development in West Africa. This refers par
ticularly to the geographic distribution and interaction
of industrial units over a given space-economy. In this
Chapter, analysis shall draw primarily on developmental
perspectives on integration rather than the traditional
theory of integration. The traditional theory of inte
gration does not illuminate structural and dynamic prob
lems. Under it, as Linder1 asserts, that 'the possibil- j
ity of a universal theory of customs union and economic j
1 S. B. Linder. Trade and Trade Pol icy for Devel
opment . New York: Praeger Publishers, 1967, p. 32.
250
development is automatically ruled out.’ In this con
text, the following questions are raised: what is the
role of industrialization in the regional integration of
ECOWAS? what are the problems and prospects of industri
alization in ECOWAS? what are the priorities of invest
ment for industrialization?. In doing so, the study of
this chapter is divided into five major parts on the
bases of issues involved in the process of industriali
zation of ECOWAS.
The first part discusses the need for industriali
zation and the constraints on industrial development and
industrial policies in ECOWAS.
Part two examines the process and structure of in
dustrialization in ECOWAS. In so doing, the cases of
the most industrialized member states (Cote d'Ivoire,
and Nigeria) are examined. Part two also attempts to
provide some answers to why there are differences in the
levels of development and industrialization in the su
bregion. Alternatively, the study probes the question:
To what extent are there similarities which would ener
gize the proccess of structural transformation in the
subregion as a whole?
251
In part three, development objectives and criteria
for evaluation are examined. In doing so, the issues of
trade strategies for industrialization are identified
and discussed-- the rationale for and against Import-
Substituting Industrialization (ISI) and Export-Oriented
Industrialization (EOI). By identifying the current
trade and development strategies of the industrially ad
vanced countries of ECOWAS, the study provides an analy
sis of the problems and prospects of both ISI and EOI in
West Africa.
Part four examines the role of the state and
transnational corporations (TNCs) in the transformation
of the economies of the member countries of ECOWAS. It
is also in this connection that the problems of "depen
dency" and "underdevelopment" are discussed to illus
trate the major obstacles hindering the smooth tran
sition from ISI to EOI. Part five evaluates problems of
ECOWAS industrialization. Part six summarizes the find
ings of the chapter.
252
7.1.1 The Need for Industrialization in West Africa
The infrastructure and industrial tradition of the
now developed countries of Western Europe and North
America are generally absent in West Africa. The deci
sion to industrialize during the post-independence peri
od was taken on the basic understanding that the devel
opment of transportation and industrial facilities would
be a necessary engine of long-term socio-economic
growth, thereby increasing economic independence of the
subregion. However, as will be seen later in this chap
ter, linkages between industrial projects and indeed be
tween industrial developments and that of the economy,
in general, remain weak in West Africa today.2 The lack
of such linkages reflects the underlying structural
weaknesses and distortions of the subregion.3 In order
to understand these distortions, a number of key issues
must be treated adequately:
(1) there is a need to conduct an in-depth study of
the causes leading to the development of an essen
tially dualistic (i.e., the existence side by side
2 United Nations Industrial Development Organiza
tion. Industry and Development. ID/SER.M/17. New
York: United Nations, 1986, p. 1.
3 Thomas Biersteker. Pistortion or Development:
Contending Perspectives on the Multinational Corpora-
tion. Cambridge: The MIT Press, 1979.
253
of a traditional sector and a modern sector) eco
nomic structure in the ECOWAS member countries,
where industry has little or no structural and in
stitutional links with the traditional sector of
the economy?
(2) there is a need for a closer examination of the
nature of the external relationships of the ECOWAS
industry, and particularly its dependence on for
eign capital, technology and raw materials that are
essential in the process of industrialization, and
(3) changes in the internal organization of ECOWAS
industry (i.e., selection criteria of industries,
and that of locations, and methods of cost and ben
efit distribution) and its position within the in
ternational economic community that could reduce
its structural weaknesses need to be identified and
analyzed.
The need for industrialization becomes even more
obvious and essential when the following questions are
analyzed in some greater details: (1) How can ECOWAS
move towards an industrial revolution that will change
the social, economic and political structure in which
the Community's population moves toward the realization
of an improved standard of living, which may include:
greater incomes, greater material well-being, higher
standard of education, better health provisions, etc.?
What is the role of each member state to ensure such an
outcome? (2) To what extent should the Community's in
dustrialization process be based upon imported raw ma
terials (and other inputs)? (3) Should industries be
254
located in existing towns or should new industrial de
velopments be considered where they can share new roads,
energy supply, and adequate supply of other factor in
puts? (4) How does the process of industrialization in
ECOWAS help to articulate or disarticulate the process
of integration and ultimately an achievement of an eco
nomic union? (5) Do national industrial development pri
orities of member countries strengthen or weaken the
process of integration through industrialization?. Much
of the present analysis attempts to respond to these
questions. In doing so, it is of some significance to
identify and analyze a number of major economic and non
economic constraints in restructuring the Community's
existing industrial base.
First, as mentioned in Chapter Five, the current
trade links among ECOWAS member countries are very weak.
ECOWAS has not sufficiently implemented its free trade
provision as articulated in its treaty, and the evolu
tion of the intra-ECOWAS trade activities since 1975 has
not revealed any significant tendencies towards greater
interaction. Moreover, the weakness of trade links is
even more aggravated by the following fact of colonial
legacies: six of the ECOWAS member countries (Burkina
255
Faso, Cote d'Ivoire, Mali, Mauritania, and Niger) belong
to the same monetary union of the Colonies Francaises
d'Afrigue (CFA), thus creating currency exchange prob
lems with the Sterling areas (i.e., the former British
Colonies) .
There is a second group of obstacles:3 (1) the un
derdevelopment of commercial and financial institutions;
(2) the underdevelopment of transport, and national and
interregional communication networks; (3) the domination
of the structure of exports by raw materials; (4) an un
stable political environment; (5) lack of harmonization
of economic policies; (6) industrial enterprises created
for the narrow national markets, which have not facili
tated "economies of scale" for most member countries;
and (7) the lack of competence of the Economic Commis
sion for Africa (ECA) to undertake direct intervention
on behalf of the subregions in Africa in the restructur
ing of industries in comparison, for example, with the
Economic Commission for Latin America (ECLA).
3 T. Gogue. "Industrial Co-operation in ECOWAS,"
in Towards an African Economic Community (Lessons of Ex
perience from ECOWAST: Proceedings of International Con
ference. Ibadan, Nigeria: Nigerian Institute of Social
and Economic Research, 1986, p. 286.
256
Third is need to evaluate the role of domestic
public policies and multinational corporations (MNCs) in
industrialization.
ECOWAS member countries recognize that industrial
ization is a very important means of embarking upon a
technological society. They have also recognized that
in the process of industrializing their individual econ
omies, they are stimulating employment-creating and in
come-creating economic activities. Moreover, the pro
cess of industrialization tends to increase demand for
agricultural products and service activities. Hence,
their development plans both at the national and intra
national levels place the greatest priority on the role
of basic industries and small-scale enterprises.
The ECOWAS member countries recognize also the im
portance of national government involvement in industri
al development schemes, as evidenced by the success of
governments of the newly industrializing countries j
(NICs) of East Asia, and South America. The environment !
I
for a growing industrial society requires, at least,
such basic supporting infrastructural facilities as
utilities, transportation networks, and social services
257
such as schools, hospitals, and recreational facilities.
As will be pointed out later in this chapter, national
governments must enter directly into industrial activi
ties either by providing private entrepreneurs incen
tives in such areas as taxes, tariffs, and the financing
of small businesses, or by engaging itself as a partner
with the private sectors in some key industrial activi
ties. For example, for the rapid development of indus
trial activities in their economies, many LDCs have set
up "industrial development corporations" or organiza- J
tions. As such, the importance of industrialization to
these countries is evident in the wide range of powers
given to these national entities. In many of these
LDCs, the current policies and programmes that are de
signed to promote industrial development are geared
I
mainly to urban-based industrialization, although the
Nigerian industrial development plans envisages the es
tablishment of modern industrial estates in each state.*
But, development strategies and the formation of indus
trial development corporations are not the entire solu-
4 Enyinna Chuta. "Policies and Programmes for
Small-Scale Industries in Nigeria: Relevance for Rural
Industrialization," in Rural Small-Scale Industries and
Employment in Africa and Asia, edited by the same au
thor. Geneva: International Labour Organization, 1984,
p. 53.
258
tions to the problems of regional integration through
industrialization. A number of other constraints accen
tuate the problems of industrial development in ECOWAS.
First, heavy dependence on imported raw materials,
intermediate goods, simple industrial equipment and ma
chinery primarily results from the lack of local techni
cal expertise essential for producing such industrial
goods within the member countries of ECOWAS. It is of
ten cheaper to import input materials in processed forms
from more industrialized countries than to produce them
domestically. The fact that importing these processed
industrial goods involves enormous costs reflects two
industrial development problems in the subregion. One
is that the member countries of ECOWAS have not succeed
ed in establishing import substituting industries. Sec
ond, a considerable amount of foreign exchange is being
exported to secure these industrial goods and other in
dustrial inputs.
The extent to which member countries choose to
process raw materials will depend upon the evaluation of
total costs and benefits. The cost-benefit of process
ing these raw materials may depend upon: (1) availabil-
259
ity of raw materials locally, (2) the degree of techni
cal skills necessary to the integration process, (3) the
extent to which final products are in demand both within
and outside of the subregion.
There are other problems including the joint fi
nancing of industries, the proper location of new indus
tries, and the problem of getting well-trained human re
sources to manage the industries of the countries
concerned. In this connection, Ajit Singh5 appropriate
ly argues that:
as experience of industrialization in various parts
of the world shows that the key factor in industri
al development is not national resources but the
skills and capabilities of the people in the coun
try concerned. An extremely important and related
factor is whether or not the society possesses the
appropriate social organization and institutions to
harness science and technology for industrial de
velopment ... The African countries, because of their |
colonial history, started with a particularly large
handicap in this regard. At the time of indepen
dence the labor force of most African countries was
largely rural and unskilled.
5 Ajit Singh. "Industrialization in Africa: A
Structuralist View," in Industry and Accumulation in Af
rica, edited by Martin Fransman. London: Heinmann, 1982,
p. 32.
260
Clearly, industrial development has become a major
issue of the post-independence period not only to the
countries of West Africa but to the continent as a
whole, as evidenced by the fact that the United Nations
has designated the period of 1980-1990 the industrial
development Decade of Africa.6 However, UNIDO7 observes
that the ’ ’pace and the pattern of industrial development
vary among the LDCs.’ ’ UNIDO attributes these variations
to such factors as differences in availability and qual
ity of both human and physical resources; size of domes
tic market; geographical location of the country; and
differences in national objectives, strategies and poli
cies. 8 These distinctions will be more apparent even
when two of the four industrially advancing countries of
the region (Cote d'Ivoire, and Nigeria) are closely ex
amined later in this Chapter.
6 United Nations. Official Records of the General
(A/35/16), An
7 UNIDO. Industry in a Changing World: Special
Issue of the Industrial Development Survey for Fourth
General Conference of UNIDO/ ID/CONF. 5/2 ID/304. New
York: United Nations, 1983, p. 99.
Assembly:
Supplement No. 16
Ibid.
261
7.1.2 Central Role of Manufacturing within
Industrialization
From the preceding discussion, it is clear that
industrialization in West Africa will require a struc
tural transformation of the national economies of the
sixteen member countries of ECOWAS. An essential part
of this transformation will involve the orientation of
primary economic activities towards the production of
manufactured intermediate and capital goods with in
creased importance given to the production of consumer
goods. While it is important to recognize that a "suc
cessful process of industrialization requires the build
ing of an economic structure"9 that facilitates and
stimulates the raising of productivity in the economy as
a whole, the problem still persists as to how this
structure can be brought into being.
9 Martin Fransman. Industry and Accumulation in
Africa. London: Heinmann, 1982, p. 4. The term struc
ture of industrialization is a broad one and has several
meanings. It may include the basic characteristics of
the industry such as the size of establishments classi
fied according to either employment or output, the vi
ability of the industries, the technology utilized, the
problem of foreign and indigenous participation, govern
ment and private participation and the commodity struc
ture of manufacturing output. The term "structure" is
used in the present context to refer to (1) the commodi
ty composition of manufacturing output, (2) the foreign
and indigenous participation and (3) public and private
participation in industrial or manufacturing activities.
262
The process of structural transformation requires
a systematic body of economic reasoning which not only
articulates why manufacturing industry in West Africa or
elsewhere should expand at a faster rate than the econo
my as a whole during the process of industrialization,
but would also acknowledge strategic causal significance
to manufacturing in raising the overall rate of growth
of productivity in the economy.10 Moreover, one commen
tator11 suggests that:
countries tend to pass through a common sequence of
structural changes with first one type of industry
then another growing most rapidly, different sec
tors accounting at different times for the majority
of non-traditional output and applying the greatest
impetus to overall growth. This leads to suggest
ing development indices based on measures such as
the share in overall output accounted for by manu
facturing (often the most dynamic sector), the
share in total income earned from manufactured ex
ports, the share of manufacturing output occupied
by certain types of activity.
Much of the analytical justification for the stra
tegic position of manufacture rests upon the following
three arguments.
10 A. H. Amsden. "The Industry Characteristics of
Intra-Third World Trade in Manufactures." Economic De
velopment and Cultural Change 1 (October 1980), pT 1019.
Also in "Small Industry in Developing Countries: A Dis
cussion of Issues." World Development 10, no., 11
(1982), pp. 913-948.
11 Peter Hall. The Economic of Growth and Devel
opment . New York: St. Martin's Press, 1983, p. 9.
263
First, at its rudimentary level, it has been ar
gued that as the income elasticity of demand for manu
facturing products is, to a large extent, higher than
that for food and for other agricultural products. Cor
respondingly, manufacturing can be expected to grow at a
relatively faster rate.
The second level of analysis is rooted in the
classic work of Allyn Young (1928) and that of Adam
Smith and other classical economists after him. Most of
their work in the theory of economic growth has shown a
structural approach. They argue that manufacturing is
subject to increasing returns to scale in the static
and, more significantly, in the dynamic sense. Thus,
much of the justification for the expansion of the manu
facturing sector is due to the favorable demand elastic
ities and dynamic economies of scale evidenced by empir
ical studies.12 The relatively faster rate of growth is
also associated with increased employment. An increase
in employment means that the expansion of manufacturing
industry will induce the rate of growth in productivity
to rise in the agricultural sector, in at least, two
12 See Chenery and Taylor (November 1968), Chenery
and Syrquin (1975); and Chenery (1960).
