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Economy

Wotld Trade and Debt

As was the case during colonial rule, Africaís role in the world economy remains to produce raw materials for use in developed nations. Whatever economic development has occurred in African countries since the end of colonial rule has reinforced this pattern. Investment by international corporations and most foreign governments has concentrated on expanding production of exportable mineral and agricultural raw materials. The emphasis on exports has left inadequate resources for developing domestic industry or changing the traditional, underdeveloped system of African smallholder food production. Neglecting their food-producing sectors has led African countries to increase their dependence on raw-material exports and has required many to import food to feed its people.

The continentís trade position has faced further challenges since the 1960s. The prices of manufactured goods and fuels imported by African countries increased substantially, while the prices of almost all products of African mines and farms declined or fluctuated. This downturn meant that African countries not only had to make do with fewer needed imports, but they also had to go into international debt to meet their financial obligations. Oil-exporting countries were able to avoid this pitfall for a time, but they too were beaten down by the collapse of world oil prices in the 1980s and 1990s. Africa has also been put at a disadvantage by the protectionist trade policies of industrialized countries, which admit unprocessed raw materials tax-free but impose substantial tariffs on imported products made from the raw materials.

As a consequence of their internationally disadvantaged status, nearly all African countries have had to borrow money from foreign lenders to cover the difference between their export earnings and their spending for imports. The amount of accumulated external debt owed by sub-Saharan African countries has risen from less than $6 billion in 1970, to $80 billion in 1985, to $230 billion in 1999. Interest payments to foreign creditors siphon away precious foreign exchange earnings. Such pressures on export earnings have led African governments to make stringent cuts in imports through high tariffs and outright prohibitions.

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