- Globalization has both positively and negatively impacted failed states in sub-Saharan Africa according to different theorists. Stiglitz argues that IMF policies have harmed states through austerity measures and liberalization, while others note a lack of political and legal infrastructure has also contributed to failures. - Failed states struggle due to internal conflicts often related to control over natural resources for income, as well as predatory governing elites that centralize power and wealth. Reliance on primary exports also concentrates wealth among elites. - Moving beyond primary industries and attracting private capital through manufacturing could help states integrate into the global economy, but most states have not seen sufficient investment to create self-sustaining industry growth

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Strengths and Weaknesses of Globalisation that affect Failed States
Globalisation is not new. For over many centuries, if not millennia, globalisation has only become
more profound in terms of global awareness of its impact upon the world’s population and
countries since the increased coverage and technology of telecommunications.1
This phenomenon
is highly controversial with extreme proponents and extreme critics, and everywhere in between.
Whether for good or bad, it has arguably touched the farthest corners of the globe in one way or
another. In this essay, we will look at different views and theories of how globalisation has affected
those failed states2
in the sub-Sahara which have unable to effectively provide public goods and
security to its citizens, and invariably become vulnerable to extreme poverty, famine in some cases,
population displacement, civil armed conflict, genocide is some cases, and disease.3 Starting with
Professor Stiglitz, we will consider different globalisation theories that have positively and
negatively impacted the economics, politics, and finances upon these class of states, and upon the
region in general. What has been discovered, is that there is no general consensus on the causes
why some states in the sub-Sahara struggle to thrive, which I notice essentially depends upon the
fundamental ideology of which the author is a student as applied to globalisation.
A prolific publisher mostly about the same subject matter, Joseph Stiglitz is highly critical of how
the International Monetary Fund (IMF) and its current lending conditions are stipulated upon the
sub-Saharan states. Stiglitz believes that as part of neo-liberal globalisation, policies such as
1
Martin Wolf, 'Will the Nation-State Survive Globalization?' (Pt Council on Foreign Relations) (2001) 80(1) Foreign
Affairs 178, 179.
2
Different authors use different terminology for these countries in terms of generalisation – failed, developing,
southern, emerging markets, emerging economies, third world. Since the essay will focus on the sub-Sahara, this
essay will use the term ‘failed’ states.
3
Arjun Chowdhury, 'Failed States: Inside or Outside the ‘Flat’ World of Globalization?' (2009) 40(6) Security
Dialogue 637, 638.

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privatisation, deregulation, and fiscal austerity measures imposed on these countries, are mostly to
blame for their failure to thrive.456
He is especially disparaging towards neo-liberal proponent’s
views that these states’ invariable corruption, lack of transparency and resolve in their own
accountability play a significant part to their own predicament. 7
Stiglitz does not have an aversion
to globalisation, 8
but believes that Africa has, historically, been the most exploited by it;9
not by
foreign direct investment (FDI), but by neo-liberal unfettered and free markets, as well as short-
term capital flows moving in and out of countries that have failed to allow them a chance to
thrive.10
He believes that the IMF must stop pressuring these countries into liberalising their
markets, and design interventions to stabilise their capital flows, interest rates and exchange
rates.11
Susan Strange expands upon Stiglitz’s theory, by adding that notwithstanding the economic and
financial pressure given, sub-Saharan states still have an opportunity to become stable and reliable,
citing Asia and Latin America successes in overcoming the same obstacles from the 1960s to the
1990s as examples.12
She believes private capital and not public capital is what accelerates
modernisation of developing countries. Therefore, transport and communication advances, greater
capital mobility, and accelerating technology changes will attract capital investors to start up
4
Joseph E. Stiglitz, 'The Overselling of Globalization' in M. Weinstein (ed), Globalization : What's New? (Columbia
University Press, 2005) 228-58, 229-30.
5
Joseph E. Stiglitz, 'Capital-market Liberalization, Globalization, and the IMF' (2004) 20(1) Oxford Review of
Economic Policy 57, 65.
6
Joseph E Stiglitz, Making globalization work (W.W. Norton & Co., 1st ed, 2006) 40-42.
7
Stiglitz, 'The Overselling of Globalization', above n 4, 229-30.
8
Stiglitz, 'Capital-market Liberalization, Globalization, and the IMF', above n 4, 57.
9
Stiglitz, above n 6, 11.
10
Stiglitz, 'Capital-market Liberalization, Globalization, and the IMF', above n 4, 57.
11
Ibid 65.
12
Susan Strange, The Retreat of the state : the diffusion of power in the world economy (Cambridge University
Press, 1996) 57-9.

