africa: African countries could suffer a fate worse than debt

An investment agreement in the World Trade Organisation, such as is being promoted by the major powers of WTO, is likely to pose worse problems for the social and economic development of African and other developing countries than anything encountered by these countries as a result of the debt crisis. Foreign private financial flows to these countries generate far larger outflow of resources than those associated with foreign loans, and so can cause overall financial instability as well as undermine domestic resource mobilisation for productive activity. That is, unless such flows are managed through careful regulation. However, the very policy instruments necessary for such management are precisely those which a WTO agreement on investment aims to take away from African and other developing country governments who need it most, when they need it most. These observations were contained in a paper presented by David Woodward, economist and consultant, at an African civil society seminar on investment in Accra in May, organised jointly by Oxfam International and Third World Network-Africa.