Stabilization of export proceeds in Tropical Africa

This study contains an attempt to define and analyse the elusive concept of "stabilization"' in its application to the export production of countries in Africa south of the Sahara. The writer has found it hard to place his analysis in a specifically African context. This difficulty arose partly from the lack of data and the paucity of general reference works based upon African economic conditions. But it was also due to his desire to treat the subject of stabilization against a broad background of the social and economic factors which typically bear upon policy-making in Africa. The Introduction contains a methodological discussion of the means by which an economic analysis might take explicit notice of African social, political and administrative conditions. The conclusion is reached that it is impossible to blend all these factors into one analysis. The primarily non-economic background material is therefore consigned to Chapters I and II, with the discussion of the main theme following in Chapters III and IV. Chapter I contains five numbered sections. (l) The reader is introduced to the newly-independent 'Country X', an expositional device for lending coherence to material drawn from several different African countries. (2) Under the heading 'Political Factors’ there is a discussion of Pan-Africanism and of the "Mobilization' form of political organization. (3) Under 'Social Factors', there are brief outlines of several representative social problems, followed by an interpretation of the economic rationales underlying the 'hoarding' of cattle and the 'extended family system'. (4) Under 'Public Administration’ are discussed standards of morality in public affairs and the need for eliminating bureaucratic rigidities. (5) The summary points to the "confused and confusing" general situation in "X", and enjoins caution and a "piecemeal" approach to the application of economic theory. Emphasis is placed upon the social disruption which inevitably attends economic development of primitive societies. In Chapter II, to illustrate the importance of social and political factors in economic policymaking, there are brief reviews of three questions. (l) The use of psychological indoctrination to speed economic development. (2) The prospects for comprehensive planning in the light of the physical and conceptual difficulties experienced in compiling statistics. (3) The "export-bias" doctrine, Hlla Myint's refutation, and his alternative formulation. The conclusions are broadly similar to those of Chapter I. Chapter III analyses the case for a general international commodity price stabilization scheme. Following a review of the supply and demand factors responsible for the present pattern of international trade, it is concluded (a) that such a stabilization scheme would be administratively, politically and economically unworkable. (b) that the proposal is essentially one for achieving disguised income transfers from rich to poor countries, and (c) that stabilization of producer prices can equally well be achieved by domestic action. The discussion of domestic stabilization policy in Chapter IV centers upon the marketing of Ghana cocoa. The ambiguities of stabilization, which may refer to different periods of time, and to either prices, money incomes or real incomes are fully discussed. The effect of low prices upon production incentives is treated at length, as is the use of the stabilization authority to extract "forced savings" from peasant producers. The conclusion is generally in favour of national stabilization schemes, provided their objectives are strictly defined. Chapter V summarizes the conclusions already set out for the preceding chapters.

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