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manufacturing.13
Stiglitz counters that. Even after leaving socialism, having “reasonably honest
governments”, balancing the books and keeping inflation down, sub-Saharan states still have not
been able to attract international private investors, which in turn, have not created sustainable
growth.14
In contrast, Calomiris asserts that impoverished countries remain so because they also lack the
required political and legal infrastructure to create wealth and growth.15
Notwithstanding low
existing wealth, poor corporate governance protections for foreigners restricts the accessible
supply of domestic equity finance, while legal institutions and inept creditor protections hinder
bank lending.16
Even so, foreign capital can provide them with opportunities for expansion.17
Unfortunately, foreign capital costs are higher than local bank financing, and they are usually
forced to burden the risk by accepting foreign currency, rather than accepting FDI in local
currency.18
So when the exchange rate of local currency depreciates, domestic banks cannot rescue
the debtors by paying the debt for them or indirectly by printing money, thus pushing inflation up,
which then reduces the value of the loans.19
The biggest risk that failing countries face is when a
financial collapse occurs simultaneously with a dramatic depreciation of the domestic currency
value.20
Calomiras believes this aggravates the ability of the states to service their debts because
earnings drop as well making it more expensive again, thus creating a vicious cycle. Often the
13
Ibid 58.
14
Joseph E Stiglitz, Globalization and its discontents (W.W. Norton & Co., 1st ed, 2002) 6.
15
Charles W. Calomiris, 'Ch 4 - Capital Flows, Financial Crises, and Public Policy' in M. Weinstein (ed), Globalization
: What's New? (Columbia University Press, 2005) 36-76, 41.
16
Ibid.
17
Ibid 41-2.
18
Ibid 42-3.
19
Ibid 43.
20
Ibid 44.

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domestic financial system collapses along with the currency. This causes banks to fail, credit is no
longer available for local debtors, and governments are pressured to bail out the banks along with
other fiscal burdens, such as increasing welfare payments due to the increased unemployment.21
According to Robert Rotberg, international financial assistance has allowed weak and corrupt
governments to accept the aid regardless of whether they will carry out the policy reforms
stipulated or not.22
Some states may have welcomed the relief, made the necessary adjustments,
and stabilised the government; but most others disregard the reform conditions that could have
stabilised the economy, and increased public goods and services.23
Conceding that international
financial aid stipulations do stabilise countries, Rotberg believes they also have made them more
vulnerable to fail by increasing the chances of political incidences and disputes, thus causing a
downward spiral of failure and chaos.24
Interestingly, Rotberg points out that in the last one hundred years, there has been a “diminishing
relative value of land and what is underneath it.”25
Countries that have not been fortunate to have
significant land mass for agriculture or natural resources, have ironically, had economic success
through the use of tertiary industry and their labour force by way of manufacturing, finance, and
ICT development.26
He cites Korea, Japan, Hong Kong and Taiwan all being particularly
21
Ibid.
22
Robert I. Rotberg, When States Fail : Causes and Consequences (Princeton University Press, 2004) 111.
23
Ibid.
24
Ibid 112.
25
Ibid 304-5.
26
Ibid 304.