264
ways: (1) by absorbing some of the superabundant labor
(since the agricultural sector is usually associated
with disguised unemployment), and (2) by providing both
consumer and capital goods which permit agricultural
productivity to increase.
The third variant of justification presupposes
that the expansion of the manufacturing industry also
induces an increase in productivity of sectors other
than agriculture such as transportation and communica
tion networks.
The significance of the above analysis to the West
African economic transformation is very clear. It sug
gests that the structural transformation of the West Af
rican economies is a necessary, but not sufficient, con
dition to stimulate a greater economic growth rate,
thereby industrialization. Otherwise, the objectives of
ECOWAS--industrialization through integration of the su
bregion— may be stifled.
Broadly speaking, the sixteen ECOWAS member coun
tries that are subject to this study are externally sim
ilar. However, they differ significantly in their eco
nomic and industrial structures.
265 j
I
Many of the differences are often as obvious as
those prevailing between the industrially advanced coun
tries and the industrially less developed ones within
the subregion. In order to depict their differences,
the values of a number of economic indicators are pre
sented in Table 1.1 (Chapter One) and in this chapter,
Tables 7.1-7.10 for those ECOWAS member countries with
adequate data was available. As illustrated in Table
1.1, the West African countries differ enormously in
size (measured in terms of both area and population),
resources and material living standards. For example,
in 1986, Gambia and Guineas-Bissau had an estimated pop
ulation of a little in excess of 1.6 million, whereas
Nigeria had nearly 106 million during the same period
and is the most advancing country of the subregion with
the riches of oil and other material resources. The
West African countries, as elsewhere in Africa, differ
significantly in their social and political systems (See
Table 1.1) and, therefore, in the development objectives
and industrialization strategies that they pursue. j
i
These factors are said to contribute to the under- j
lying industrial differences among the West African !
countries. For example, Ghana's and Nigeria's industri-
266
al sector contribution to GDP in 1986 was 15.38 percent,
and 32.31 percent, respectively, whereas the same sector
was responsible only for 15.18 percent and 5.45 percent
of GDP in Mali and Guinea-Bissau, respectively. The
manufacturing industry accounts 12.24 percent and 5.15
percent of GDP in Ghana and Nigeria respectively while
only 9.33 percent of GDP in Mali and Guinea-Bissau com
bined.13 Given these basic diversities and the fact that
virtually all the governments of the subregion favor in
dustrialization, the question arises as to how much
progress can be made by the individual national econo
mies?. Although this question cannot be answered within
the scope of the present chapter, a brief analysis of i
two of the relatively industrially advanced countries
(Nigeria and Cote d’Ivoire) of the subregion is in or
der .
13 Economic Commission for Africa. Survey of Eco
nomic and Social Conditions in Africa, 1986-1987.
E/ECA/CM.144: A30.
267
7.2 CASE STUDIES IN INDUSTRIALIZATION
7.2.1 The Case of Nigeria
The process of industrialization in Nigeria has
undergone considerable development since independence on
October 1, 1960. According to Onyemelukwe,14 Nigeria's
capacity with the riches of its land and human resources
can influence the long-term industrial development of
l
the West African subregion. But it is also important to
reflect the short-term role that Nigeria will play in
the development of industries in the subregion. 1
i
1
As has been illustrated in Chapter Five, Nigeria
played a significant role in the coordination and devel
opment of the transportation and communication networks
of West Africa. Nigeria's role in industrial develop
ment of West Africa is equally important. Although Ni
geria's industrial development and diversification are
relatively high in the subregion, its national industri
al policies and objectives must be coalesced with the
policies and objectives of ECOWAS for this is one way to
ensure the success of industrial development equitably
14 J. O. C. Onyemelukwe. Industrialization in
West Africa. New York: St. Martin's Press, 1984, pp.
161-174.
268
throughout the subregion. The question is whether Nige
ria’s industrial capacity can make any difference to
many of the much poorer ECOWAS member countries (such as
Burkina Faso, Mauritania and Guinea-Bissau)?
Therefore, the best way to evaluate whether the
growth and capacity of Nigeria's industrialization can
play any role in the subregion's industrialization pro
cess is to investigate such important indicators as lev
els of employment in the manufacturing establishments,
growth of manufacturing value added (MVA), et cetera.
Although agriculture continues to dominate the ec
onomic activity of the Nigerian society, manufacturing
industry has generated a very impressive level of em
ployment. For example, in 1957, about 32,000 persons
were employed in manufacturing and processing. By 1967,
over 76,999 persons were employed in this sector. This
figure was nearly quadrupled (305,000) by 1978. Taking
1957 as the base year employment in the manufacturing
sector increased nearly by 10 times (313,000) in 1985.ls
Thus, between 1957 and 1985 there was an average in
15 This figures were extracted from the ECA's So-
cial and Economic Survey, 1986-1987 Report, various pag
es.
269
crease of 30.3 percent annually. However, Adejugbe ar
gues that the modern industrial spectrum continues to be
dominated by a few giant multinational firms- which is
bound to distort the efforts of regional integration.16
This is further complicated by the concentration of over
50 percent of the manufacturing enterprises of Nigeria
within the "Greater Lagos" area as is the case for near
ly all the other ECOWAS member countries.17
Focusing attention exclusively on the manufactur
ing sector, a comparison between gross output and value
added reveal a certain degree of confidence on Nigeria's
ability to play a leadership role in impacting the pro
cess of integration of the subregion through industrial
ization. As in many LDCs, modern manufacturing activi
ties were unknown in Nigeria before WWII.20 The
development of these activities in the post-WWII period
was principally processing in character as illustrated
in Table 7.1., and the processing of agricultural prod
ucts and minerals like tin ore and iron ore was found to
16 Ibid.
17 D. K. Fieldhouse. Black Africa 1945-80; Eco
nomic Decolonization and Arrested Development. London:
Allen & Unwin, 1986, p. 153.
20 Wickens, 1986, Op. Cit., pp. 178-199.
I so 1 e 7.1
Structure of Manufacturing Industry
In West Africa by Type of Activities
MFg. Activities I 2 3 5 0 7 e 9 10 11 12 13 14 IS lb
Beer X X X X X X X X
Cotton tarn X X X
Solt Drinks X X i X X X X X
bread X
Cioar et t e* X X X X X X
Cigars X
Cotton Woven
Fabrics X X X
Aluaina
(CalclneO
Equiv. 000)
Metal ___
Synthetlc
Textile
Materia I s
Footwear
(Exc1■ Rubber )
P i y w 3 0 0
Passenger
Motor Car
ftsseabled)
Motor Spirit
(Petrol)____
Petroleu*
Bitueen
Aschalt_____
et Fuels ___
X X
Source: Staff. Africa South o f the Sahara: 1988, Seventh Edition. London:
Europa Publications Limited, 1988, various pages.
Numbers in the column represent member countries: 1-Benin, 2-Burkina Faso,
3-Cape Verde, 3-Cote d 'Iv o ire, 4-The Gambia, 5-Ghana, 6-Guinea, 7-Guinea-
Bissau, 8-L1ber1a, 9-Mali, 10-Mauritania, 11-Niger, 12-Nigeria, 13-Senegal,
14-Sirra Leone and 15-Togo.
271
Table 7.1
Structure o4 Manufacturing Industry
In tfest Africa by Type of Activities
Mfg. Activities 1 2 3 4 5 6 7 8 9 10 1 1 12 13 14 15 U
Her osene______
Distillate
Fuel Oils t
Residual
Fuel Oil_____
Ceaent______
Electric
Energy______
iSAC________
Bicycle,
Motor Cycles
1 Scooters
Tin aetal
tUnxrought)
Acetylene
Nitrogenous
Fertilizers
Paints
lubric ating
Oi 1 s
Liquified
Petroleum Gas
Metal Cans
Plastic
Foot wear
Source: Staff. Africa South of the Sahara: 1988, Seventh Edition. London:
Europa Publications Limited, 1988, various pages.
Numbers in the column represent member countries: 1-Benin, 2-Burklna Faso,
3-Cape Verde, 3-Cote d'Ivoire, 4-The Gambia, 5-Ghana, 6-Guinea, 7-Guinea-
Bissau, 8-L1beria, 9-Mal1, 10-Maur1tan1a, 11-Niger, 12-Nigeria, 13-Senegal,
14-S1rra Leone and 15-Togo.
272
Table 7.1
Structure of Banufacturing Industry
In West Africa by Type of Activities
Mfg. Activities 1 2
* J
4 5 0
7
f 8 9 10 11 12 13 14 15 16
Mheat Flour X X X X X X X
Fale/Pal•
Kernel Ch 1 X X X X X X X
M 5h Oil X
biscuits X X
Groundnut Oil
(Sales) X
Pineapple Juice
(Unconcen-
tr ated) X
Refine Suoar X
Salted, Dried
or Seoked
F i sh t X X X X X X X
Tinned Fish
All Types
Ex cept
Salted X X X
Oi st111ed
Hi COhol 1C
Sever aoe X
Cocoa Sutter
(Exported X
A1cohollc
Sever aoe X
Raw Suoar X X X X
Cotton Seed
Oi1 (Refineo) X
Source: S taff. Africa South of the Sahara: 1988, Seventh Edition. London:
Europa Publications lim ited, 1988, various pages.
Numbers in the column represent member countries: 1-Benin, 2-8urkina Faso,
3-Cape Verde, 3-Cote d'Ivoire, 4-The Gambia, 5-Ghana, 6-Gu1nea. 7-Guinea-
Bissau, 8-L1ber1a. 9-Mali, 10-Mauritania, 11-Niger, 12-Niger1a, 13-Senegal,
14-Sirra leone and 15-Togo.
273
be promising in generating revenue. Onyemelukwe21 ar
gues that, at least, three major factors were responsi
ble for the development of modern manufacturing activi
ties in Nigeria: first, the country's export trade in
its natural resources; second, the increased overseas
demand for its products during the Korean War of the
early 1950s; and third, in spite of obvious technologic
al and infrastructural constraints, the local abundance
of resources crucial to industrial modernization--par-
ticularly water power, petroleum, coal, limestone and
such farm and forest resources as cotton, palm produce
and timber--which has helped to provide an economic base
for industrial progress. The result was a steady in
crease in the price of Nigeria's exports which in turn
resulted in an increase of national income, saving, and
investment. An increase in personal income meant an im
provement in the relative social mobility of the people
of Nigeria which may result in political consciousness
and eventual political socialization of the people.
There is a much more significant aspect of the
third factor which requires further examination-the
source of raw materials utilized in Nigeria's manufac-
1 Onyemelukwe, 1983, Op. Cit., pp. 175-278.
274
turing enterprises. To what extent are Nigeria's manu
facturing enterprises dependent upon local raw materi
als? What is the implication of a non-local raw materi
als usage for both Nigeria's internal development and
integration of the subregion?. Much of the discussion
of section 7.3 will be concerned with the need to ex
plore the implications of these wider questions for in
dustrial development and integration of West Africa.
7.2.2 The Case of Cote d'Ivoire
The development of manufacturing sector in Cote
d'Ivoire has been referred to as the "Ivorian Miracle."
Why?. Unlike many of the ECOWAS member countries and
the rest of African countries, Cote d'Ivoire achieved a
7 percent annual growth rate between 1950 and 1975.22
This was mainly attributed to the government's concerted
effort in advancing laissez-faire economic policies (
and only when necessary, a pragmatic interventionist ap
proach). In 1950, per capita income in Cote d'Ivoire
was estimated at $70 (U.S.); in 1960 it rose to $145 and
in 1975 it was $580. By 1984 it has achieved $1100
which is higher than the per capita income of Nigeria by
22 Fieldhouse, 1986, Op. Cit., pp. 187-189.
275
nearly 28 percent for the same period (computed from the
International Statistical Yearbook, 1986). Unlike Nige
ria which financed its manufacturing sector from mining
and petro-dollars, Cote d'Ivoire depended upon savings
generated, by and large, from the agricultural sector.
In addition to the type of public policies identified
above, a number of other factors are responsible for the
"Ivorian Miracle": political stability, expatriate man
agement and technicians, cheap local manpower, a suffi
cient supply of foreign capital, mainly from France, and
relatively adequate infrastructure.23
However, as Table 7.1 shows, the scope of manufac
turing in Cote d'Ivoire is dominated by light consumer
industries: food industries, textile, leather and foot
wear. In 1975 food industries accounted for 29 percent
of total employment in manufacturing and about 36 per
cent of the gross output. Like Nigeria, the expansion
of these industries was born from the import- substitut
ing plants, processing industries and primary exports.
The other light consumer industries (textile, footwear
and leather) combined shared about 20 percent of the to
tal labor in the manufacturing sector, contributing 15
23 Ibid., pp. 198-199.
276
percent of the gross output. Wooden products indus
tries, on the other hand, accounted for 26 percent of
the sector's total labor and only about 8 percent of the
gross output.2 4
In total, light consumer goods industries account
ed for more than 75 percent of the employment and about
60 percent of the output. Building materials remain in
significant, although the capital goods sector (machin
ery and transport equipment) was a higher proportion of
manufacturing than in Nigeria. These group of indus
tries in both Nigeria and Cote d'Ivoire lack any hori
zontal or vertical linkages.
In promoting industrialization, Cote d'Ivoire has
achieved a unique position in West Africa in one re
spect. About 33 percent of the total output is export
ed, mainly to France and other Western European coun
tries. Much of the exported products include: palm oil,
cocoa products, wood products, pineapple products,
guived cotton, latex, instant coffee and canned fish.
But a closer examination of such a success story reveals
a serious dilemma for the next phase of the Ivorian in-
24 Ibid., p. 197
277
dustrialization process. According to Tuinder,25 the
greatest constraint to industrial progress in Cote d'I
voire is that the limits of industrialization through
light consumer goods seem to have been reached, and con
straints with respect to foreign exchange to finance
further industrial ventures have been built up. This is
because the industrialization of Cote d'Ivoire heavily
relied on foreign inputs, constituting about 55 percent
in the 1970s. This is further complicated by the prob
lems of economic efficiency,26 employment and the for
eign ownership of manufacturing, constituting about 67.6
percent in 1975 and the concentration of establishments
in Abidjan accounting for 67 percent.
The case of Cote d'Ivoire is clearly one of "de
pendent industrialization." Dependent industrialization
can be useful if the relative level of industrial devel
opment of a country has resulted in some economic gains
as Fieldhouse27 put it:
25 B. A. Tuinder. Ivory Coast: The Challenge of
Success. London, 1978, p. 231.
26 Ibid., p. 238.
27 Fieldhouse, Op. Cit., p. 199. See also, Bill
Warren, "Imperialism and Capitalist Industrialization,"
The New Left Review, 81 (1973), pp. 3-44.
