The dynamism of its development depended on the demand for their export commodities by the central countries. The exporting activity was concentrated in a small number of products - crops and minerals-which made the region extremely vulnerable to crises in the ex-metropolises with which they maintained trade relations, and volatile international prices for their products. It must be pointed out that, in most countries, the Government assumed the leadership of completely impoverished economies with little or no public finance, virtually without key institutions to run a country, an acute shortage of physical and human capital - a high illiteracy rate, In this context, the second stage of Sub-Saharan Africa's industrialization, which starts soon after the period of change in power from the metropolises to the autochton population 3 arises from an anti-colonial ideology, anti-exploitation, and a rupture with foreign capital, seen as neocolonial.
It was in the presence of such constraints and the pressure of declining terms of trade for primary goods - which reduced their import capacity even more - that new policies began to counteract the severe underdevelopment. The new African Governments, confronted with the calamitous situation of their countries, concluded that the road to development was to base their economies on new production activities in other sectors. On contemplating the fairly successful development in the Latin American countries, they decided to adopt import substitution as a strategy to overcome poverty in the region; therefore, the sixties mark the first attempt at an industrialization policy for most countries in Sub-Saharan Africa.
The new nationalist Governments would try to finance industrialization, for- in their ideology - industry would be the driving force behind the transformation of economies - predominantly agrarian and primitive - into modern economies less dependent on international markets. Kilby , and Mkandawire and Soludo suggest that import substitution was the original industrialization policy, because the Governments recognized that they did not have the capability to compete in the world market.
The objective was to ban the export structure based on obsolete farming, and use import substitution as support to expand and diversify its production. With import substitution, imported goods would begin to be produced domestically and the negative effects of the declining terms of trade would be minimized, thus partly solving the disequilibrium in the balance of payments. It was believed that in the long run adverse terms of trade would be reverted by shifting the export structure from primary goods to goods whose prices tended to be higher, and had less elasticity of demand; to achieve that, the ultimate goal of the Governments was to: encourage foreign investment; 4 acquire new technologies from central countries to diversify the industry later on; and, by orienting themselves outwards, to expand the export list, and gradually enter the international market of competitive manufactured goods.
The Governments, aware of the constraints previously pointed out, especially the shortage of domestic savings by most of the countries, decided not to part from foreign capital definitively, recognizing that it would be crucial to the acquisition process of resources to finance the plants that would constitute the industrial park, the procurement of technology from industrialized countries, and the certainty of staff to manage the businesses and coordinate their production lines. They also recognized that a rupture with ex-metropolises would affect the obtainment of resources - in the form of aid - from international institutions by the State.
It is the financial aid, actually, that would set in motion part of the ambitious development plan devised by these countries, particularly for their industry. Therefore, in the early s, the Governments took steps not only to expand foreign businesses 6 from their initial base in the - external and internal - commercial sectors, and distribution to the manufacturing sector, but also to attract more private foreign capital.
As pointed out by Stein , the public policy to stimulate foreign investment encompassed the following measures: tax exemption, preferential access to credit, low customs duty rate, favorable exchange rate for investors, and duty-free import of capital goods. These actions resulted in the installation of a capital-intensive technology.
Therefore, following a typical import substitution model, a capital-based industry was established, sacrificing a comparative advantage in the use of labor and natural resources. Foreign capital was directed at industries that produced nondurable consumer goods, and industries that produced goods which could not be imported, such as the construction material industry and that of some mineral processing.
Nevertheless, the imported technology was lucrative only for large-scale production, that is, it was technology developed for mass consumption. As the market was small in Africa, due mainly to low income, there was no public for manufactured goods, thus making production at profitable levels unviable.
Multinationals tried to export manufactured goods in the region, but lack of a transportation infrastructure connecting the countries that shared a border, and poor port conditions were obstacles to exportation to the other countries of the region. The multinationals noticed these difficulties right from the beginning, and changed the course of their activities, concentrating on the exploration of valuable minerals and petroleum.