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successful examples since World War II. They focused on producing for the world market, rather
than for domestic markets.27
Matsumoto adopts a theory that some sub-Saharan countries struggle to thrive because of the
internal armed conflicts that involve the country’s government as one of the warring parties. These
countries have a low income per capita of less than US$745 per annum.28
Reasons for these
conflicts have been changing since the end of the Cold War when their funding dried up from the
superpower rivalries. Therefore, controlling natural resources has become important for warring
factions as an alternative source of income in order to continue their conflict. The rebels are usually
militarily weak, factionalised, and also rely on illegal arms-dealing to continue their efforts.29
Ultimately, these conflicts are not simply a war between the government and rebels, but have
become “economic wars” based on political ideologies and grievances.
Matsumoto’s research showed that if young males are not able to stay in secondary school, there
is an increased risk of violent conflict.30
Further, political maneuvering and policy choices by the
ruling elite also tend to increase the risk of civil war. In order to get re-elected in post-colonial
Africa, these governments will initially fund public services such as schools. But once this
becomes too expensive, the government turns to an authoritarian regime by prohibiting opposition
parties and withhold elections. The incumbents become more ‘predatory’ and start retaining funds
for their own use. By choosing a closed, centralised and regulated economy, the ruling elite create
27
Ibid.
28
Mitsuko Matsumoto, 'Three strands of explanations on root causes of civil war in low-income and weak states in
sub-Saharan Africa: Implications for education' (2016) 49 International Journal of Educational Development 1, 1.
29
Ibid 2.
30
Ibid 6.

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a weak public service, institutions and services. Matsumoto concludes that the elite fear that if they
do not govern like this, their power to rule would be challenged. Thus toleration and prevalence of
corruption is dependent on systemic patronage, and using public office for personal benefit.31
Paul Collier theorises that countries relying on natural resources for export, only increases the
wealth of the land-owning elite of impoverished countries such as mining companies and
individual land-owners.32
The more the primary industry exports onto the world market, the more
likely prices are to go down. Therefore, by changing to manufacturing and services, it utilises more
labour and distributes the developments more widely. What was once dominated by wealthy
countries, several developing states have taken advantage of this market, and Collier believes that
the market is big enough for poorer states to utilise this advantage.33
Constance Anthony expands
upon this, believing that for African states to move towards economic global integration, they must
move past the Cold War paradigm, and realise the global economic and trade opportunities in their
own agrarian and textile industries. For example, Europe realised its own globally comparative
economic advantage in the 1950s and 1960s, eastern Asia in the 1970s and 1980s34
, China and
parts of Latin America in the 1990s, and south-east Asia, Mexico, Brazil and Turkey in the late
2000s35
.
31
Ibid 7.
32
Paul Collier, Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It (Oxford
University Press, USA, 2007) 65.
33
Ibid.
34
Such as Hong Kong, South Korea, Singapore and Taiwan.
35
Constance Anthony, 'Africa's Displaced Peoples: State-Building Realpolitik and Stunted Globalization' (Pt Harvard
International Review) (2009) 31(3) Harvard International Review 50, 54.

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Interestingly, Feeny and McGillivray’s study of Papua New Guinea (PNG) showed that although
helpful, financial aid donations were not as effective as it could have been.36
Even with financial
aid, countries similar to PNG could experience economic, political and social difficulties. A high
proportion of taxation revenue is likely used for consumption spending; with aid loans and
donations used to prop up recurrent budgets. Although there is evidence that foreign aid has
assisted in relieving poverty in PNG, its public sector has utilised this aid very poorly. They
concluded, that if financial aid is warranted, more consideration is needed when donating or
lending to ensure that it is used more wisely to get the best effect from the funding provided to
relieve the poverty. They noted that trade liberalisation was only partly to blame for PNG’s
predicament; and equally, government’s long-run reliance on foreign financial aid as a revenue
source is also a serious concern.37
Constance Anthony continues that sub-Saharan countries are historically weak and have never
before had the opportunity to grow economically strong.38 Before colonisation, they were mostly
agrarian and non-industrial. Increased nationalism occurring in India discouraged Britain from
capital investment in their African colonies. Two decades after de-colonisation, neoliberal policies
have placed a priority on markets over the state. Anthony says that they have been governed by a
small minority of elites, whether by force through internal conflict and/or by quasi/pseudo-
democratic elections, keeping them weak or failed as the population becomes highly mobile or
flee altogether. Therefore, they struggle to move beyond pre-industrial and fail to find their place
36
Simon Feeny and Mark McGillivray, 'Aid and public sector fiscal behaviour in failing states' (2010) 27(5) Economic
Modelling 1006, 1014.
37
Ibid 1015.
38
Anthony, above n Error! Bookmark not defined.,51.