278
It is, therefore, unwise to be dogmatic about in
dustrialization in Ivory Coast. At one level this
was clearly of the most 'dependent' kind, almost
entirely generated by foreign capital, which showed
very little sign during the first twenty years of
evolving an 'autonomous' capital goods or interme
diate goods sector. On the other hand, Ivory Coast
received a number of benefits. Many industries
consumed local raw materials (sic), especially
those that were export-oriented; and some was es
sential to other industrial and commercial activi
ties.
The sixteen countries of the West African Communi
ty may be divided into two: the comparatively more in
dustrialized countries (Nigeria, Cote d'Ivoire, Ghana
and Senegal) and the relatively less industrialized
countries (the remaining twelve). However, if industri
alization is approximated by a high shareof manufactur
ing in gross national products (GDP) of a country, ac- j
cording to Table 7.2, the empirical evidence is not j
conclusive. For example, among the comparatively more 1
advanced countries, Senegal consistently shows a high
i
share of manufacturing in GDP for the periods examined.
Cote d'Ivoire shows the second highest share of manufac
turing in GDP in 1960, though it moved to a third posi
tion in 1969, 1982, and 1984, and fourth place in 1986.
Ghana shows a fairly high position in the 1980s. But
Nigeria performed surprisingly very low. Clearly, the
279
280
Table 7.2 Share of Manufacturing in GDP for West
African Countries, for Selected Years
ECOWAS 1 960 1 969 1 982 1 984 1 986
Member
Count r y Index Rank Index Ra n k 1 ndex Rank Index Ra n k Index Rank
Benin 0.033 10 0.072 8 0.061 8 0.065 9 0.064 9
Burkina
Faso 0.085 3 0.092 5 0.128 2 0.144 2 0.144 2
Cape
Verde na na 0.056 8 0.053 10 0.053 11
Cote
d’ Ivoire 0.087 2 0.137 3 0.117 3 0.116 3 0.110 4
Camb ia 0.044 8 0.051 13 0.071 S 0.098 4 0.087 5
Ghana 0.036 9 0. 076 6 0.059 8 0.090 S 0. 122 3
Guinea 0.070 4 0.073 7 0.036 13 0.036 13 0.030 15
Guinea-
Bissau
~ -
na na 0.016 14 0.017 14 0.015 16
Liberia 0.058
6
0.056 12 0.087 4 0.086 6 0.085 6
Mali 0.058 6 0.067 10 0.049 10 0.076 7 0.079 7
Mauritania 0.014 11 0.025 14 0.047 11 0.048 11 0.054 10
Niger 0.052
7
0.070 9 0.038 12 0.038 12 0.039 13
Nigeria 0.052 7 0.101 4 0.056 9 0.048 11
0.052 12
Senegal 0.095 1 0.140 2 0.158 1
0.176 1
0.190 1
Sierra Leone 0.058 6 0.063 11
0.067 6 0.052 9 0.035 14
Togo 0.065 5 0.162 1 0.087 4 0.076 7 0. 077 8
Source: ECA. Survey of Economic and Social Conditions, 1960-1969 and 1986-1987.
Addis Ababa: Economic Commission for Africa, various pages.
index is not a definitive indicator of industrializa
tion. Clearly, manufacturing is only one of the compo
nents of industrialization.
If we return to total industry as a percent of
GDP, we find that Nigeria clearly shows a commanding
lead in its performance. Table 7.3 shows that Nigeria's
share of total industry in GDP was approximately 40 per
cent in 1982, although it declined to 33.5, 32.2, 32.0,
32.3 percent in 1983, 1984, 1985 and 1986, respectively.
Although Liberia was not considered among the four in
dustrially advanced ECOWAS member countries, its per
formance was surprisingly very high and shows the second
highest between 1982 and 1984. Liberia also shows a
fairly high share of total industry in its GDP for 1985
and 1986. Cape Verde, which gained its independence
only in July 1975, also performed very high--a third po
sition in the union for 1982, 1983, 1985 and 1986 and a
fourth position in 1984. Senegal's performance was also
fairly high, ranging between 26.2 percent and 29.6 per
cent for the periods examined, respectively. While Cote
d'Ivoire's performance in terms of the share of Total ■
industry in GDP shows a distant seventh place for four
of the five years examined, Ghana's performance was fif —
281
282
Table 7.3 Share of Industry, Total in GDP for West
frican Countries, for Selected Years
(At current factor costs)
ECOWAS
Member
Country
1982 1983 1984 1985 1986
Index Rank Index Rank Index Rank Index Rank I ndex Ran k
Ben i n 0.140 13 0.147 12 0.151 12 0.150 14 0.152 1 3
Burkina Paso 0.159 12 0.178 8 0.180 10 0.173 11 0.170 n
Cape Verde 0.272 3 0. 274 3 0.281 4 0.282 3 0.290 •3
Cote d'Ivoire 0.213 7 0.202 7 0.201 7 0.191 6 0. 188
* ?
Gambia 0.162 11 0.173 11 0.190 8 0.189 9 0.154 1 1
Ghana 0.103 15 0.097 15 0.136 15 0.200 7 0.181 K
Guinea 0.186 9 0.177 10 0.181 9 0.166 13 0.152 1 3
Guinea-Bissau 0.058 16 0.057 16 0.059 16 0.058 16 0.055 1 5
Liberia 0.354 2 0.316 2 0.294 2 0.273 4 0.255 5
Mali 0.108 14 0.124 14 0.146 13 0.169 12 0.152 12
Mauritania 0.256 6 0.267 5 0.255 S 0.259 6 0.237 6
Niger 0.197 8 0.177 9 0.175 11 0.179 10 0.168 1 0
Nigeria 0.396 1 0.335 1 0.322 1 0.320 1 0.323 1
Senegal 0.262 5 0.269 4 0.286 3 0.294 2 0.296
3
Sierra Leone 0.170 10
0.148 13 0.137 14 0.131 15 0.133 1 l
Togo 0. 269 4 0.252 6 0.247 6 0.266 5 0.261
1
Source: Same as Table 7.2 (1986-1987)
teenth between 1982 and 1984 and seventh and eighth for
1985 and 1986, respectively. In the share of mining in
GDP, Nigeria has a commanding lead followed by Liberia,
Togo, Mauritania, Guinea, Niger, Sirra Leone and Cote
d'Ivoire, respectively (E/ECA/CM.14/4: A-30).
The disappointing performance of manufacturing in
general, as in other parts of Sub-Sahara Africa, has re
sulted from complex economic and non-economic factors.
The World Bank28 asserts that:
Formidable resource constraints, which included a
critical shortage of local skills and inadequate
infrastructure, combined with inappropriate poli
cies (exchange rate policies, tariffs and quantita
tive restrictions on imports, price controls, na
tionalization) to create high-costs and inefficient
manufacturing industries.
There are good economic and non-economic reasons
as to why only four of the sixteen countries have ad
vanced industrially. One answer, at its simplest form,
is that by coincidence all four countries identified in
the first category are situated along the coast with
easier accessibility to the outside world; there are
other favorable resource endowments such as sizable pop
28 World Bank. World Development Report, 1987, p.
106. The Bank's study asserts that the combination of
these policies proved extremely damaging to industrial
growth and efficiency.
283
ulation, mineral deposits and agricultural products com
pared to, say, the land-locked countries in the second
category. Given these two extreme cases, what would be
the conditions for effective integration in West Afri
ca?. Ezenwe29 argues that members of a prospective eco
nomic grouping would require satisfactory assurances on
three broad fronts prior to full membership:
First, each participating country should believe
that the benefit accruing to it--regardless of how
this was calculated for the short-term and the
long-term-- will be greater than anything that
could be achieved by remaining outside the scheme.
Secondly, the members of the grouping should be,
individually and collectively, willing to make the
necessary sacrifices and compromises towards the
adopting of certain policies to realize the aims of
the community.
Finally, the physical infrastructure, especially
transport, should be efficient enough to facilitate
a well-ordered intra- zonal distributive network.
The issues involved in these pre- conditions are
interrelated and their exposition somewhat twisted.
Political considerations enter even more strongly
into these matters.
The first factor relates to similarities in the
levels of development among the prospective members.
Hence, a cursory look at the manufacturing sector of Ni
29 Uka Ezenwe. ECOWAS and the Economic Inteqra-
tion of West Africa. New York: St. Martin's Press,
1983, p. 31.
284
geria and Cote d'Ivoire below illustrates a number of
points. Both Nigeria and Cote d'Ivoire have attained
the highest levels of industrial development among
ECOWAS member countries, and therefore act as "growth
centers" of the subregion. Second, both countries have
experienced many of the problems that bedevil industrial
development efforts in the subregion, hence, the two
countries can act as both positive and negative models
of the process of industrialization for the remaining
fourteen countries participating in the integration pro
cess.
The cursory examination of the manufacturing sec
tor of the economies of Nigeria and Cote d'Ivoire above
reveals a number of pervasive problems of industrializa-
tion--e.g, the gross inadequacy of technical and mana
gerial skills, and other factor inputs. These are crit
ical resources for strong industrial foundations and
sustained development towards industrial self-reliance.
Much of the approach to the development of manufacturing
industry differs from country to country. In some coun
tries the establishment of "laissez-faire" type enter
prises is encouraged along the formation of joint ven
tures with foreign companies or with the state. In
285
other countries the nationalization or indigenization of
foreign companies is the preferred strategy for indus
trialization .
The commanding lead of Nigeria and Cote d'Ivoire
in industrialization may be considered as a threat to
the aspirations of the smaller countries to reach the
same levels of industrial progress as their neighbours.
The existence of greater regional diversity in levels of
economic development within most of West Africa coun
tries is also considered as a danger to the proccess of
economic integration. It is hoped that, a reasonable
mobility of the factors of production, (i.e., both labor
and capital) will tend to reduce inequalities between
and among the participating countries Of ECOWAS. More
over, industrial production in ECOWAS must utilize "spe
cialization benefits" from the enlarged market rather
than from the smaller markets of individual countries.
These benefits of specialization can be maximized when
ECOWAS member countires focus on the production of cer
tain commodities requiring high raw material and energy
costs, for example, the endowment of Nigeria with petro
leum, Ghana with gold and cocoa, Guinea and Liberia with
high quality iron ore, etc. There is no ECOWAS member
286
country without, at least, one basic mineral or agricul
tural product that can usefully be exploited industrial
ly. Therefore, the subregion's industrial development
and production must emphasize a system of vertical coor
dination in order to reduce duplication of industrial
activities. In other words, several countries should be
involved in the production processes of a given finished
product rather than duplicating the entire processes in
volved.in the production of ' a final product. In the
next section, this study examines the nature and impli
cations of such strategies to regional integration of
the West African Community.
7.3 ECOWAS STRATEGIES FOR INDUSTRIAL!ZATION
7.3.1 Import-Substitution Industrialization (ISI)
versus Export-Oriented Industrialzation Ce o i)
In this section we will examine two different
strategies: import-substitut ion industrialization (ISI)
characterized by the production of manufactured goods
for the domestic market which was previously imported,
and export-oriented industrialization (EOI) character
ized by the production of manufactured goods for exter
nal markets.
287
288
Table 7.4
Trade Orientation of the
Industrially Advancing West African
Countries, 1963-73 and 1973-85
1963-1973 1973-1985
Outward:
Oriented
Strongly
- -
Moderately Cotre d'Ivoire
Inward
Oriented
Strongly Ghana Ghana, Nigeria
Moderately Nigeria, Senegal Cotre d'Ivoire, Senegal
Source: World Bank, World Development Report, Oxford University Press, 1987
According to a recent classification of forty-one
developing economies by the World Bank (1987), of the
four relatively industrially advanced countries, only
Senegal has remained as "inward" looking ( favoring pro
duction for the domestic market) in its trade-orienta-
tion for the periods between 1963-73 and 1973-85. While
Cote d'Ivoire has made a radical shift in its trade-ori-
entation, the remaining two countries (Ghana and Nige
ria) have remained "inward" looking for the periods in
dicated in Table 7.4 above. The slight shift in Ghanian
and Nigerian trade-orientation may have been in response
to subregional or international factors. More specifi
cally, the inward-oriented or "inward-looking" trade
strategies pursued by these four countries since 1973
have been considered particularly important for the
goals set by the ECOWAS treaty in 1975--that is, "col
lective self-reliance."
In connection to the above consideration, there
are two important questions that should be considered
here in understanding the objectives of ECOWAS in its
bid for the subregion's industrialization: Should
ECOWAS pursue an EOI or ISI strategy (or some combina
tion of the two)? What are the implications of each for
trade among the member countries?
289
The issue is posed as a choice between an "inward-
looking" strategy in which industries are developed
largely to supply the subregion’s market with over 150
million consumers, with external trade given a minimal
role, and an "outward-looking” strategy of concentration
on industries in which the collective resources of
ECOWAS have a comparative advantage with heavy depen
dence on external market as a source of demand for the
expanded output of member countries. It is in this con
text that the following analysis emerges.
Disenchanted with declining export prospects and
the burdens of balance of payments, compounded by the
desire to catch up with the developed countries through
rapid economic transformation for industrialization, the
import-substituting industrialization (ISI) has been a
widely accepted strategy of the LDCs since the early
1950s. To the extent that substitution takes place in
the form of domestic production in order to reduce de-
»
pendency on foreign produced goods, total import expen
ses are reduced, freeing foreign exchange for importing |
something else, e.g., capital goods which may be em
ployed in the production of other capital goods to en
hance the industrial infrastructure of the country.
290
This is exactly what the newly industrializing countries
(NICs) of East Asia did during the late 1960s and
1970s.30 These countries are said to be in the next
phase of industrialization, outward-looking, or export-
oriented industrialization (EOI), not only as consumer
goods exporters, but also capital goods exporters. Also
included in these group of countries are India, Brazil,
Argentina, and potentially Egypt and Mexico. The World
Bank's Report31 observes that:
countries pursuing the. import substitution strategy
typically started by producing final manufactures
to replace imports. Many enjoyed initial bursts in
the growth of manufacturing. But since production
required imported intermediate and capital goods,
sustained industrial growth depended on the expan
sion of exports to provide the necessary foreign
exchange. Countries that made an early transition
to export expansion, such as the Republic of Korea,
sustain their industrial growth. Many others did
not make the transition. They stayed in the pro
tective import-substitut ion phase and their indus
trial development was retarded.
It is in this context that the strategy of indus
trialization in West Africa must be examined. Accord
ingly, the implementation of import-substituting indus- )
i
trialization (ISI) and export-oriented industrialization I
30 UNIDO, 1983, Op. Cit., pp. 120-129.
31 The World Bank. The World Bank Report. New
York: Oxford Universty Press, 1987, p. 45.