Since foreign capital was being favored, the exiguous local private capital played a minor role in development at this industrial stage. Its activities were concentrated on small-scale production, trading, regional distribution, and also on the transportation sector. In spite of the fact that it was not supported, this class was not liquidated, and would form a local faction with nationalist ideas.
Although at first avoided by the State, that group would ally themselves with the Government in the creation of parastatals - in some countries.
The data presented by Pearson show that the industry grew considerably during that period. Pearson indicates that the countries of the East African Union - Kenya, Uganda, and Tanzania - already had very diversified manufacturing in and In the nondurable goods sector - foodstuffs, drinks, tobacco, textiles, shoes, clothing, paper, and leather were produced; in the intermediate goods sector - rubber, chemicals, oil, electrical materials, and metal and non-metallic mineral products; and in the capital goods sector - some electrical machines and transportation equipment.
Coulson , however, mentions that, in the late first half of the s, the Governments were dissatisfied with the problems of the balance of payments, and the behavior of foreign capital. Current account balance showed a large deficit because the import substitution process required a great import of machines, parts, and other intermediate inputs for production, in addition to skilled labor, thus causing great pressure on external accounts.
With respect to foreign capital, there was a negative flow between the inflow and the outflow of foreign exchange - see Tanzania's example on table 1. Moreover, foreign businesses preferred importing synthetic inputs - produced in central countries and used for production - to using natural domestic inputs such as rubber and sisal , overburdening the balance of current account, and also breaking the connection between sectors.
That made it difficult for the various activities to grow internally, and prevented the natural expansion of the economy and the income. In general, it was noticed that foreign capital and the market would not provide the economic transformation required to overcome underdevelopment effectively. As stated by Nixon , p. It was then that nationalist groups emerged and decided to change the course of the economic policy by opting for a nationalized process of import substitution.
Import substitution Led by the state. In general, from the second half of the s on, the Governments assumed total control of the industrial development, and introduced several modifications to the institutions and the economic policy. Herbst and Stein comment that the economic policy adopted two guiding principles: the first one was related to the foreign trade policy, and emphasized three aspects: i multiple exchange rates effectively choosing imports, giving preferential treatment to capital and intermediate goods, and certain basic inputs, strongly discriminating luxury goods; ii imposition of administrative import control through quotas, licenses, and tariffs; and iii price control and prohibition of imports of goods similar to those produced domestically.
The second guiding principle was an investment policy, for which the State defined three priorities: i to make large investments in manufacturing; ii to create and widen the basic infrastructure for the industry; and iii to orient towards basic investments through the creation of public institutions connected exclusively with industrial development. The purposes of these institutions were as follows: to stimulate foreign businesses to retain the profit in the country by reinvesting productively in the manufacturing sector, otherwise they would be controlled by the Government; to nationalize banks and insurance companies dominated by foreign capital; to gather and allocate domestic savings; and to manage official foreign aid and the projects funded within the scope of the aid.
At the time, the nationalization process of foreign businesses was part of a strategy by the Governments as a result of some factors: first, it was closely associated with the State's dissatisfaction with the foreign businesses that sent the profits to their countries of origin instead of reinvesting them productively, and the small number of jobs created by those businesses.
Ghai , and Paulson and Gavin mention that, due to the nationalization wave, the Governments began to favor public capital and private domestic capital, encouraging the latter to ally itself to the State by participating in the formation of parastatals - which occurred in less radical socialist countries. Thus, participation of the local population in the management of businesses also began to be stimulated, concomitantly with the rejection of management by foreigners-including in Kenya and the Ivory Coast, which had a more capitalist orientation.
Some subterfuges were, therefore, used, such as: i deny nationality to alien minorities; ii demand work permit to non-nationals; and iii impose restrictions on foreign businesses in the trading, distribution, and transportation sectors.