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in the global economy.39
Further, cultural and religious history, as well as severe crises such as
disease, drought and famine, have also played a significant part towards the conflicts and state
instability in many of these sub-Saharan states.40
Yet, Anthony also cites Charles Tilly whom says
that these states are not so much as failed but are nation-building - like France, Russia, and others
that have gone through revolutions before.41
Tilly believes that countries such as DRC, Sudan,
Somalia and Zimbabwe will go through the same fate before reaching stability, but not expected
to do so for another 20 years yet.
Like Strange, Collier explains that the problem for countries like those in the sub-Sahara, is that
they are short on capital.42 Not public capital, but private capital. In wealthy countries, private
capital exceeds public. But it is the reverse for the poor states. This, Collier explains, is problematic
because there is insufficient funding to set up these private industries. Although financial
institutions provide funding, it is only for public capital such as infrastructure and public services.43
Collier believes in principle, that globalisation can still work because in basic economic theory,
those societies short of capital, usually have higher capital returns, which in turn, should attract
private capital inflow, citing China and Malaysia as successful examples.44
But those in the sub-
Sahara have not been as successful, except for those that have foreign firms exploiting their natural
resources such as Angola.45
Collier states even with low wages, they have not attracted sufficient
39
Ibid.
40
Ibid 52.
41
Ibid.
42
Collier, above n 32, 69.
43
Ibid.
44
Ibid 69-70.
45
Ibid 70.

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foreign firms/investment to create an “economy of agglomeration”46
But theoretically, it is not
impossible. For example, what started out as a trickle, became an explosive flood of manufacturing
agglomerations from the United States and Europe into Asia, because these Asian countries had a
comparable economic advantage with low wages and a large labour market.47
Optimistically, if
the right conditions can be seeded, it is possible to do the same in the sub-Sahara. Madagascar
achieved this in the 1990s.48
It was only when President Ratsiraka decimated the economy in a bid
to get back into power, did the foreign firms and investors become wary of the political instability,
and then pulled out.49
Rotberg concedes, along with Gurnek Bains,50 that globalisation has created a dark side by
encouraging warlords, corrupt leaders and politicians, and others whom have utilised sophisticated
global systems to their advantage in the form of drug/human trafficking or smuggling/exploitation
of natural resources such as diamonds and timber.51
However, Rotberg argues that even though
there is a global international economy for which the leaders could utilise to develop their own
country in terms of trade and financial investment for the country’s national interest, it is used
instead to enrich their own personal interests.52
46
Ibid 66. “Economy of agglomeration” is defined as spatial economies of scale in industry such as manufacturing
like it occurred in Asia.
47
Ibid.
48
Ibid 67.
49
Ibid.
50
Gurnek Bains, 'Sub-Saharan Africa: Under Nature's Shadow', Cultural DNA (John Wiley & Sons, Inc, 2015) 41-79,
41.
51
Rotberg, above n 22, 305-6.
52
Ibid 306.