291
(EOI) in Africa in general, and West Africa in particu
lar, have raised a number of questions and implications
for the integration process of West Africa: (1) how much
emphasis should be assigned to: (i) import-substituting
industrialization (ISI)?, (ii) exports to world markets
adhering to preferential trade arrangements? (2) How
much emphasis should be assigned to the development and
production of capital goods which are considered to be
essential ingredients of the industrialization scheme
for self-reliance?; (3) What emphasis should be assigned
to equality in spatial distribution of small-scale en
terprises within the subregion of ECOWAS?
In Nigeria, as in many LDCs, a number of factors
have stimulated the adoption of import-substituting in
dustrialization (ISI). The economic argument is that
through the use of tariffs, quotas, and other barriers,
imports can be constrained or restricted and the domes
tic market can be reserved for domestic producers.
Among other things, of course, this rationale, general
ly, presupposes the "infant-industry argument" which
simply states that:
Under a protective umbrella of artificial trade re
straints, it was theorized that local firms would
have the opportunity to achieve economies of scale
292
associated with larger production volumes, or to
lower unit costs through specialization or factors
associated with the learning curve.32
Because infant industries are associated with eco
nomic activities that are being initiated for the first
time in an economy, the startup costs for these indus
tries in Nigeria and the other participating countries
of ECOWAS are thought to exceed their benefits in the
short-run. The requirement for infant-industry develop
ment are seen differently by different people. Bell,
Ross-Larson and Westphal33 argue:
Some economists and policy makers conceive of in
fant industries as being akin to operating an
espresso machine. As they would have it, all that
one needs to enter the competitive fray is to buy
an espresso machine and to become proficient in
preparing inputs and running the machine. This
conception may be correct for some infant activi
ties. But many other infant industrial activities
may be more akin to run a good restaurant, for
which entering the competitive fray is much more
complex. One not only needs a kitchen with an ar
ray of equipment, ingredients, and possibilities
for what can be produced. One also needs an array
of recipes for various dishes and the broader
training and specialization associated with each
input and product and with their interrelations.
32 A. J. Yeats. Trade and Development Poli-
c ies: Leading Issues for the 1980s. New York; St.
Martin's Press, 1981, p. 1.
33 Martin Bell, Bruce Ross-Larn and Larry E.
Westphal. "Assessing the Performance of Infant Indus
tries." Journal of Development Economics 16 (1984),
1984, p. 108.
293
The central point of the above illustration is
that infant enterprises cannot mature unless they accu
mulate the capability for technological change through a
learning process, but what this learning involves is not
clear. However, protection is justified by some combi
nation of external economic and economies of scale argu
ments, particularly in the process of integration of the
West African economies. According to Evans and Aliza-
deh,34 as purported by varying neo-classical views, pro
tection of between 10 percent and 20 percent is justi
fied for the infant industries learning period of five
to eight years.
The preceding argument can be associated with the
problems of dependency which requires examining the fol
lowing set of questions: To what extent can the Commu
nity's industrialization be based on regional raw ma
terials? Is the processing of these materials
cost-effective? How can dependence on imports of raw ma
terials (and other inputs) be minimized? How can a ver
tically integrated industrial structure be obtained?
34 David Evans and Parvin Alizadeh. "Trade, In
dustrialization, and the Visible Hand." Journal of De
velopment Studies 21, no. 1 (October 1984), p. 23.
294
While the more "successful learners" tend to be
larger LDCs (e.g., Argentina, Brazil and India) with a
relatively long industrialization experience since the
1920s, much of the evidence of low rates of progress
tend to reflect the economies whose industrialization
i
! process began in the 1950s35 (e.g., Bangladesh, Thai
land), including such LDCs as Nigeria, Cote d'Ivoire and
Ghana. Moreover, in the majority of these later LDCs,
the process of import-substituting industrialization
(ISI) has tended to "get stuck" at primary import sub
stitution (PIS) stage.36 Many attempts have been made to
explain why LDCS find it difficult to make the tran
sition from consumer to intermediate and capital goods.
According to Hubert Schmitz,37 there are several reasons
why most LDCs found it difficult to make smooth tran
sitions to the EOI phase.
(1) Excessive administrative regulations gave rise
to bureaucratisation, corruption, uncertainty and
delays and thus discouraged productive private ini
tiatives.
35 Hubert Schmitz. "Industrialization Strategies
in Less Developed Countries: Some Lessons of Historical i
Experience." Journal of Development Studies 21, no. 1
(October 1984), p. 6.
36 Albert O. Hirschman. "The Political Economy of
Import-Substituting Industrialization in Latin America."
The Quarterly Journal of Economics 82, no. 1 (February
1968), pp. 6-7.
37 Hubert Schmitz, Op. Cit., p. 3.
295
(2) The existence of import restrictions led to a
higher exchange rate than woulg have prevailed un
der a free trade regime, reducing the relative
gains obtained from exporting.
(3) The protection of local industry raise the
prices of manufactured goods relative to agricul
tural products in the home market and the overva
lued exchange rate reduced the domestic currency
receipts for agricultural exports.
(4) Since import controls did not equally apply to
capital goods and since credit for installing ma
chinery was relatively cheap, factories were over
equipped. Moreover, protection in product markets
made it possible to earn good profits even at low
capacity utilization.
(5) Although initially industry can grow faster
than domestic demand for manufactures, LDCs soon
run out of import substitution possibilities, After
that growth rates can only be maintained by a
growth in domestic demand or in exports; but by
then the structure and inefficiency of industry
stand in the way of conquering ecport markets.
Basically, although in some sense Nigeria is con
sidered an open economy, its economic strategy is typi
cal of most LDCs both in Africa and elsewhere in LDCs.
That is, the import-substituting industrialization
strategy has been the center of the Nigerian public sec
tor economy to develop import substituting industries by
means of some protective measures, such as tariffs, im
port-licensing and other stimuli. Like many other LDCs,
Nigeria's decision to adopt such protective measures in
296
order to become self-sufficient has historical, politi
cal and economic justifications, Tom Forrest38 argues
that:
Historically-- Industrialization came late relative
to other African countries. It had been discour
aged by the colonial regime, by the merchant, bank
ing and shipping monopolies, and later by the oper
ation of the marketing board system which excluded
African merchants and appropriated surplus funds to
London.
Politically-- the 1950s shifts in power away from
the metropolitan center' and increased competition
led to local market protection and the establish
ment of large-scale industry dominated by foreign
capital and supplemented by state capital.
Economically-- with the approach of independence
the state provided finance, tax incentives and pro
tection in the early stages of industrialization.
Agriculture provided the financial resources for
this support. Considerations of market protection,
various types of state subsidy, and tariff escala
tion due to balance-of- payments difficulties in
the early 1960s, all encouraged the expansion of
foreign capital from its commercial base into manu
facture and prompted the flow of new investment
from aboard.
Much of the literature examined also suggest that
an import-substituting industrialization is inclusively
assembly type activities which involves a great deal of
"dependency" upon manufacturing parts and components to
38 Tom Forrest. "Industrialization in West Afri-
ca," in Industry and Accumulation in Africa, edited by
Martin Fransman. London: Heinmann, 1982, pp. 324-325.
297
be imported from aboard. It is also true that assembled
products must be sold, by and large, in foreign markets,
again, which involves dependency. These researchers
also claim that, based on the level and types of manu
facture export accounts, a very insignificant amount of
export-oriented industrialization (EOI) activities have
been developed. The scope and nature of Nigerian indus
trial development perpetuates the absence of linkages,
both backward and forward within the national economy.39
Economic independence for member countries of
ECOWAS would require some type of vertically integrated
(i.e., both backward and forward linkages) industrial
structure. The growth pole (and growth centre) approach
is one of many spatial development strategies that have
been popularized since it was formally postulated in
1950. During the 1970s the theory gained application in
both developed and developing countries. The theoreti
cal framework of the growth pole is generally attributed
to Perroux (1950), a French economist. The concept of
growth poles was conceived as a field of forces consist
ing of centres (poles or foci). These forces were es
sentially economic and their generators mainly firms and
39 Forrest, 1982, Op. Cit., p. 325.
298
industires. Perroux was fundamentally interested in ex
plaining the process of growth as reflected in the ap
pearance and development of new economic or industrial
activities and the implications of these new activities
to the surrounding areas. A number of researchers, in
cluding Myrdal (1957), Hirschman (1967), and Boudeville
(1966) have incorporated the concept of space-economy
into Perroux's work which later gave rise to other con
cepts such as growth centres and spatial theories.
Although the application of the growth poles (and
growth centres) concepts have not been successful,40
these concepts can play significant role in explaining
how a vertically integrated industrial structure can be
developed, because it applies specially to investments
and the distribution of infrastructure, including indus
try. In the context of ECOWAS, a four-tier hierarchy of
growth foci approach41 for a vertically integrated in
dustrial structure can be adopted and includes the fol
lowing:
(1) Growth poles at the subregional level,
40 Antoni Kuklinsky. Growth Poles and Growth Cen
tres in Regional Planning. Paris: Mouton & Company,
1972, p. 103.
41 Ibid., pp. 158-163.
299
(2) Growth centres at the member countries level,
(3) Growth points at the district levels of the
member countries and districts between member coun
tries, and
(4) Development of service centres at the local and
village levels of the member countries.
The successful implementation of such strategies
requires the following: (i) the establishment of ade
quate criteria which will assist regional planners and
policy makers in identifying and selecting potential
growth centres, (ii) identifying and analysing the basic
forces which will stimulate growth and devlopment of
these centres to enable them in turn to stimulate their
surrounding areas to relatively higher levels of growth
and development, and (iii) identifying and analysing the
basic forces which will transmit the growth impulses
generated in the centres to their surrounding areas
thus, leading to a balanced spatial system. While all
of these issues are very important in the analysis of
regional growth, the second issue is more significant in
understanding the problems of West African integration
as the discussion below attempts to illuminate.
300
TABLE 7.5
SHARE OF GROSS DOMESTIC PRODUCT IN MANUFACTURING AND AGRICULTURAL SECTORS
(MILLIONS OF U.S. DOLLARS AT CONSTANT 1980 FACTOR COST).
Manufacturing Agriculture
Country 1982 1983 1984 1985 1986 1982 1983 1984 1985 1986
Benin 68 66 68 66 66 525 512 527 500 502
Burkina Faso 138 150 148 154 169 531 534 529 588 604
Cotre d'Ivoire 950 892 902 882 891 3095 3157 3174 3484 3608
Gambia 14 13 15 15 15 77 92 71 66 75
Chana 980 929 1022 1176 1198 7334 6912 7621 7917 8091
Liberia 63 64 61 57 53 133 127 132 134 137
Mali 74 78 100 100 105 1030 899 829 775 945
Mauritania 27 28 29 31 34 160 149 152 160 180
Niger 79 85 78 85 87 936 1042 938 960 1124
Nigeria 6021 5726 4594 4815 3081 20608 19421 19379 19993 20392
Senegal 446 456 487 521 552 669 629 542 593 642
Sierra Leone 57 59 52 38 30 348 347 360 361 361
Togo 77 69 71 75 71 293 288 288 298 291
Source: UN(BCA) E/ECA/CM.14/4: Survey of Economic and Social Conditions in Africa,
1986-1987. (Mining and Quarrying; Electricity, Gas and Water; Construction.
Commerce and Transportation and Communications are not included in this
analysis.)
302
Table 7.6
A r r u a l G k x w t h F & t e s c £ G D P t y f f e l n S e c t o r s
( a t C o n s t a n t 1 9 8 0 F a c t o r O a s t }
IrtLstry, Ibtal Fbtnfacturing Agriculture
Gantry
1981-
1982
1982-
1983
1983-
1984
1984-
1985
1985-
1986
1981-
1982
1982-
1983
1983-
1984
1984-
1985
1985-
1986
1981-
1982
1982-
1983
1983-
1984
4 - l O
C O C O
$ 3
1985-
1986
Cbtre d'Ivoire -1.08 -6.23 -0.31 -2.48 2.57 0.73 -6.07 1.16 -2.31 1.08 0.20 1.99 0.56 9.77 3.54
G bth -17.00 -12.49 7.35 13.63 1.71 -20.48 -5.16 10,02 15.05 1.89 -3.23 -5.75 10.26 3.87 2.20
Nigeria -6.88 -6.32 -5.00 2.00 - -10.06 22.14 -4.19 -19.76 4.81 -36.01 15.12 -5.76 -0.22 3.16 2.00
Sarecpl 7.77 5.41 3.87 7.34 3.87 3.65 2.38 6.86 6.89 5.91 33.78 -5.86 13.91 9.38 8.24
Source: E/EDv/CM.14/4: 1988, pp A-32 - A-33.
S a v e cf tbe other less adverted m e n ta : cantries h a v e s h o w n positive grc wt h rabes (e.g., Mali, a n d N&jrita~ua to a
lesser extant).
The associated problems of "dependency" are cer
tainly not divorced from the problems of the absence of
a vertically integrated industrial structure in West Af
rica. The problems of dependency and the absence of
vertical integration of industrial structure can be il
lustrated by the poor performance of economic activities
in the West African countries, including Nigeria, as in
dicated in Table 7.5. A recent report of economic and
social conditions in Africa, 1986-1987, argues that the
performance of African developing countries is inferior
to that of other LDCs of the world. For example, while
Table 7.5 and 7.6 indicate that agriculture remains the
dominant sector of economic activities in all the par
ticipating countries, the contributions of each sector
to the national income has been declining between 1982
and 1986, particularly in one of the. stronger economies
of West Africa, namely, Nigeria. It is also important
to note that between 1981 and 1986, the annual growth
rates of the manufacturing and agricultural sectors have
been deteriorating for three of the four industrially
advancing ECOWAS member countries. However, as Table
7.7 projects, prior to 1981 both Nigeria and Cote d'I
voire showed a positive growth of manufacturing value
303
added (MVA). The most revealing economic performance is
indicated in Table 7.8. While GDP and manufacturing
value added (MVA) grew in 1986 by 3.6 percent and 6.7
percent in Latin America and 5.9 percent and 10.0 per
cent in Asia and the Pacific region respectively, it was
a mere 0.5 percent and 2.4 percent in Africa.42 For West
Africa, it was even bleaker as Table 7.8 depicts below.