Thus, behind industrialization lay production for the domestic market and the creation of jobs, which began to be considered more important to the point where some Governments proposed autarky. The most radical ones forgot about their initial goal, that the import substitution process was a means of organizing and diversifying the domestic production core, in addition to serving as an orientation, later on, towards the international market.
This made the industrial park expand considerably, with the multiplication of the number of plants intended mainly for the production of nondurable consumer goods-such as textiles, paints, plastics, light drinks, beer; construction materials - such as ceramics, faucets, pipes, floor tiles, roof tiles; pharmaceuticals; fertilizers and agro-industrial products.
The exploration of minerals, such as iron, was also expanded, and the State invested in oil production and petroleum-based products. D'Almeida , p.
In Kenya, they increased threefold, from 20 - at the time of independence in - to 60 in In Ghana, where there were no state-owned companies at its independence in , there were approximately in the early s. In other countries, such as Zambia, Senegal, the Ivory Coast, Mali, Mauritania, and Uganda, there was a marked increase in the number of those companies.
Moreover, Short , p. The oil shock in posed serious problems for the balance of payments, and although it was weakened, the import substitution process continued at the expense of foreign indebtedness. In the late s, the situation of the balance of payments worsened dangerously due to the second oil shock, affecting imports of capital and intermediate goods, and other inputs used by local industries.
That resulted in decreasing growth rates of the value added in the manufacturing sector, and a very high idleness level of businesses. With its sector completely stagnant due to lack of foreign exchange to import intermediate and capital goods, the industry's performance was far below expectations. Nigeria, Kenya, and Zambia - of all the African countries - were the ones which became more industrialized; in the other countries, there was a slight industrial development in the sector of nondurable consumer goods, such as drinks, textiles, etc.
The industry led by the State grew substantially in size, but in terms of production, its contribution was very modest.
This small growth is due not only to external and internal constraints, but also to low productivity, poor business administration, and the fact that the industry focused more on employment than on business. The main difficulties in implementing import substitution were: i obstacles imposed by the agricultural sector; ii problems with the balance of payments; iii lack of human capital; and iv little knowledge of technology.
According to Vitta , the industrial and economic development did not occur as recorded throughout history, with the agricultural sector giving support to the industrial development process by supplying food and raw materials, transferring capital, generating foreign exchange, and providing a consumer market. The only transfer that was possible to achieve from the agricultural sector to the industry was labor, by virtue of a high population growth rate in the region; however, the output per worker which in principle should increase in the agricultural sector, did not occur, thus causing high inconsistency in the economic system.
Therefore, with industrial development and larger urban areas, there was a growing need for agricultural goods, either as food for the urban population, or as raw material, to be feasible to continue the industrialization process.
The low productivity of the agricultural sector did not allow the growing demand to be met, and even caused problems of food safety in several countries, as reported by FAO According to Sutcliffe , when the starting point is a typically primary economy, not only are the workers concentrated in the fields, but also the capital is used in agriculture; industrialization requires, therefore, that part of these resources be transferred to investments in industrial activities. In Africa, the Government's policy on resource transfer somehow segregated the agricultural sector which - with the reduction in credit lines for farmers, both for planting and purchasing of machines and tools - continued its production at a low capital-labor ratio.
In August , Angolan President Jose Eduardo dos Santos stepped down after thirty-eight years in office, and in November of that year, Zimbabwean President Robert Mugabe was forced from office after thirty-seven years by a military coup. They have declined during the last two decades; there were twenty-seven successful coups from to , but only twelve from to Sub-Saharan Africa. Heads of State and Government.
Elections and Voting. Prominent examples include:.
In the wake of a slew of constitutional amendments granting Mugabe broad power, the country experienced drops [PDF] in life expectancy and per capita income between and Under the three-decade-long dictatorship of Mobutu Sese Seko, the DRC suffered from gross corruption, embezzlement, and neglect of public infrastructure.