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Finally, Martin Wolf argues that globalisation does not make sovereignty unnecessary or
impotent.53
It is up to individual states to determine their own policy and their own goals if and
how they wish to economically integrate internationally.54
Upon critiquing Milton Friedman’s
economic theory, Nico Vorster said that Friedman was correct that the welfare state has historically
failed because the reallocation of resources encourages laziness, discourages achievement,
increased taxes encourages tax evasion, and creates a sense of indebtedness and self-entitlement.55
Friedman claims that unproductive employment subsidised by state taxes increases production
costs, and consequently, a higher standard of living that can only be achieved by economic
growth.56
Particularly after the 2008 Global Financial Crisis, Wolf argues neoliberal capitalism
also needs to be balanced with less Darwinism and more sense of moral ethics.57
In conclusion, globalisation has had a significant impact around the world in differing ways.
Focusing particularly on sub-Saharan Africa, many of these countries have floundered for decades,
before and during colonisation, and after decolonisation. Interestingly, there have been differing
theories of why they have struggled from corruption, economic, financial and resource
exploitation, and civil wars. Some believe that through globalisation it is too late, whereas other
predict a more optimistic future. Fortunately, parts of sub-Sahara have been taking advantage of
globalisation in the last decade, with many catching up with the rest of the world by becoming
53
Wolf, above n
54
Ibid.
55
Nico Vorster, 'An Ethical Critique of Milton Friedman’s Doctrine on Economics and Freedom' (Pt S.A.C.R.I. The
Academic Society for the Research of Religions & Ideologies) (2010) 9(26) Journal for the Study of Religions &
Ideologies 163, 170.
56
Ibid 171.
57
Ibid.

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economically robust, and improving across all indicators.58
Rwanda and Ghana particularly, are
currently one of the fastest growing economies in the world, lifting many out of poverty.59
Even
not waiting for FDI, through globalisation, they are becoming successful in their own enterprises
such as telecommunications, brewing and food manufacturing, 60
indicating optimistically, that
globalisation still has a place in Africa.
Word count: 2385 (not including footnotes)
58
About Sub-Saharan African - At a turning point, (2012) United Nations
<http://www.africa.undp.org/content/rba/en/home/regioninfo.html>. Regional Economic Outlook: Sub-Saharan
Africa: Dealing with Gathering Clouds, Regional Economic Outlook: Sub-Saharan Africa: Dealing with Gathering
Clouds, International Monetary Fund No (2015) ix-x.
59
Bains, above n 50, 41.
60
Ibid 42.

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Articles/Books/Reports
Anthony, Constance, 'Africa's Displaced Peoples: State-Building Realpolitik and Stunted Globalization' (Pt
Harvard International Review) (2009) 31(3) Harvard International Review 50
Bains, Gurnek, 'Sub-Saharan Africa: Under Nature's Shadow', Cultural DNA (John Wiley & Sons, Inc, 2015)
41-79
Busumtwi-Sam, James, 'Ch 10 - International Financial Institutions, International Capital Flows, and
Financial Liberalisation in Developing Countries' in Stephen MacBride and John Wiseman (eds),
Globalisation and its Discontents (Palgrave Macmillan, 2000) 84-96
Calomiris, Charles W., 'Ch 4 - Capital Flows, Financial Crises, and Public Policy' in M. Weinstein (ed),
Globalization : What's New? (Columbia University Press, 2005) 36-76
Choi, Yong-Yil, 'Relative government size in globalization and its welfare implications' (Pt Routledge)
(2010) 42(11) Applied Economics 1447
Chowdhury, Arjun, 'Failed States: Inside or Outside the ‘Flat’ World of Globalization?' (2009) 40(6) Security
Dialogue 637
Collier, Paul, Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It (Oxford
University Press, USA, 2007)
Feeny, Simon and Mark McGillivray, 'Aid and public sector fiscal behaviour in failing states' (2010) 27(5)
Economic Modelling 1006
Friedman, Milton, Milton Friedman on Economics : Selected Papers (University of Chicago Press, 2008)
Harvey, David, Brief History of Neoliberalism (OUP Oxford, 2005)
Jos, xe and Perales Antonio Sanahuja, 'Consensus, Dissensus, Confusion: The 'Stiglitz Debate' in
Perspective: A Review Essay' (Pt [Taylor & Francis, Ltd., Oxfam GB]) (2004) 14(3) Development in Practice
412
Kourtidis, Dimitrios, Željko Šević and Prodromos Chatzoglou, 'Investors’ trading activity: A behavioural
perspective and empirical results' (2011) 40(5) The Journal of Socio-Economics 548
MacBride, Stephen and John Wiseman, Globalisation and its Discontents (Palgrave Macmillan, 2000)