The period between 1980 and 1986 is equally re
vealing: the manufacturing sector recorded an average
growth of 3.1 percent in 1980 prices. The overall per
formance of manufacturing industry has thus fallen below
the development target set in the Lagos Plan of Action
(LPA). However, the preliminary projections for 1987
indicated a 3.7 percent growth, which is an improvement
from the earlier period. Although the West African
economy showed some degree of recovery in 1987, Table
7.8 shows that in 1986 there was a decline of 2.5 per
percent which was due to external economic forces. One
obvious cause was the decline in world market prices of
oil and a consequent shortage of foreign exchange in the
leading economy, Nigeria, with devastating effects on
import-substituting industries in particular. The pre-
42 ECA, E/ECA/CM.14/4, Op. Cit., p. 129.
304
TABLE 7/>7
Growth of Manufacturing Value Added,
at Constant (1975) Prices
Country
Total Mfg.^
Per Capita2
MVA
1963-73 1973-82 1963-73 1973-81
Benin 6.0 -4.2 3.2 -7.0
Burkina Faso 18.3 4.1 15.7 1.5
Cotre d'Ivoire 10.7 8.7 5.5 4.9
Gairbia 3.5 -12.0 0.3 -14.5
Ghana 6.9 -0.5 4.4 -3.6
Liberia 12.8 2.6 9.1 -0.9
Mali 4.8 3.8 2.3 1.1
Mauritania 5.1 6.8 2.4 3.9
Niger 8.0 3.1 5.0 0.2
Nigeria 7.6 12.0 4.4 8.4
Senegal 4.2 0.9 0.8 -1.8
Sierra Leone 4.5 0.2 2.1 -2.3
Togo 14.0 -3.9 10.6 -6.5
Source: 1 & 2 UNIDO: Industry and Development, No. 17,
Vienna, 1986
3Q5
Table 7.8
Value Added by Manufacturing Industry, by
Subregion and Economic Grouping, 1985 - 1987
(At 1980 Factor Cost)
1986 Annual Growth Rate
Millions
of
Dollars % 1980-86 1985 1986 1987
Subregion
North Africa 15,389 52.4 6.3 6.6 -2.5 5.4
West Africa 6,394 21.8 -1.5 -11.8 -2.5 1.7
Central Africa 2,193 7.5 7.2 4.5 0.5 2.0
East/Southern
Africa 5,380 18.3 1.1 3.6 2.0 3.5
Econ. Groupinqs
Major Oil-Exporting
Countries 8,622 29.4 3.9 -2.1 1.6 4.0
Least Developed
Countries 3,052 10.4 2.4 0.1 1.6 0.4
Other Countries 17,682 60.2 1.5 5.5 4.4 3.2
Developing Africa 29,356 100.0 3.1 0.1 2.4 3.7
Source: Same as Table 6.5, P. 130.
306
liminary estimates for Nigeria for 1987 indicate only a
1 percent growth in production was anticipated.43 The
major reason for the poor performance of manufacturing
industry in 1986-1987 did not vary drastically from the
earlier periods.
Structural factors such as the lack or weakness of
the intermediate or capital goods sectors in most coun
tries and the absence of linkages within the manufactur
ing sector and between sectors, including transport and
communications, constrained development. The preceding
analysis suggestes that unless the West African coun
tries make a deliberate effort collectively to partially
disarticulate their trade patterns with the Developed
economies, the growth poles (and growth centres) con
cepts would ecounter major resistance from the developed
countries as any radical changes in the LDCs normally
do, Nigeria, for example, has been heavily "dependent"
on imported technology, know-how, industrial skills and
raw materials.
Ibid. 131.
307
Given the above macroeconomic constraints of im
port-substituting industrialization, the question arises
whether the transition to a more export-oriented indus
trialization (EOI) is possible in Africa and particular
ly in Nigeria, Cote d'Ivoire, Ghana and Senegal. A num
ber of studies, including those by UNIDO (1986) and the
World Bank (1987) have argued that a free trade policy
measures are necessary elements for development, al
though the West African governments view the Bank's ar
guments as obstacles to their protective measures which
could have both short term and long term effects. The
short-run effect of trade liberalization will tend to
generate resistance to trade policy reform from pressure
groups such as displaced workers and producers whose
loss tends to be the biggest. The long-run effect of
trade liberalization will depend upon macroeconomic pol- i
icies and the efficiency of factor markets. In fact,
the World Bank, in particular, argues that one of the
practical lessons from past experience is the link be
tween trade liberalization and macroeconomic policy.
Much of the trade reforms of the past began with a pro
gram of stabilization in order to lessen inflation and
unemployment through fiscal conservatism and the imple-
308
mentation of tighter monetary mechanisms, and the trade
deficit has been reduced by two-tier policies--domestic
deflation and devaluation of national currencies. The
bank asserts that devaluation, giving incentives for
both import-substitution and exporting, is a vital step
in trade policy reform. As the World Bank's report sug
gests in some sub-Saharan African countries there has
been basic trade policy shifts since the early 1980s.
The extent of these policy shifts vary from country to
country.
Nigeria's trade policy shift has been character
ized as "radical" since 1986, when it eliminated the
mandatory surrender of export proceeds and the licensing
of imports and established a more moderate tariff struc
ture, although reform has cautiously been watched. One
such area of "openness" of the Nigerian economy to in
ternational influence is demonstrated by how the foreign
exchange regime is managed. For example, the demand for
foreign exchange is now facilitated largely through com
mercial banks. These banks are authorized to purchase
the auctioned proceeds of oil exports and foreign loans
and other foreign exchange earnings directly from their
309
customers.44 In Ghana, after having experienced the
worst kind of decline in economic activities, the gov
ernment proceeded almost as expeditiously in the devalu
ation of its currency (cedi) many times before it actu
ally began to auction foreign exchange extending it to
all types of commodity imports. This is facilitated
through the liberalization of imports and exports promo
tion. 45
Like Nigeria and Ghana, the remaining industrially
advancing countries (Cote d'Ivoire, Senegal and Togo)
are rationalizing their tariff structures. The success
of such reforms, many argue, will depend upon other pol
icy changes that facilitate a greater role for domestic
competition, the establishment of sufficient infrastruc
ture, skills and institutional support. In the long
run, these policy changes are hoped to provide the West
African Community and the rest of Sub-Sahara Africa a
position of greater comparative advantage than the level
the Community has to date.
44 The World Bank, 1987, Op. Cit., p. 107.
45 Ibid.
310
7.4 THE ROLE OF THE STATE AND TRANSNATIONAL
CORPORATIONS
The role of the State and of the transnational
corporations (TNCs) in the transformation of LDCs' econ
omies have been a widely discussed topic during the last
three decades. In this connection, a number of issues
have been raised, including: What are the respective
i
roles of the government and the private sector in ECOWAS
industrialization strategy? What projects will require
i
foreign capital? How can foreign capital be most effec- j
'
tively directed into needed projects? Can foreign capi
tal be obtained without increasing economic dependency?.
There is a body of literature which provides varying an
swers to the above questions.
The role of the state in facilitating major indus
trial development and operational processes in West Af
rica, as in other LDCs, was indispensable in the early
post-independence periods. This was because in the pre
independence periods industrial development was in the
domain of foreign capital and management. Such an ar
rangement allowed no room for local private entrepre
neurs to accumulate the resources and experience needed
for modern industrial schemes.
311
After achieving their political independence most
of the States of West Africa decided to increase public
investment in order to alleviate the problems of capital
accumulation. Initially, this was made possible by the
government's ability to raise taxes on expanded export
of primary products (i.e., agricultural and mineral -
products) when world prices were rising through most of
the 1960s and 1970s. But according to UNIDO's study,
heavy dependency on the exports of primary products
alone has created even more problems in industrial de
velopment schemes. Another major constraint to govern
ment's earnings on primary commodities is the rapid ero
sion of the national resource base which has become an
excruciating experience for the Sahel countries (covered
by the Sahara desert) of West Africa. While it is gen
erally accepted that government is a major instrument in j
I
the transformation of society, government is equally j
blamed for much of the failure. For example, according
to Fieldhouse,46 government is to be blamed for the
failure of industrial development schemes. Fieldhouse47
argues that no new African state had sufficient experi
ence in the politics of self-government, nor an adequate
46 Fieldhouse, 1986, Op. Cit., pp. 234-238.
47 Ibid., p. 237.
312
supply of able administrators, to run more effectively a
modern economic system. The role of public policies
were, hence, marginal although very important, particu
larly in the 1970s, and early 1980s when the world econ
omy was under extreme recessionary periods.48
These developments have significantly reduced lo
cal resources available to the public sector for the
purpose of regional industrial development and expan
sion. The absence of local resources leads to "depen
dency" on external sources of development which have be
come inevitable since independence.
Another major weakness in the current efforts to
promote subregional development or integration as a
whole is the near-total absence of national development
priorities. Moreover, the absence of consultation among
the participating countries at the appropriate institu-
I
l
tional level has nearly stifled the efforts of harmoni- i
zation of their development or integration strategies.
As Robson49 observes, harmonization of all the partici- i
pating countries' development objectives into one may be j
48 Ibid.
49 Peter Robson. Integration, Development, and
Equity: Economic Inteqration in West Africa. London:
George Allen & Unwin, 1983, pp. 86-123.
313
difficult to achieve initially due to the different na
ture of each country's conceived needs and priorities,
their colonial histories, their post-independence loyal
ties to former masters and their political ideologies
and orientation.
Clearly, there is a need for national governments
to prepare and to implement common strategies for indus
trial development. This can facilitate the development
and integration of joint ventures,50 although industrial
development programs which require the pooling together
of resources and markets of the Community will be diffi
cult to achieve. Adubifa51 notes that most, if not all,
of the countries of the subregion do not have industrial
information and data on any of their respective neigh
bors. This underscores the absence of meaningful coop
eration in such areas as communication and exchange of
information among national agencies. Priorities of
project execution have usually been based on raw materi
als availability rather than on perceived needs, export
50 0. Akin Adubifa. "Production Cooperation in
Industry: Lessons of Experience," in Towards an African
economic Community (Lessons of Experience from ECOWAS);
Proceedings of International Conference, edited by Aki-
nola A. Owosekun. Ibadan, Nigeria: Nigerian Institute
if Social and Economic Research, 1986, p. 287.
51 Ibid., p. 237.
314
potential, or subregional market requirements.
Even if harmonization of national development pri
orities succeeds in the subregion, the participating
countries are inadequately endowed with both the finan
cial and technological requirements for industrializa
tion. Thus they will continue to depend for a long time
on foreign investments, technologies, and even capital
for their industrial development and integration pro
cess. The transnational corporations (TNCs) have in
creasingly become major forces in the supply of these
resources in the last three decades. As Benjamin Bobo52
observes, the TNCs can be important facilitators in the
formation of capital for economic development. More
over, the TNCs have the capacity to mobilize enormous
amounts of capital not only within the ECOWAS subregion
but also throughout Black Africa. But problems with es
tablishing an equitable relationship between TNCs and
host African countries have made Africans skeptical
about the presence of TNCs.
52 Benjamin Bobo. "Multinational Cooperations in
the Economic Development of Black Africa." Journal of
African Studies 9, no. 1 (Spring 1982), pp. 14-15.
315
The continued expansion in the activities of TNCs
in the ECOWAS subregion has been significant and contro
versial. This is mainly because of differences in the
interests and objectives of the two parties involved:
the "core-based" TNCs and their host countries in the
West African periphery. The peripheries' objective is
to develop their weak and unstable economies through
collective "self-reliance," they will inevitably need
capital and technology which are the sources of economic
development. It is in this context that Peter Robson53
appropriately argued that:
Customs unions are rarely, if ever, established in
circumstances of complete international immobility
of factors. Foreign capital has been an important
element in the economies of most of the countries
that have sought to establish customs unions and
other forms of international integration during the
past quarter of a century.
Regional integration in West Africa can be seen as
a collective response to this dilemma. The subregion's
integration problems include how to acquire, organize
and uti1ize needed capitals, technologies and know-hows,
while seeking to reduce external involvement in the de
53 Peter Robson. The Economics of International
Integration. Third Edition. London: Allen & Unwin,
1987, p. 69.
316
velopment vis-a-vis the inteqration process. Hence, re
gional or subregional integration, in the orthodox
sense, is an approach to collective development which
simultaneously seeks to reduce external involvement.
During post-independence periods, governments in
West Africa began to seek foreign capital to develop
their weak economies. As new industries took a central
role in West Africa’s industrialization process, foreign
subsidiaries gained significance and continued to con
trol, by and large, the extractive sector that they had
in the earlier, pre-independence, periods. According to I
Table 7.9, only in Nigeria, Sierra Leone, and Cote d'l- I
voire have TNCs taken a relatively significant role in
the extractive and manufacturing sectors. In both ex
tractive and manufacturing sectors, the presence of TNCs
has serious implications.
First, the mining of non-renewable resources be
came a very sensitive and controversial issue in the ex
ercise of national sovereignty. For example, West Afri
can countries, as other LDCs that are exporting primary
products, have seen their foreign exchange reserves
drastically reduced, mainly as a result of unfavorable
317
trade relations with developed countries operating
largely through the TNCs. During the last three decades
the prices of all primary exports from West Africa, ex
cept for petroleum, have declined considerably relative
to the prices they pay for manufactured products--re-
sulting in unfavorable "terms of trade.”
Second, in terms of the manufacturing sector, the
TNCs usually establish subsidiaries in the subregion
which are operated within a wider global scope in a
"vertical monopoly" position. Here, much of the focus
is upon products manufactured elsewhere, but which are
found readily in many West African markets* This is the
case with a number of household goods (e.g., Omo washing
powder, Astral soap, Gibbs toothpaste) distributed in
the subregion by numerous subsidiaries. Biersteker54
argues:
multinationals are said to promote a net capital
outflow because they establish few linkages to the
local economy. Vertical integration increasingly
concentrates the flow of goods, technology, and
particularly finance within the firm. Thus a func
tional equivalent of the tie-in clauses becomes op
erative. The resulting lack of integration with
other sectors of the national economy not only in
creases the net outflow of capital but also hinders
the development of any multiplier effects, another
54 Biersteker, 1982, Op. Cit., p. 5.
318
of the indirect benefits suggested by proponents of
multinational investment.
As foreign manufacturing capital plays the role of
the cuckoo, laying its eggs in nests constructed by oth
ers, Biersteker55 further observes that:
multinational corporations can displace the indige
nous production simply by purchasing enterprises
originally established as import-substitut ion ven
tures. This can occur because host-country govern
ments require that foreign companies reinvest their
profits in the host country. This requirement may
appear to be a solution to the problems of a net
capital outflow and a worsening balance-of- pay
ments position, but it often results in the "dena
tionalization" of existing national industries.
The mechanisms by which import-substitut ion indus
tries are bought out and transformed into multinational
subsidiaries have been described in the following se
quences. First, foreign producers export their finished
products; then they establish sales organizations
abroad. Second, they allow local producers to use their
licenses and patents to manufacture the product locally.
Finally, they buy off the local producer and establish a
partially or wholly owned subsidiary.
s 5 Ibid., p. 7.
