Africa’s Burden: Labour Markets, Natural Resources and the FDI ‘Reliance-Rejection’ Paradox

de Mauro, Andrea (2013): Africa’s Burden: Labour Markets, Natural Resources and the FDI ‘Reliance-Rejection’ Paradox. Published in: e-International Relations (June 2013)

Abstract

This paper will attempt to provide a comprehensive answer to the complex issue of development in sub-Saharan Africa by identifying an FDI reliance-rejection paradox emanating from the incompatibility between colonial legacies and Structural Adjustment Programmes. Since the 1980s, international financial institutions have imposed foreign direct investment as the main source to finance the development of SSA, while ignoring the two main structural issues inherited from colonialism - the organisation of the labour market and the dependence on natural resources extraction. The former drastically reduces the attractiveness of the SSA economy to investors, while the latter forces FDIs to be exclusively oriented towards resource exports. The implication of this is the formation of three vicious cycles - economic instability, the Dutch disease and patronage - which locked the continent in an FDI paradox that prevents it from funding its own development.

• Item Type: MPRA Paper
• Language: English
• Keywords: Africa; Development; Investment; Structural Adjustment Programmes; Labour Markets; Natural Resources; Dutch Disease; Resource Curse; FDI; Zambia; Tanzania
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O19 - International Linkages to Development ; Role of International Organizations

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