13. Suzanne Stone LAWS1011 100000922
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MacDonald, Michael and Darel E Paul, 'Killing the Goose That Lays the Golden Egg' (2011) 39(4) Politics
&amp; Society 565
Matsumoto, Mitsuko, 'Three strands of explanations on root causes of civil war in low-income and weak
states in sub-Saharan Africa: Implications for education' (2016) 49 International Journal of Educational
Development 1
Melluish, Steve, 'Globalization, culture and psychology' (Pt Taylor & Francis) (2014) 26(5) International
Review of Psychiatry 538
Rabin, Matthew, 'Psychology and Economics' (Pt American Economic Association) (1998) 36(1) Journal of
Economic Literature 11
Regional Economic Outlook: Sub-Saharan Africa: Dealing with Gathering Clouds, Regional Economic
Outlook: Sub-Saharan Africa: Dealing with Gathering Clouds, International Monetary Fund No (2015)
Rockoff, Hugh, 'Parallel Journeys: Adam Smith and Milton Friedman on the regulation of banking' (Pt
Routledge) (2011) 4(3) Journal of Cultural Economy 255
Rotberg, Robert I., When States Fail : Causes and Consequences (Princeton University Press, 2004)
Sheppard, Eric, 'Trade, globalization and uneven development' (2012) 36(1) Progress in Human Geography
44
Söllner, Albrecht, 'Globalization, greed, and exploitation. How to break the baleful path?' (2014) 84(9)
Journal of Business Economics 1211
Stiglitz, Joseph E, Globalization and its discontents (W.W. Norton &amp; Co., 1st ed, 2002)
Stiglitz, Joseph E, Making globalization work (W.W. Norton &amp; Co., 1st ed, 2006)
Stiglitz, Joseph E., 'Capital-market Liberalization, Globalization, and the IMF' (2004) 20(1) Oxford Review
of Economic Policy 57
Stiglitz, Joseph E., 'The Overselling of Globalization' in M. Weinstein (ed), Globalization : What's New?
(Columbia University Press, 2005) 228-58
Stiglitz, Joseph E., The great divide : unequal societies and what we can do about them (W.W. Norton
&amp; Company, 0th ed, 2015)

14. Suzanne Stone LAWS1011 100000922
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Strange, Susan, The Retreat of the state : the diffusion of power in the world economy (Cambridge
University Press, 1996)
Strine, Leo E., 'Human Freedom and Two Friedmen: Musings on the Implications of Globalization for the
Effective Regulation of Corporate Behaviour' (Pt University of Toronto Press) (2008) 58(3) The University
of Toronto Law Journal 241
Vorster, Nico, 'An Ethical Critique of Milton Friedman’s Doctrine on Economics and Freedom' (Pt S.A.C.R.I.
The Academic Society for the Research of Religions & Ideologies) (2010) 9(26) Journal for the Study of
Religions & Ideologies 163
Wolf, Martin, 'Will the Nation-State Survive Globalization?' (Pt Council on Foreign Relations) (2001) 80(1)
Foreign Affairs 178
Wolf, Martin, Forum on Constructive Capitalism : Fixing Global Finance (Johns Hopkins University Press,
2010)
Other
About Sub-Saharan African - At a turning point, (2012) United Nations
<http://www.africa.undp.org/content/rba/en/home/regioninfo.html>