319
Table 7.9
Some Transnational Corporations
in West Africa
Host
Country
Enterprises wholly or partly
owned or controlled by TNCs
Nature of
Enterprises
Nigeria Coutinho, Caroy & Co., ITT,
Julius Berger, Solen-Boneh,
IXjmez, UAC (Nigeria)
manufacturing
(construction,
telecommunication,
distribution)
Senegal Taiba extractive
(phosphates)
Cotre d'Ivoire Energie electrique de Cote
d*Ivoire
extractive
Ghana Lonrono, CAST, Union
Carbide, Aluminium Company
of America (ALCOA), The
Volta Aluminium Company
(VALOO)
extractive
(gold, bauxite,
diamonds,
aluminium,
rranganese)
Sierra
Leone
Sierra Leone Petroleum
Refining Co., National
Diamond Mining Co., Sierra
Leone Rutile, Sierra Leone
Ore and Metal Co.
refining
extractive
(petroleum,
di amends,
iron ore)
NATOO-member of T. Choitram
Group of Companies, Sierra
Leone Oxygen Factory, Aureol
Tobacco Company, Feetown
Cold Storage
manufacturing
Source: Ralph I. Onwuka and Amadu Sesay, The Future
of Regionalism in Africa. New York: St. Martin’s
Press, 198S, pp. 153-156.
320
Table 7.9 icont'd.)
Some Transnational Corporations
in West Africa
Liberia The Liberian American
Swedish Mineral Company
(IAMCO), The Deutsche
Liberian Mining Company
(DELIMOO), Liberian
Iron and Steel Corporation
(LIMSCO), Liberia Mining
Conpany, National Iron Ore
Company
extractive
(iron ore)
Mauritania Compagnie Mini era du fe
Mauritanie (Iferma)
controlled by the Bureau
francais de recherches
geologiques et miniere
(Bram) and Societe
Miniere de Mauritania
(Somina)
extractive
(iron and copper)
Guinea Compagnie des bauxite de
Guinea, des mines de fer de
Guinea
extractive
(bauxite and
iron ore)
Nigeria Shell/BP, Esso, Mobil,
Agip, Safnap, Minatone
extractive
(petroleum and
uranium)
321
Although one of the objectives of ECOWAS is to es
tablish a strategy of "collective self-reliance," the
countries of the subregion have individually been condi
tioned with the forces of "dependency" on diverse and
multiple foreign sources (See Table 7.9) for their tech
nological needs. Much of these diversities arose from
the nature of each country’s colonial experiences. As
evidenced in Chapters Five and Six, attempts at coopera
tion in trade and transport and communications develop
ment schemes among the participating countries in ECOWAS
have been disappointing precisely because of this depen
dence and/or allegiance mainly to former colonial pow
ers. Such dependence also constrains local entrepre
neurs and governments from considering
locally-applicable alternatives for industrial develop
ment. Hence, under this circumstance, it becomes rather
problematic to direct the Community's choice in decision
making process towards alternatives that best energize
local capability and local technological advancement.
Although the West African countries have chosen
inward-looking (i.e., production for domestic market)
trade strategies, they have taken positions which par
ticularly favor foreign investors for the promotion of
322
inappropriate production. But, as Gogue56 observes,
compared to Asia, Central America and Latin America,
foreign investment shares in West Africa has declined
dramatically during the same periods in which West Afri
can countries experienced unfavorable terms of trade for
their exports. According to Gogue,57 between 1967 and
1978 growth rate of foreign investment in Africa aver
aged only 6.2 percent per year against 32.2, 24.01 and
11.5 percent in Asia, Central America, and Latin America
respectively. Africa's share in the stock of direct in
vestments in LDCs decreased from 18.8 percent in 1967 to
11.5 percent in 1978. In the Third World Countries 40
percent of this stock was concentrated in the manufac
turing sector against only 21.3 percent and 16.4 percent
respectively in Africa in general and in the ECOWAS
countries in particular.5 *
As Table 7.9 shows, the distribution of direct in
vestment suggests the priority afforded to the primary
sector (mining or extractive) by TNCs in West Africa, as
elsewhere in sub-Sahara Africa: iron ore in Liberia;
copper and iron ore in Mauritania; iron ore and bauxite
56 Gogue, 1986, Op. Cit., p. 179.
57 Ibid., p. 279.
58 Ibid.
323
in Guinea; petroleum and Uranium in Nigeria; phosphate
in Senegal; bauxite, gold, diamonds, aluminum and manga
nese in Ghana; petroleum, diamonds and iron ore in Sier
ra Leone to mention a few. In almost all the ECOWAS
countries, TNCs in the manufacturing sector concentrate
their efforts on the production of conspicuous consump
tion goods such as beverages, cigarettes, other luxury
items and to a lessor extent textile and petroleum re
finery. Much of the TNCs involvement have produced no
apparent linkages with other sectors. This is certainly
tantamount to the "development of underdevelopment."
Kennedy (1988), Biersteker (1982) and a number of
other Africanists argue that the orientation of economic
activities of the TNCs is thus conspicuously in contra
diction with the policy objectives of ECOWAS--that is,
the promotion of industrial development. Robson5’ as
serts:
The conduct of the TNCs West Africa is that of any
profit-maximizing enterprise that operates by ref
erence to distort market signals, although it is
true that the market power of the TNCs does enable
them to exercise influence and pressure on the mem
ber states and the group; they do not merely re
spond to exogenous provisions.
5’ Robson. The Economics of International Inte-
qration, Third Edition. London: Allen & Unwin Publish
ers, Limited, 1987, p. 212.
324
Although there have been attempts to contain TNCs
activities through United Nations agencies, LDCs includ
ing the West African countries have been unsuccessful
introducing regulations governing the activities of TNCs
in member countries.
Following an economic strategy aimed at fostering
accumulation, national governments in West Africa have
been engaged in various "take-over" (i.e., nationalizing
foreign firms or other major holdings) operations since
the mid 1970s, usually in the fields of mineral extrac
tion, petroleum, banking, insurance, public utilities
like port installations and telecommunications, and to a
lesser extent, in the manufacturing sector. Many re
searchers argue that short of such a policy, the objec
tives of ECOWAS for integrating the subregion would be
an illusion. It is in this context, that a number of
West African countries (Ghana, Nigeria and Senegal),
leading the way, began the "indigenization" of foreign
owned enterprises by decree. In some countries these
decrees have been made much stiffer overtime. For exam
ple, the 1972 Nigerian Enterprises Promotion Decree re
quired that a minimum of 40 percent of their equity
shares in all industries to be transferred to local peo-
325
pie. The 1977 Decree stiffened this requirements to a
minimum of 60 percent Nigerian ownership. Even in the
largest and most capital-intensive industries, the de
cree required a 40 percent ownership by Nigerians. Over
the last decade, Promotion Decrees of 1972, 1977 and
1981 have been further amended to restrict any foreign
direct investment to a joint venture activity.60 Al
though Nigeria has been characterized by a liberal or
favorable investment climate and generous tax incen
tives, foreign direct investment has not kept up with
the country's development demands. Similar measures
have been introduced in Ghana, Senegal and other West
African countries. However, according to Kennedy (1988)
and Forrest (1982) they are more drastic compared to
those employed in Nigeria. For example, there as been
no consistent policy towards foreign direct investment
in Ghana. Since independence (1957), the rise of na
tionalism has been apparent. The most aggressive policy
was announced in 1975, under the Investment Policy De
cree, when foreign companies operating in Ghana were di-
60 John Dunning and John Cantwell. Directory of
Stat i st ics of International Investment and Product ion.
New York: Institute for Research and Information on Mul
tidimensional, New York University Press, 1987, p. 422.
326
Table 7.10 Flow of Foreign Direct Investment, 1970-1984
(in millions of national currencies)
Inward Investment
Cote
d‘Ivoire Ghana Liberia Nigeria Senegal
Sierra
Leone Togo
1970 8.61 69.40 80.70 146.40 5.00 6.67 1.00
1971 4.45 32.00 203.70 10.00 4.16 5.00
1972 4.46 15.80 200.70 15.20 3.47 1.10
1973 11.42 16.70 245.50 4.80 2.92 3.60
1974 7.81 12.50 161.80 10.80 9.25 -39.70
1975 17.43 81.00 257.10 23.10 8.74
1976 10.76 14.60 39.10 242.30 35.80 9.51 5.80
1977 12.60 16.50 44.70 283.00 28.00 5.76 12.00
1978 66.50 7.70 135.20 5.00 25.43 96.90
1979 57.90 -2.20 186.90 3.90 16.93 53.90
1980 72.70 12.00 -404.10 1.90 -19.54 41.40
1981 27.80 13.80 335.10 5.20 8.75 8.50
1982 14.80 34.80 289.10 4.50 5.74
1983 2.20 49.10 256.00 3.32
1984 2.00 39.00 224.80
Source: John Dunning and John Cantwell. Oirectory of Statistics of International
Investment and Production. New York: Institute for Research and Inform
ation on Multinationals, 1987, various pages.
327
rected to sell between 40 percent and 60 percent of
their assets to Ghanians, with few eceptions.61 In 1983,
Ghana was forced to reform its foreign direct investment
policies and announced a "reconstruction programme" to
encourage foreign investment in certain mining and manu
facturing activities. Despite the favorable investment
climate and incentives offered by the government of Gha
na, little new investment has occurred since the 1983
Decree.6 2
By contrast, Togo welcomes foreign direct invest
ment while joint venture is being discouraged. Liberia
has had an "Open Door Policy" since 1944 with amendments
in 1966, 1973 and the establishment of a National In
vestment Commission and a Liberal Industrial Free Zone
Authority in 1979. However, very little foreign direct
investment has taken place due to recent political in
stability in the country.63 Table 7.10 shows the sporad
ic patchy nature of inward investment in some selected
countries in the subregion which, in part, may be at
tributed to inconsistency of investment policy of indi
vidual countries and policies associated with indigeni-
61 Ibid., p.365.
62 Ibid.
63 Ibid., p. 4 55.
328
zation.
Although indigenization policy represents a sig
nificant advance in the process of industrial develop
ment, the subregion's industrial development brings very
complex and much more difficult problems with it, espe
cially during periods of economic stagnation and world
recession. and medium terms. Kennedy64 and others sug
gest that:
The role of indigenous business groups may be par
ticularly appropriate whenever it is intended, for
example, to encourage export-led growth through
building up a local manufacturing capacity since
here the easiest place to begin might be with the
production of certain kinds of low-cost consumer
goods which require relatively labor-intensive pro
duction techniques, moderate capital and reasonably
straight forward technical and managerial skills.
These inputs are already accessible to many African
entrepreneurs. In addition, such activities may
also give them an advantage over big foreign sub
sidiaries, whose highly sophisticated management
systems and investment interests in advanced tech
nology predispose them to dominate other sectors.
Once achievements in this area have been consoli
dated the experience and capital gained may enable
some entrepreneurs to embark on more difficult and
profitable projects (e.g., Research and Develop-
ment--R&D; the development and horizontal integra
tion of manufacturing products in the subregion).
64 Paul Kennedy. African Capitalism: The Struggle
for Ascendency. Cambridge: Cambridge University Press,
1988, p. 189.
329
Perhaps the best way the West African countries
can effectively contain some of the deestablizing im
pacts of TNCs might be by pooling together their re
sources within the supranational framework such as the
ECOWAS. However, it is unlikely that TNCs would remain
neutral from the process of economic integration. Rath
er, they should be viewed as one of the strongest actors
in the process of regional integration. They can influ
ence policies, and participate in or even dominate any
policies for implementation. In other words, they can
become critical forces in integrating or disintegrating
the process in the pursuit of their profit-maximizing
objectives.
Although foreign direct investment policies or
laws are essential as logical policy steps toward the
achievement of "economic sovereignty" by every country
in the subregion, both to fulfill its aspirations and to
try to satisfy its impoverished population through wel
farism, they are inadequate measures or indicators of
increased national economic control. Major constraints
on the actual capability of the West African countries
to manage the deestablizing behaviors of TNCs remain.
Almost all the foreign direct investment policy measures
330
or decrees discussed earlier require a relatively so
phisticated as well as accommodating apparatus capable
of formulating, implementing, and directing very complex
array of criteria, rules, and provisions— all this vis-
a-vis a supranational organization such as ECOWAS with
access to worldwide resources and talent. But, as Cole
man and Nixon (1978) argue, it is only TNCs that possess
the financial and organizational resources and technical
expertise which are indispensable elements in the inte
gration process in LDCs. Given the low level of foreign
direct investment at the present time, ECOWAS must find
a way to attract sizeable injections of foreign capital,
especially foreign direct investment, which brings with
it technology and management. Foreign direct investment
can be a very significant stimulus to economic integra
tion vis-a-vis economic development so long as the in- 1
1 • - I
vestment is mutually beneficial to the foreign investor |
and the subregion as a whole. Thus, the task facing i
ECOWAS in the process of integration is the problem of
reconciliation of its acknowledged needs of foreign cap-
I
ital and technology and the evolution (or survival) of j
its strategy of collective self-reliance.
331
7.5 EVALUATION OF PROBLEMS OF ECOWAS INDUSTRIALIZATION
The member countries of ECOWAS, as has been dis
cussed in earlier chapters, have varying objectives and/
or strategies on industrial development and it is not
I easy for them to agree on which industries should be
protected and which industries should be initiated and
by what policy measures. This is further complicated by
attempts at intra-ECOWAS coordination of industrial pol
icy which is likely to generate opposing interests with
respect to the locations of such industries. Moreover,
since industrial policies of each member country often
stem from ideological and philosophical orientations,
the goals of the participating governments and their re
spective industries may vary considerably from country
to country. For example, certain kinds of policy inter- j
vention acceptable in one country may not be acceptable j
1
in another. Therefore, in order to pursue any type of
industrial distribution to maximize equity among the
member countries of ECOWAS, the social, political and
economic divergencies that account for disparate poli
cies in the first place must be harmonized.
332
J
The review of industrial development policies in
LDCs and the West African countries are summarized be
low .
First, it is simplistic to describe ISI as a
'failure' and EOI as a 'success.' Both strategies in
volve a complex set of economic relationships, each of
which requires detailed evaluation. Furthermore,’ the
neoclassical analysis of trade-related industrialization
strategies, on which such broad judgments are often
based, is subject to various qualifications and limita
tions .
Second, ISI and EOI strategies should not be
treated as mutually exclusive alternatives. In prac
tice, elements of both strategies should be employed, j
and the relative importance of each strategy is likely j
to alter over time. The appropriate balance between ISI
and EOI policy measures will be determined by, inter I
alia, an economy's level of industrialization, its size
and resource endowments, and its overall development ob-
l
jectives. Government involvement, through planning and
other measures, in industrial sector activities is like
ly to be needed to ensure that the appropriate combina-
333
tion of EOI- and ISI-based industrial development is
achieved.
