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Transatlantic Blog

'A Marshall Plan for Africa' won't help Africans; free trade will

    During his two-day official visit to Tunisia in late October, the president of European Parliament Antonio Tajani proposed the establishment of a “Marshall Plan” for Africa. Evoking the plan of subsidies the U.S. transferred to Western Europe following World War II, Tajani estimated the cost of a plan for Africa at €40 billion (or roughly $47 billion U.S.).

    The objective of these investments will be the building of new infrastructure, support for small and medium enterprises (SMEs), and boosting youth entrepreneurship and employment in Africa. Besides, Tajani stressed that, without tackling these issues, “there are thousands, and in the future millions, of people who could leave their country.”

    Nevertheless, the free-market end does not justify the government-transfer means. My native Spain, which has the second-highest unemployment rate in the EU-28, proves this. Among EU-28 regions with the most unemployment and lowest GDP, there are two Spanish regions: Extremadura and Andalusia. Despite national and regional government subsidies to “promote the creation of new businesses,” Spain has the most obstacles to businesses growth and entrepreneurship of all OECD countries, according to the IMF.

    Africa remains the poorest continent in the world. Its GDP per capita is almost $8,500 (U.S.) below the world average. But there are signs of hope. Famines have largely disappeared outside of war zones. Average life expectancy has risen from 50.3 years in 2000 to 59.9 in 2015. All of this progress has taken place because of free-market economic reforms.

    According to the Heritage Foundation, sub-Saharan Africa’s overall score on economic freedom is 55 percent, almost three percent higher than at the beginning of the century. Trade freedom has risen 18 points. The tax burden seems to be diminishing. However, not one African country ranks among the 20 freest economies of the globe. The rule of law falters and repression too often prevails.

    When morality is engaged, human flourishing will follow.

    Deeper, laissez-faire economic reforms are the only road to prosperity. At the same time, corruption must be fought efficiently. Botswana is a model, as one of the richest countries in Africa, the least corrupt African nation, and one of the 34 freest economies on the globe (Africa’s second freest).

    There is no country where development aid and cooperation agencies have successfully lifted a nation out of poverty. These funds are merely transfers from one state’s governmental apparatus to other. Post-colonial Singapore, which was far from being a rich country a few decades ago, is a case study for supporters of open economies. Policies oriented toward free markets and attracting foreign investment help it grow and prosper.

    The European Parliament has no competence, nor responsibility, outside its own jurisdiction. But that does not mean it can do nothing to improve Africa’s economic condition. More exactly, some European policies are putting obstacles in the way of Third World merchants. The infamous Common Agricultural Policy makes it more difficult for underdeveloped nations to export their products to the EU. CAP exerts a particularly high economic prejudice against non-European farmers. These protectionist policies haven't caused farming to become an economic powerhouse for the EU-28. Despite its annual budget of €59 billion (which finances income support for farmers and rural development programs, which less developed countries cannot afford), agriculture made up less than two percent of the EU’s GDP.

    There is a model for the kind of transition the EU would need to implement if Africa is to have freer access to European markets. New Zealand, whose rural sector was similar to that of Europe three decades ago, endured a process of economic liberalization. There were widespread worries about failing farms, but in the end only about 800 farms were forcibly sold. Farmers who hoped to compete began to operate in a more efficient and innovative way based on market conditions. Today, agriculture still makes up seven-to-10 percent of New Zealand’s GDP.

    Undoubtedly, a true a suppression of protectionist agrarian measures would lead to fierce protests in Brussels and other national capitals. Europeans are used to interventionism. Even Eurosceptics would show their indignation. Notwithstanding that risk, politicians should try to explain the policy changes in a more popular way - and a more effective, morally appealing way.

    In a hypothetical campaign for agrarian market liberalization, politicians and supporters of liberty must not focus only on GDP statistics and other macroeconomic data. They must reinforce that Europeans would be able to buy cheaper products, since they are currently charged for costly regulations and subsidies, and they can exchange with a wider variety of non-European countries.

    Most importantly, from a moral standpoint, as in real life, it’s easy to understand trade is a way to benefit oneself and one’s neighbor. Lower prices free up more capital for other family priorities. At the same time, Africans can begin to expand their export market and purchase more of the necessities of life. Everyone benefits. Trade is a way of giving life to others. On the other hand, commercial boycotts are a way to protest views that we wish to stamp out.

    My fellow Europeans must come to see trade liberalization as a way to express solidarity with Third World farmers, to lift African people out of property, and to benefit their own families through lower prices. They must see it is a good and moral choice. When morality is engaged, human flourishing will follow.

    (Photo credit: SIM USA. This photo has been cropped. CC BY-SA 2.0.)

    Ángel Manuel García Carmona is a student of computer engineering in Spain. You may follow him on Twitter at @GarciaCarmonaAM.