Abstract
Dear Readers,
Welcome to the January 2016 issue of the Global Journal of Emerging Market Economies. In this issue, we focus primarily on trade, with the authors providing a wide variety of perspectives on trade at national, regional, and global levels. Of particular note are two pieces from academics in South Africa and Mauritius, who fill a gap in the literature on trade coming from researchers and institutions in Africa, given the region’s growing prominence in the global trade system. We start with an article on how the emergence of new powers is reshaping global governance through the case of the WTO. This is followed by three country-specific articles. The first examines the evolution of trade policy in Botswana and the underlying transformations. The second discusses developments in the aftermath of the Multi-Fiber Agreement (MFA) using the case of clothing manufacturers in Mauritius. The third focuses on Brazil’s challenges in formulating and implementing trade and other economic policies discussing, inter alia, its frequent use of the WTO dispute settlement system.
In “Reformist Multipolarity and Global Trade Governance in an Era of Systemic Power Redistribution,” Dr Charalampos Efstathopoulos of the University of Aberystwyth derives a framework for analyzing the behavior of emerging powers (the larger emerging powers, particularly the BRICS) in the context of global trade governance. The article argues that this has led to a system of “reformist multipolarity.” The article goes on to discuss the changing shape of global trade and provides an analytical account of WTO negotiations in such a system of reformist multipolarity. This author emphasizes three major characteristics of the system: (i) a multipolar decision-making process where established and emerging powers hold veto power over the negotiating process but commit to the stable management of the global economy; (ii) a nascent great power concert where established and emerging powers share a common worldview on the centrality of the WTO to operate as the overarching authority for regulating and managing global trade; and (iii) emerging powers maintain a reformist approach in this multipolar system seeking to renegotiate the rights and responsibilities to be undertaken by each major stakeholder. He concludes that the power transition that has unfolded in the WTO can be understood as the emergence of reformist multipolarity in global trade governance. In its conclusion, the article also notes other international bodies such as the G-20 Leaders’ Forum and the Bretton Woods institutions could be facing conditions similar to those faced by the WTO.
In “The Evolution of Trade Policy in Botswana,” Malefa R. Malefane and Professor Nicholas M. Odhiambo of the University of South Africa focus on the developments in Botswana’s trade sector over the five decades since its independence in 1966, with emphasis on key transformations that have taken place. The country had initially adopted import substitution industrialization as the key strategy for the economy but now functions under an export-led growth strategy. This transformation has been supported by pro-trade policies and legislation, such as, the Vision 2016, the National Development Plan 10, and the Industrial Development Policy, which have been implemented by the government in recent years. The country’s membership to various trade agreements, particularly the Southern African Customs Union and the Southern African Development Community (SADC) and the requirement to adopt free trade arrangements with its Southern African trading partners, have influenced the country’s trade policy instruments significantly. The primary objective of this article is to provide an explorative review of Botswana’s trade sector, including trade policy, trade agreements, and trade patterns.
Continuing with our theme of trade, we move on to “Surviving Chinese Competition in a Post Multi-Fibre Arrangement (MFA) World: Experience of Clothing Exporters from Mauritius,” by Dr Vinaye Dey Ancharaz of the International Center for Trade and Sustainable Development (ICTSD) and Dr Harshana Kasseeah of the University of Mauritius. They focus on the MFA, Chinese competition in its aftermath, and the response of Mauritian clothing firms. In their article, they argue that Mauritius is a small island economy where textile and clothing firms were previously benefiting from preferential access to the EU and US markets under the MFA, which imposed limits on the exports of large exporters. Mauritius was able to develop its Export Processing Zones mainly due to the benefits that it was deriving under MFA. With the phasing out of the MFA, Mauritian textile and clothing firms now have to compete with Asian exporters, especially China, without any imposed constraints. This article studies post-MFA stabilization in a sample of clothing firms in Mauritius, relying on face-to-face interviews with the senior managers of 20 firms. Findings indicate that the firms did not adopt a common set of changes, but have undertaken a wide range of changes adapted to the situation of individual firms after the phase-out of the MFA. These changes include investment (including foreign direct investment) in technology, marketing strategies, increased specialization, and production reorganization, including rationalizing and closing down production units. Evidence also indicates that the competitive edge of Mauritian firms lies in their ability to accept small orders with short lead times, and delivering good quality on time. A number of institutions such as Enterprise Mauritius, Mauritius Exporters Association and the Mauritius Chamber of Commerce and Industry have supported the transition.
In “Brazil’s Challenges of Post-interventionist Bargaining,” Dr Anna Lanoszka of the University of Windsor focuses her research on Brazil. When Brazil emerged from decades of isolation, the government embraced economic globalization and democratization much like its neighbors. The article examines the dynamics of post-interventionist domestic bargaining in Brazil to understand the recent increase in its trade protectionism and escalating economic problems. By examining Brazil’s economic history, the author shows that decades of economically and politically oppressive rule have left the country institutionally weak and vulnerable to internal power struggles. The subsequent domestic bargaining over policies has shifted Brazil’s trajectory from a pro-liberal orientation toward a model of state capitalism, where the state selectively supports those business sectors and societal groups that the government identifies as strategic. The enduring influence of domestic stakeholders who are primarily interested in unilateral gains means that Brazil’s developmental priorities are increasingly skewed to serve those narrow interests. Dr Lanoszka, in her conclusion, also highlights the importance of building institutions in emerging economies, such as for ensuring transparency and regulatory oversight, and the risks of moving to a model of state capitalism.
We encourage our readers to take this discussion further by providing feedback on these articles and the topics addressed therein, or submitting an article that reflects their views on these important topics.