The choice of trade policies should be determined
by the country's industrialization objectives. Similar
ly, trade policies should not be seen as the only set of
instruments with which to pursue the goals of industri
alization: the choice and use of trade-related measures
should be made in conjunction with that of other govern
mental policy instruments that are appropriate to the
attainment of those goals. The means of achieving the
"desired relationship between ISI and EOI vary from
country to country and from region to region.45
The Community's evaluation of problems of ECOWAS
industrialization is critically centered around two ba
sic questions: (1) How to distribute the industries be
tween member countries in order to maximize the gains to
the Community as a whole, and (2) How to distribute the
gains to be derived from the Community's total industri
al allocation. Economic principles (e.g., location
theory, comparative cost, and economies of scale) alone,
45 Peter Evans. Dependent Development: The Alli
ance of Mult inat ional, State, and Local Capi tal.
Princeton New Jersey: Princeton University Press, 1979,
pp. 274-329.
334
applied in the allocation of industries, will not be a
sufficient measure of agreement to solve the problem for
two fundamental reasons.
First, ECOWAS member countries may have differing
notions about equity, and therefore place differing so
cial value on the apparent cost sub-optimal production
in determining their national development strategies.
Second, the basic building block of these strat
egies are public investment and industrial projects
which must be evaluated predominantly in terms of opti
mal social benefit-cost criteria which explicitly empha
sizes "income benefit and growth output."
A more realistic approach to the Community's col
lective project evaluation and project appraisal in the
context of economic development should explicitly incor
porate in the project selection process trade-offs be
tween the short-term and the long-term benefits accruing
from such Community projects. For example, some members
may be willing to "trade-off" employment against income,
or income in one part of the subregion as against income
in another part of the subregion. In principle, such
distributional problems, i.e., inter-country differences
335
in employment opportunities, can be taken care of
through the implementation of Article 27 of the Treaty
of ECOWAS which allows mobility of productive resources
(e.g., labor and capital) among intra-ECOWAS countries
to compensate for inter-country differences in employ
ment opportunities. However, this is problematic, spe
cially in the short-term.
Consequently, any distributionally constrained al
location of industries in the subregion may well imply
an efficiency loss, because industries will not always
be built where they generate the optimum benefit for the
member countries as a whole. Therefore, a trade-off is
called for here. In order to maintain stability and
steady success of ECOWAS, a sub-optimal allocation of
industries may be the best alternative in the short
term.
i
7.6 CONCLUSIONS
In conceptualizing the role of industrialization
i
in national and regional development, a number of ques
tions were raised in order to understand the need for
industrial development in West Africa. The analysis of
336
these questions reveals that there are major constraints
common to all ECOWAS member countries.
Scope and structural transformat ion --An examina
tion of the scope and structural transformation of in
dustrialization in West Africa indicates the need for
the development of related social and economic institu
tions which harness industrial development through an
integrated process. It is in this context that much of
the analysis and the need for a structural transforma
tion of the national economies was highlighted through
out the study. The study also shows constraints con
fronting the West African countries in their bid to
transform their weak economies to vibrant and diversi
fied modern economies.
Nigeria and Cote d*Ivoire: A Case Study --The
analysis of the economic structures of these two coun
tries suggested the following: (1) that there are common
obstacles to the structural transformation of the na
tional economies of the individual countries. These in
clude heavy dependence on imported technology; the con
centration of TNCs on the production of conspicuous
consumption goods (e.g., beverages, cigarettes, luxury
337
items); the lack of a capital goods sector essential for
industrialization; and, the location of over 50 percent
of the manufacturing enterprises in their respective
capitals, Lagos, and Abidjan; (2) that because of the
individual countries' accommodation to external inter
vention in their economies (i.e., the presence of TNCs),
the transformation process is further aggravated, and
(3) that in both countries while agricultural activity
remains the dominant sector, industrial activities con
tinue to receive a high priority, although light manu
facturing enterprises dominate most industrial activi
ties. Small scale industrial activities have an
undoubted impact on the economy in which they operate.
For example, the creation of employment, however small
it may be. They perform useful services and produce
goods that may otherwise not be produced in the economy,
thereby becoming an income source. Another type of im
pact involves the linkage relationships between these
production units and other sectors of the economy.
The study shows that trade orientation of the
countries examined is generally an "inward-looking" one,
i.e., based on trade within the region, although critics
have pointed out the advantages of an "outward-looking"
338
trade strategy which seem to have created an economic
miracle for a number of East Asian countries, (e.g.,
South Korea, Taiwan, Singapore and Hong King). While
the "outward-looking" trade strategy ("export-led" in
dustrialization) is generally an approach widely accept
ed by many middle-income LDCs, the study argues that the
West African countries have not been able to make a
transition from the first phase (import-substituting-in-
dustrialization) of industrialization strategy.
The State and Transnational Corporations --Final
ly, the role of the state and transnational corporations
has been discussed. According to the study, the absence
of sufficient state experience in the management of na
tional economies is further aggravated by the inadequate
supply of scientific and technological resources essen
tial for industrial development. In that context, the
role of the transnational corporations as suppliers of
these scarce resources was discussed. The introduction
of these resources has not been smooth and the relation
ship between the state and TNCs is at "arms-length." Ex
ternal intervention, particularly TNCs involvement, has
been handled cautiously. There are tensions inherent in
the partnership between the state and the TNCs and these
are likely to become unstable over the long haul.
339
Clearly, the development of the industrial sector
is indispensable if West Africa is to succeed not only
in the individual national economies, but also in the
integration of the subregion as a whole. Therefore, co
operation in the field of industrial development is es
sential for the success of ECOWAS. Although it is dif
ficult and requires a considerable amount of resources,
the subregion is in the process of structural transfor
mation. In order to realize this important objective,
the ECOWAS Treaty sets out guidelines on which coopera
tion in industrialization in the subregion would be
based.
340
Chapter VIII
SUMMARY AND CONCLUSIONS
8.1 SUMMARY
The forgoing chapters have identified certain de
velopment problems challenging the Economic Community of
West African States (ECOWAS) in their bid to integrate
their economies. The purpose of this chapter is to sum
marize and provide conclusions.
Regional economic integration has been viewed by
many students of economic development, including this
one, as a necessary, but not sufficient, prerequisite
for the development of any of the less developing coun- (
i
tries (LDCs) of the world. According to the United Na- •
tions studies (1971, 1973, 1974, and 1975), economic in
tegration on an intracontinental scale is necessary if
i
Africa is to support many of the industries one usually j
i
associates with economic development. This concern was I
I
further accentuated by a number of developmental theo- \
i
rists, including Balassa (1961), Hazlewood (1978), Gru- [
i
i
I
341
ber (1979), Ezenwe (1983), Onyemelukwe (1984), Mazzeo
(1985), Asante (1986), and Robson (1983, 1987), whose
theoretical contributions to focus on the relationship
between integration and economic development. This re
lationship has continously been assumed in the present
study as an alternative approach to the customs union
theory which was formalized as a theoretical framework
by Viner (1950). The contribution of these theorists to
the study of regional and subregional issues has been
discussed extensively in the preceding chpaters. Here,
i
a brief summary of the ECOWAS's experience and implica
tions for RIC in other LDCs is postulated.
In Chapter Two, the literature review provided an
economic analysis of the Vinerian theory of integration
focusing on two fundamental issues.
First, the effects of customs union or economic
union on aspects of welfare according to Viner's analy
sis emphasized the welfare gains or losses from a margi
nal reallocation of production patterns under conditions
of static equilibria in which factor endowments (e.g.,
technology, population and demand) are assumed to be
constant. Second, in examining the effect of customs
342
union on the welfare of participating countries of a re
gion, Viner distinguished between two effects: trade
creation and trade divesion. The former is said to oc
cur if and when a pre-union high-cost domestic firm is
displaced or phased out by an intra-union low-cost firm
after the formation of a customs union. The later,
trade diversion, is said to occur if, before the forma
tion of a customs union, a high-cost (inefficient) firm
which may be protected by a post-union discriminatory
tariff wall seizes part of the union's market. In all,
the Vinerian economic analysis of the theory of customs
union suggests that a customs union raises the world's
welfare if its trade creation effect is greater than its
trade diversion effects.
The literature review in Chapter Three discussed
the limited relevance of the traditional theory of inte
gration in the analysis of regional integration issues
in West Africa.
First, the analysis of economic integration in
ECOWAS, as in other LDCs, should be viewed as an ap
proach to economic development rather than an approach
to the analysis of tariff issues. Accordingly, it
i
i
343
should bring together the various aspects of economic
development in each of the participating countries of
ECOWAS. Second, primacy must be given to dynamic rather
than static effects in evaluating the appropriateness of
economic integration among the participating countries
of ECOWAS. The developmental aspects of integration en
tail the various ways in which integration affects the
development of participating countries. More specifi
cally, regional integration which brings about dynamic
effects include: (a) the economies of scale brought
about by the enlargement of the size of the market for
enterprises producing below optimum level before the
formation of the union, (b) the potential for lessening
the problems of pre-integration polarization between
member countries due to concentrated trade creation or !
i
attractiveness of labor and capital in some areas of the ]
I
integrated region.
t
On the whole, Chapter Two and Chapter Three pro- |
vided a theoretical background for the analyses of *
|
subsequent chapters. Accordingly, if one asks the ques
tion "how has ECOWAS fared?" within this theoretical
framework, and in the context of the issues raised at
the outset of this study the answers are fairly neg- I
344
ative. However, if one establishes the goals or objec
tives of ECOWAS against the scarce resources with which
it had been working since 1975, and if one considers the
heterogeneity of the economic, social, political, and
cultural, development of the participating countries,
one could say with justification that ECOWAS had made
fair progress. The following four chapters summarized
some of this progress.
Chapter Four provided a description of organiza-
i
tional background, structure and objectives of ECOWAS.
Here, a number of key obstacles and constraints were
identified. These include: (a) the member countries of
ECOWAS are mostly primary products producers. Their
economies are competitive rather than complementary, (b)
the member countries of ECOWAS are inadequately linked
due to lack of transportation and communications net
works, (c) the Community does not have common industrial
policiy that will enable it to accelerate the develop
ment and expansion of industries in the subregion, (d)
the Community is faced with the problems of rival inte- j
gration schemes within the subregion, and (e) the prob
lems of sheer diversity of the West African countries is
yet to be addressed and lessened.
345
In'Chapter Five, the pattern and volume of trade
in ECOWAS was examined in two ways: (1) using the grav
ity equation model (aspect of static analysis), to eval
uate' the relative degree of integration among the par
ticipating countries of ECOWAS, and (2) to analyze the
problems and prospects of trade liberalization provi
sions under the ECOWAS treaty. The findings of this
i
chapter suggest that the main constraint to trade and
development of the subregion is the division between the
Francophone and Anglophone states. This division ex
tended beyond language differences and involved currency
arrangements (CFA Franc-Sterling area), export market
ing, and loyalty to their respective former colonial |
powers. As the study suggested, these differences were j
further aggravated by the low-level of intra-Community i
trade (i.e., before after the signing of the ECOWAS
Treaty) which is clearly produced, in part, by high tar
iffs and quantitative import restrictions. These funda- i
mental problems of intra-Community cooperation in trade
became the basis for the participating countries to sup- i
port trade liberalization measures designed to foster
trade creation, if not trade diversion. The importance
of these measures within ECOWAS where intra-Community
346
trade has heretofore been minimal cannot be overempha
sized .
One of these measures was the elimination of tar
iff barriers on industrial products (originating from
the four industrially advanced ECOWAS members) between
May 18, 1981 and May 29, 1989 which it was hoped would
lead to trade creation and trade diversion. As a re
sult, the larger ECOWAS market which constitutes more
than 150 million consumers was expected to attract the
CEAO (Francophone states) member states to continue to
work with ECOWAS for the greater good. However, there
has been no significant move made by CEAO in relinquish
ing its own rival position in the subregion. It has re
mained as one of the key obstacles of ECOWAS.
In Chapter Six, the role of transport and communi
cation networks in economic development and integration
was discussed. It is generally agreed that the provi
sion of adequate transportation and communication net
works is essential if the integration efforts to suc
ceed. The present state of transport and communication
infrastructure in member countries of ECOWAS is inade
quate to accomplish the various objectives of the Trea
347
ty. Communication by road between member countries is
minimal as only few roads traverse the territories of
member countries of ECOWAS.
The findings of this Chapter have serious implica
tions for transport and communication policies. Since
there is no country with sufficient transport and commu
nication networks, a coordinated and multinational ap
proach to the subregion’s development could produce po
sitive results. Although some progress has been made in
road building and telecommunications, member countries
of ECOWAS need to increase their support for the subre
gion's transport and communication networks, as well as
industrial policies and programmes. Only when linkages
between infrastructural and industrial policies are made
will it be possible to expect sustained process of inte
gration and economic development.
Chapter Seven focused upon several aspects of in
dustrialization as they related to economic development
and regional integration. A number of major obstacles
to industrialization were identified and discussed.
First, many of the problems of industrialization in West
Africa are associated with the size and structure of the
348
economies. A viable industrialization process (with em
ployment creating and/or development creating effects)
will require a structural transformation of the national
economies of the member countries of ECOWAS. Second,
industrial planning has remained relatively underdevel
oped in most African countries, including those of
ECOWAS. One way to alleviate the problem of planning is
to coordinate the interaction of industrial ..projects
"intersectorally" at the national as well as the subre
gional levels in order to assess the collective impact
of industrial planning for integration. Moreover, ade
quate attention should be given to demand creation. The
absence of sufficient demand has been a major obstacle
limiting industrial development in ECOWAS, as elsewhere
in sub-Sahara Africa. An economic strategy which pro
motes an equitable distribution of income can stimulate
industrial demand and can generate scope for developing
a broader and more integrated range of industrial activ
ities. Therefore, the type of structural changes needed
in the subregion should involve the orientation of pro
duction to primary economic activities (i.e., local pro
cessing activities) followed by the manufacture of in
termediate and capital goods with increased importance
given to the production of consumer goods.
349
However, the structural transformation of the West
African economy is a necessary, but not sufficient, con
dition to stimulate a greater economic growth rate to
speed up the process of industrialization. One perva
sive problem that was cited in Chapter Seven was the
gross inadequacy of technical and managerial skills
critical for viable industrial foundations and steady
progress towards self-reliance, the antithesis of depen
dency. It is this problem that the ECOWAS member coun
tries will have to address individually and collectively
in order to provide the industrial base for integration
of the subregion.
It is against this background that the case study
of Nigeria and Cote d'Ivoire is usful. Both countries
have experienced many of the problems that bedevil in
dustrial development efforts in the subregion, hence,
the two countries can act as the representative case
study of the process of industrialization of ECOWAS.
