The Integration of Africa: Commodity Based Industrialization Examined

Part of the Advances in African Economic, Social and Political Development book series (AAESPD)


The 2013 Economic Report on Africa, ERA, boldly suggests a commodity-based strategy for creating jobs, for increasing growth and for transforming African economies (UNECA, 2013). This is not the first time African countries have flirted with development strategies ranging from export led growth through import substitution to outright macroeconomic liberalization. The paper examines this latest policy and principle statement from the United Nations Economic Commission for Africa, the continent’s apex institution for economic modeling and economic policy making. By adding value to their soft and hard commodities, “African countries have an opportunity to transform their economies through a commodity-based industrialization strategy that leverages on the continent’s abundant resources, current high commodity prices and changing organization of global production process” (UNECA, 2013).

First, we show that in and on itself, commodity based industrialization does not guarantee success in job creation or in attaining economic growth any more than the pathways Africa adopted before it. After all, East Asia practiced import substitution strategy about the same time as the Africans. The former was hugely successful while the latter recorded a disappointing failure. Second, we argue that the kind of posture or capstone policy statement implied by a bold choice of a rather narrow pathway to development in Africa contained in the report is largely unnecessary. We make this claim, partly because, UNECA report implies that commodity based industrialization will guarantee for Africa a comparative advantage and a much improved revenue from trading with the outside world.

Sure, there are merits to primary commodity valuation within the countries that produce them, but modern models of trade suggest that countries may, in fact, be exporting and importing the same commodities, which, in current global contexts are, differentiated. As a follow up to this claim, we computed intra industry trade indexes for ECOWAS countries and fit the gravity equation to trade data from the region. This allows us to evaluate, ab initio, the possible success expected of this newly couched approach, by UNECA, of industrialization based on commodity processing.

The paper suggests that in a world of increasing returns to scale, understanding what drives trade and the pathway to creating jobs, fight poverty and transform African societies may very well be found in efforts that place trade within regional economic blocs as already developed by the African Union. We see the importance of commodity processing in transforming African economies only if the anticipated trade flows are directed at regional trade within the continent. Any possible comparative advantages coming out of efforts to add value to African commodities are likely to come to naught, when, in fact, UNECA itself knows that the critical access factors determining the flow of exports to middle and high income countries are beyond the reach of very many African countries.


Economic integration Commodity based industrialization Increasing returns to scale Gravity model 


  1. Achebe C (2001) Home and exile (Random House) African UnionGoogle Scholar
  2. AU (2013) in a nutshell. Retrieved on 13 June 2013, from
  3. Ashraf Q, Galor O (2013) The ‘Out of Africa’ hypothesis, human genetic diversity, and comparative economic development. Am Econ Rev 103(1):1–46CrossRefGoogle Scholar
  4. Balassa B et al (1971) The structure of protection in developing countries. Johns Hopkins Press, Baltimore; LondonGoogle Scholar
  5. Bruno M (1967) The optimal selection of export promoting and import substituting projects. In: The United Nations (ed) Planning the external sector. The United Nations, New YorkGoogle Scholar
  6. Carden A, James HS Jr (2013) Time under autocratic rule and economic growth. Contemp Econ Policy 31(1):44–61CrossRefGoogle Scholar
  7. Caves RE (1971) Export-led growth and new economic history. In: Bhagwati JN (ed) Trade, balance of payments and growth. North Holland, AmsterdamGoogle Scholar
  8. Chenery HB (1960) Patterns of industrial growth. Am Econ Rev 50(4):624–654Google Scholar
  9. Dornbusch R (1982) Stabilization policies in developing countries: what have we learned? World Dev 10(9):701–708CrossRefGoogle Scholar
  10. Dumont R (1966) False start in Africa. Praeger, New York, NYGoogle Scholar
  11. Economic Commission for Africa (2013) Economic report on Africa, 2013. Retrieved from
  12. Ecostat (2013) Accessed 14 June 2013
  13. Feenstra RC, Taylor AM (2012) International economics, 2nd edn. Worth Publishers, New York, NYGoogle Scholar
  14. Helleiner GK (1976) Industry characteristics and the competitiveness of manufactures from less developed countries. Weltwirtschaftliches Arch 112(3):507–524CrossRefGoogle Scholar
  15. Hirschman AO (1968) The political economy of import-substituting industrialization in Latin America. Q J Econ 82:1–32CrossRefGoogle Scholar
  16. Krueger AO (1978) Liberalization attempts and consequences. NBER Books, Cambridge, MAGoogle Scholar
  17. Krueger AO (1980) Trade policy as an input to development. Am Econ Rev 70(2):288–292Google Scholar
  18. Lamy P (2013) Africa leading the new patterns of growth, in Inter press service news agency (15 June 2013). Retrieved from
  19. Meier GM (1975) Chapter II: External trade and internal development. In: Duignan P, Gann LH (eds) Colonialism in Africa 1870–1960: the economics of colonialism. Cambridge University Press, CambridgeGoogle Scholar
  20. Mussa M (1987) Macroeconomic policy and trade liberalization: some guidelines. World Bank Res Obs 2:61–77CrossRefGoogle Scholar
  21. Myint H (1958) The ‘Classical theory’ of international trade and the underdeveloped countries. Econ J 68:317–337CrossRefGoogle Scholar
  22. Myint H (1964) The economics of the developing countries. F.A. Praeger, New YorkGoogle Scholar
  23. Nation Media Group (2013). The good, the bad and the ugly: The African leadership index, 2012. In: The East African, 1–6 June 2013Google Scholar
  24. Sachs JD, Warner AM (1997) Sources of slow growth in African economies. J Afr Econ 6(3):335–376CrossRefGoogle Scholar
  25. Sarri S (1998) Ethics of the international monetary systems. University Press of America, Lanham, MDGoogle Scholar
  26. Spolaore E, Wacziarg R (2013) How deep are the roots of economic development? J Econ Lit LI(2):325–369CrossRefGoogle Scholar
  27. Srinivasan TN (1998) In: Chenery H, Srinivasan TN (eds) Part 3: Introduction. Handbook of development economics, vol 1. Elsevier, AmsterdamGoogle Scholar
  28. Subramanian A, Tamirisa N (2001) Africa’s trade revisited. IMF working paper. International Monetary Fund, Washington, DCGoogle Scholar
  29. Todaro MP, Smith SC (2003) Economic development, 8th edn. Addison Wesley, Boston, MAGoogle Scholar
  30. United Nations Economic Commission for Africa (2013) Economic report on Africa 2013, Addis Ababa, EthiopiaGoogle Scholar
  31. Weaver J, Jameson K (1981) Economic development: competing paradigms. University Press of America, Washington, DCGoogle Scholar

Copyright information

© Springer International Publishing Switzerland 2014

Authors and Affiliations

  1. 1.Indiana Wesleyan UniversityMarionUSA
  2. 2.School of Education, Behavioral and Social Sciences, College of Southern NevadaLas VegasUSA

Personalised recommendations