These two countries have achieved the highest levels of
industrial development among ECOWAS member countries,
and therefore act as "growth centers" of the subregion.
The concept of growth center, as French experience sug
gests, can be a useful tool both for analyzing the situ
350
ation and focusing on the problems of imbalances in wel
fare and inoptimality in resource allocation in the su
bregion. Using Nigeria, Cote d'Ivoire and few other ur
ban centers, industrial development policies can be di
rected or focused on the problems of proper geographical
allocation of resources from the point of view of gener
ating "development impulses" and "spread effects"
through which development projects may affect much larg
er geographical areas of the subregion. However, such
policies have not been embraced entirely by all partici
pating countries, particularly by smaller and poorer
ones for fear of domination and economic "polarization"
between them and the relatively advanced countries, Ni
geria, and to a lesser extent, d'Ivoire, Ghana, and
Senegal.
The current industrialization process is being ad
vocated through an inward-looking trade strategy, im
port-substituting industrialization (ISI) . However,
much of the literature examined suggest that ISI strat
egy in West Africa has neither alleviated the problems
of dependency nor generated any developmental impulses.
One obvious reason for subregion's major constraint on
industrial development is the narrowness of the domestic
351
markets of the West African countries which has, in
turn, the effect of limiting the production capacity of
not only the domestically-oriented industrial units, but
also the export-oriented industrial units due to compe
tition from foreign markets. Export-oriented industri
alization is much more demanding than ISI, since it in
volves direct competition with outsiders in the foreign
market both in the quality and prices of products.
Moreover, in the absence of appropriate technologies and
short supply of managerial and skilled manpower, the
West African countries generally suffer from high pro
duction costs due to high costs of imported inputs,
heavy dependence on costly foreign expertise, etc.
The creation of ECOWAS was to establish a free
trade area (FTA) and gradually form a common market.
Industrialization was seen as a panacea which would al
leviate problems of welfare and geographical imbalances
and also mitigate the problems of dependency. The role
of sovereign states in the subregion and of transnation
al corporations (TNCs) has been considered indispensable
since the early 1960s to facilitate major industrial
transformation. However, since African countries (even
the most industrialized states such as Cote d'Ivoire,
352
Ghana, Nigeria and Senegal) are exceptionally weak, any
export-oriented drive would have to depend heavily on
the marketing expertise of TNCs, at least for the short
and the medium terms. This means the need for greater
local processing of natural resources, particularly min
erals and agricultural products; and facilitating the
indigenization of enduring and expansive industries
rather than allowing the establishment of "footloose in
dustries"1 or "neutral industries," in which manufactur
ing operations are not close to resource supplies or
market. This may occur when (1) a product is extremely
valuable, such as electronic products, so that transpor
tation costs are a very small portion of the product's
total costs or (2) when the product is neither weight
gaining nor weight losing. Given these circumstances,
the industry tends to be quite mobile, locating wherever
the availability and cost of factor inputs permit total
production costs to be minimized. Because transporta
tion costs are not of particular significance in a
"footloose industry," production costs count more as a
key determinant of industry location.2 The above argu
1 Robert J. Carbaugh. International Economics,
Third Edition. Belmont, California: Wadsworth Publish
ing Company, 1989, p. 60.
2 Ibid.
353
ments are likely to receive a better hearing if they are
presented as a part of a coherent strategy of industri
alization and investment integration at the subregional
level. In particular, emphasis should be placed on in
creasing vertical integration of industires and increas
ing their linkages with the agricultural sector.
On the whole, the current study does not suggest
that ECOWAS is ready to celebrate any tangible or visi
ble achievements. But as indicated at the outset of the
study, the major task of ECOWAS is not to be viewed as
an institutional entity taking over the task of the in
dividual national governments of the subregion in devel
oping their economies. ECOWAS was formed to act as a
catalyst in bringing the individual countries of the su
bregion together, facilitating and creating opportuni
ties for an "accelerated and harmonious development" of
West Africa. The benefits to be derived from regional
economic integration can only be in the long run, since
the initial years of ECOWAS have been devoted fostering
a sense of membership and nurturing a spirit of "cooper
ation and unity" among the sixteen individual countries.
The main task of harmonizing key integration policies
and developing common development strategies is now in
354
______1
place for all key sectors. In this connection, there
are various approaches, with proper re-ordering of the
subregion's economic priorities, and moving towards
greater physical cohesion of the production base of the
subregion's economies with prudent management, that
could result in tangible or visible achievements. In
other words, industrialization requires careful regional
planning and intersectoral coordination to utilize ef
fectively the industrial sector as the main engine of
regional integration and cooperation.
8.2 CONCLUSIONS AND RECOMMENDATIONS
The overall conclusion of the present study is
that by instituting ECOWAS (against many obstacles), the
member countries have launched themselves on the path
toward realization of their commonly held objectives for
greater and effective integration and cooperation. How
ever, serious and wide-ranging "systemic effects" (such
as lack of ' common industrial policy, the absence of a
single currency system, and so on,) can impinge upon the
regional integration process. Viewed in the context of
industrialization as regional integration and coopera
tion, the point of the preceding chapter was that it
355
talces more than industries to industrialize (in the Ros-
towian phrasiology, 1960). Thus, ECOWAS has yet to
transform most of its commonly held objectives and/or
aspirations into practical measures, particularly those
policies which facilitate the promotion of common trans
port development projects, the establishment of a single
currency policies and of reducing inequalities (e.g.,
the negative effects of polarization) in levels of de
velopment among member countries. This means that the
process of integration among the member countries would
involve a conscious and deliberate surrender of a meas
ure of national sovereignty in policy formulation and
implementation. According to Haas,3 the decision to
proceed with integration or to oppose it depends upon
the perception of interests and on the articulation of
specific values on the part of existing political
elites. However, these political elites (both from for
mer colonial powers and national) not only make policy
decisions at each stage of the integration process, they
also interact with partners reconciling their differenc
es .
3 Ernst Haas. The Unitinq of Europe: Political,
Social and Economic Forces. Stanford: Stanford Univer
sity Press, 1958, p. 3.
356
The ECOWAS experience in the subregion's integra
tion process illustrates clearly the justaposition of
political and economic forces at work at every stage
since its birth on May 28, 1975. The dynamic process of
political exchange must be akin to that which Haas
(1965) depicts as "accommodation on the basis of the
minimum common denominator." If adoption of a suprana
tional organization, classical federalism (a Maximalist
approach) becomes improbable," it follows that political
elites will have to move toward one of the polar ex
tremes, namely, Minimalist (unitary government or loose
inter-unit cooperatives). But the logic of these low-
cost, loosely structured organizational arrangements, as
in the case of ECOWAS, can lead to some measures of con
flict with the goals of joint cooperative ventures among
the participating states. The most serious problems,
including colonial legacy, division between the Franco
phone countries, organized in CEAO, and Anglophone coun
tries, organized in ECOWAS, which encompasses the CEAO
members, unequal partnership (in terms of population,
GNP, and level of industrialization) the relectance of
individual countries to surrender any of their political
sovereignty for the greater good, are yet to be dealt
357
with if ECOWAS is to succeeded. These internal problems
have been further aggravated by economic recessions of
the 1970s and 1980s by weakeining their ability to fi
nance the program objectives of ECOWAS.
In the literature review chapters, the concept of
integration was discussed from several perspectives.
Here integration is viewed basically as a "means" to ad
here the "end" of some measure of collective-reliance.
However simple this concept may be, it suggests the most
crucial essence of the phenomenon. Regional integration
is a process linked to the notion of "gemeinschaft"--of
"community" accentuating the commonly held interests.
Haas4 has viewed integration as the means of intensify
ing the interaction and the mingling of national enti
ties in order to 'obscure the political boundaries be
tween the system Of international organization and the
environment provided by their nation-state members.'
In the context of the above, the process of inte
gration in ECOWAS has certain economic and political im
plications for the future. It is clear that a primary
goal of pooling small, weak and underdeveloped countries
4 Ernst Haas. Beyond the Nat ion State. Palo
Alto: Stanford University Press, 1964, p. 29.
358
of West Africa together should be to reduce the depen
dence of the individual member countries on the outside
world and establish conditions that will make self-sus
tained and independent development possible. Given the
conditions of the West African economic and political
environment, such development can only be achieved
through the transformation of "productive srtuctures" of
the national economy of the participating countries of
the subregion. Can ECOWAS facilitate this type of
change? Is ECOWAS a vehicle for the achievement of col
lective self-reliance in West Africa? And how will the
political economy of West Africa affect the future vi
ability of ECOWAS?. The answer to these questions must
be evaluated in terms of the achievements, failures and
problems of ECOWAS.
Achievements. After exhaustive negotiations, the
ECOWAS Treaty was signed in May 28, 1975, to formulate
"unity" amongst the sixteen countries that are different
in many ways, including economic and political institu
tions. ECOWAS's ability has been demonstrated by bring
ing together these divergent countries, their agreement
in signing the Treaty of 1975, and the subsequent adop
tion of various protocols on certain basic principles of
359
regional integration and development. The trade liber
alization scheme is now due to begin on January 1, 1990.
In order to lessen the effects of elimination of tariff
barriers, ECOWAS has set aside $1.4 million to compen
sate member countries which experience any material
losses as a result. The implementation of the free
trade area (FTA) scheme is considered an impetus for de
veloping a common industrial climate.
The transport and communications networks are on
the ECOWAS priority list. The transport program
launched in 1980 transportation of all kinds--by land,
river, and sea. Although progress has been very slow,
the Trans-African Highway (TAH), the Pan-African Tele
communications (PANAFTEL) network and the Regional Afri
can Satellite Communication Systems (RASCOM) are the
most tangible projects underway for integrating Africa
in general, and ECOWAS in particular.
The ECOWAS Treaty provides an insitutional body
known as the Fund for cooperation, compensation and de
velopment and is governed by a protocol which is an in
tegral part of the ECOWAS Treaty. The Fund has an ini
tial capital of $500 million with almost $50 million
360
subscribed. The ECOWAS member countries have made a
contribution of approximately 89 percent of the sub
scribed amount (called-up fund). Additionally, bilater
al and multilateral contributions have been made in an
effort to speed up basic feasibilty studies of projects
and allied research programmes.
Failure. These moderate achievements have to some
extent been offset by failures in implementation, in
cluding (a) failure to agree on common external tariffs
and to meet deadlines on intra-regional tariff reduc
tions, (b) failure to meet deadlines on the development
and expansion of transportation goals, particularly for
road building, (c) failure to meet obligations of con
tributions for specific projects such as the Telecommu
nications Fund. There have also been low responses in
meeting the goals of capital contribution to ECOWAS
Fund, and (d) failure to develop a common industrial
climate to ease the problems of factor mobility from one
member country to another.
Probblems. This dissertation has focused on how
West African countries progressed from colonial disinte
gration to post-colonial efforts toward integration.
361
Over the past fifteen years many lessons have been
learned and while we have identified and discussed most
of them a few can be mentioned again.
Although ECOWAS was designed to overcome the colo
nial legacy that is a deterrent to the development of
the subregion, this legacy continues to have impact.
Integrated within the spheres of their respective former
colonial powers member countries (particularly the
CEAO), have been unable to free themselves from the his
torical bonds linking them to Europe rather than each
other and continue to export primary products in return
for manufactured products from the industrially advanced
countries. The artificial division between Francophone
countries (CEAO) and Anglophone countries has a colonial
origin. The CEAO member countries have remained, large
ly, loyal to their former colonial power (France) which
in turn provides them various forms of assistance.
Although ECOWAS is designed to accommodate other
regional groupings, in some respects the Francophone
countries regard the CEAO as an alternative, rather than
complement, to ECOWAS. It is this divided loyalty that
has slowed the implementation of the Treaty of ECOWAS.
362
Finally, for ECOWAS to make any significant change
in the subregion, it must be given the institutional
means needed for the success of its ambition, that of
facilitating and fostering a homogeneous and harmonious
union where the economic policies of member countries
will be identical. Any future viability of ECOWAS stems
from the willingness of member countries to relinquish a
part of their sovereignty. The willingness to surrender
national sovereignty is a political determination on the
part of member countries. Because, the success of any
regional strategy for collective self-reliance hinges
upon a "common political ethos" of national governments.
They must understand that the division of their territo
ries is a significant obstacle to economic development.
Thus, a viable West African integration scheme will not
be built in a decade.
The benefits of integration may be realized
through daily, concrete, national, and subregional
achievements in the spirit of collective self-reliance
and cooperation. It is only in this manner that the
long run benefits can be viewed to outweigh any short
run costs incurred by the region as a whole. Therefore,
the Community's level of commitment to that end must be
deliberate and conscious.
363
Research Recommendations. The process of regional
integration is bound to encounter a multitude of obsta
cles and constraints as the present study suggests.
Countries forming a union experience varying degrees of
difficulties in resolving them. The present study sug
gests a number of problem areas which can be further re
searched for potential improvements in ECOWAS's effort
to integrate the West African subregion.
First, there is a need for an equitable distribu
tion of costs and benefits because the success of the
regional integration process would crucially depend upon
the Community's approach to this troublesome matters of
distribution. Second is the problems of new potential
industry locations and their impact upon the member
countries. Research should be able to provide basic
strategies which will assign new industries according to
their potential costs and benefits, and the allocation
of these industries in reducing inequalities among
ECOWAS member countries. The third area of research
would be social policies, including measures to estab
lish regional vocational training institutions for
training migrant workers, or the establishment of a so
cial fund like the European Social Fund designed to com
plement the free movement of people within the union.
I
364
The fourth area of investigation would be the develop
ment of data base for transport and communications sys
tems. As the present study indicates, the state of the
transport and communications infrastucture of ECOWAS is
poorly documented. There is a need for developing reli
able and usable information for the Community.
A critical investigation of these elements of the
integration process can potentially provide additional
policy instruments for politicians as well as individu
als directly involved in the planning, programming, and
implementation of the ECOWAS Treaty.
365
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Creator Gebremariam, Yilma (author)

Core Title A multidimensional analysis of regional integration and cooperation: The case of the Economic Community of West African States

Degree Doctor of Philosophy

Degree Program Political Economy and Public Policy

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag economics, general,OAI-PMH Harvest,political science, international relations

Language English

Contributor Digitized by ProQuest (provenance)

Advisor Elliott, John E. (committee chair), Hamilton, Nora (committee member), Heikkila, Eric J. (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c20-272256

Unique identifier UC11259291

Identifier DP23355.pdf (filename),usctheses-c20-272256 (legacy record id)

Legacy Identifier DP23355.pdf

Dmrecord 272256

Document Type Dissertation

Rights Gebremariam, Yilma

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA