Project Description

CHAPTER ONE

1. 1 INTRODUCTION

The expansionary nature of capitalism has led to its universalisation and the consequent integration of all economies of the world — a phenomenon known as globalization.
Thus, globalization is an inevitable outcome of capitalist expansion, it is a process that has existed and predated human history. As noted by Okolie, (2006:1):

…beginning from the chiefdom, empire and feudal epochs, to the present political and economic order, globalization and its associated checklists had remained and persisted but continued to change in content and substance in line with changing pattern and character of the existing predominant mode of production

            It is however, pertinent to see globalization as a process that became intensified as a result of global political-economic metamorphoses that occurred in the 1980s; particularly, the neo-liberal ideological prescription of Reagan/Thatcher revolution rooted on privatization, liberalization and deregulation. This was further aggravated by the collapse of the “socialist bloc” and the concomitant de-ideologisation all of which stimulated the pervasive networks of capitalism (Okolie, 2007: 3-4).

Contemporary globalization is therefore, a multi-dimensional phenomenon which entails the removal and dismantling of all forms of barriers to the free and unfettered movement of goods, services, international investment and capital. It is a process that brings about the integration of national economies into the global economy involving increasing volume of transnational capital flows and through rapid and wide-spread diffusion of technology (Okolie, 2006:72; Khor, 2001:2; Garcia, 1998:96; Iglesias, 1997:2; Reich, 1998:6 etc).

It is equally germane to note that the major facets of globalization remain liberalization of trade, investment and finance (Khor, 2001:1; Ohiorhenuan, 1998:6; Okolie, 2007:7 etc). Meanwhile, globalization is a phenomenon that has widespread impacts (both negative and positive) on countries of the world. Thus, capitalizing on its benefits while mitigating its risks remains the most important challenge to countries of the world.

Regional integration has been adopted as the most viable strategic response to the challenges of globalization. As a result, regional integration is ubiquitous as there has been proliferation and strengthening of various regional and sub-regional groupings in various parts of the globe; for instance: the European Union (EU) in Europe; the Association of South East Asian Nations (ASEAN) in Asia; the North American Free Trade Agreement (NAFTA) in America; MERCOSUR in Latin America; et cetera.

Despite efforts made in West Africa to integrate countries of the sub-region and form a formidable regional bloc, not much success has been achieved. Intra-regional trade among ECOWAS member states is still minimal while most West African countries still trade more with Europe and America than with her members. Again, monetary cooperation and integration remains a big hurdle in the sub-region while the flow of Foreign Direct Investment (FDI) has continued to decline, the region continues to experience massive de-industrialization.
Essentially, globalization is antithetical to regional integration, this is because the inextricable complex interdependent world engendered by globalization serves as a centripetal force which engenders vertical integration of the economies of West Africa to the global economy and undermines any effort to integrate at the sub-regional level.

It is against this background that we shall explicate the challenges posed by globalization to regional integration especially among ECOWAS member states. Specifically, we shall analyze globalization as a multi-dimensional phenomenon and interrogate the mechanisms through which these major facets of globalization (trade, finance and investment liberalization) impinge on regional integration in West Africa within the period, 2006  through 2012

1.2 STATEMENT OF THE PROBLEM

In order to mitigate the risks of globalization and exploit its benefits, most nations have resorted to the formation of regional blocs. Thus, regional integration is ubiquitous and have been seen as a veritable strategy in reducing the impacts of globalization (Brown, 1998:81; Oruebor & Ezeanyika, 2001:157; Janowski, 2006:61; Nnanna, 2006:9 etc).

Efforts have been made in Africa to integrate both at regional and sub-regional levels, however, not much success have been achieved especially in West Africa. Globalization is a multi-faceted phenomenon which impacts on regional integration in a variegated way. The major facets of globalization are financial, trade and investment liberalization (Khor, 2001:2; Okolie, 2007:7). Each of these facets poses serious challenge to integration in West Africa. While trade liberalization impinges on intra-regional trade, financial liberalization undermines monetary cooperation and integration in West Africa, and liberalization of investment impacts negatively on the flow of Foreign Direct Investment (FDI) in the sub-region.

Thus, intra-regional trade among West African countries is not just minimal but have continued to decline (World Bank, 2006; Oyejide, 2004; Ouya, 2003 etc); monetary cooperation and integration within the sub-region is far from being attained, while flow of Foreign Direct Investment (FDI) to the sub-region has continued to decline.

Although, considerable attention has been directed to the study of the challenges posed to regional integration by globalization, existing studies only gloss over the issue without analytically examining how the different facets of globalization impacts on integration in West Africa. Further, most studies tend to only explain how globalization engenders specialization of African economies in primary commodity production, and how these economies have been vertically integrated into the global economy (Oyejide, 1998; Onuoha, 2004 etc).

Conscious effort has not been made to explicate the mechanisms through which globalization undermines regional integration especially how the major forces of globalization (trade, investment and financial liberalization) undermine regional integration in West Africa.
Generally, little is known on how the various facets of globalization undermine intra-regional trade in West Africa, their impact on the mechanisms and strategies of monetary cooperation and integration is still vague while the impact of these facets of globalization on the flow of Foreign Direct Investment (FDI) in the region, and how this in turn impinges on the intensity of integration in West Africa have not been systematically articulated.

It is against this backdrop that rigorous effort is made in this study to explicate the challenges posed to regional integration in West Africa by the various facets of globalization. Specifically, this study shall attempt to interrogate the questions stated below:
1. Is there any link between trade liberalization and declining level of intra-regional trade in West Africa?

2. Has liberalization of global finance enhanced monetary cooperation and integration among states in West Africa?
3. Does liberalizations of investment practices increased the inflow of Foreign Direct Investment (FDI) into the West African sub-region?
4. 3 OBJECTIVES OF THE STUDY

The relationship between globalization and regional integration has generated intense intellectual debate. The broad objective of this study is to systematically
explicate the challenges of globalization to regional integration in West Africa between 2006 to 2012. The specific objectives of this study are:

1. To establish if there is any link between trade liberalization and declining level of intra-regional trade in West Africa.
2. To ascertain if liberalization of global finance has enhanced monetary cooperation and integration among states in West Africa.
3. To investigate if liberalization of investment practices has increased the inflow of Foreign Direct Investment (FDI) into the West African sub-region?

1.4 SIGNIFICANCE OF THE STUDY

This study is practically and theoretically significant because it will add value to existing knowledge and aid in solving practical societal problem, in this case, the problem of regional integration in West Africa in the era of globalization.

Theoretically, this study is a sine-qua-non because it will add value to the existing literature and ipso facto fill the gap in knowledge. Again, not only will the study be an indispensable piece for political pundits and the academia, it will also serve as a convenient starting point for further inquiry in the field of political science. Furthermore, the study will open up new vistas in the intellectual debate and provoke further academic excursion especially in the areas of globalization and regional integration. A study such as this, is therefore a desideratum and is believed to have served its purpose if it succeeds in systematically explicating issues and is able to stimulate further academic discourse.

Practically, the study will be a viable guide to African political leaders and policy makers especially ECOWAS member states to maximize the gains of globalization while mitigating its risks. More so the recommendations and findings will educate West African states in general and Nigerian society in particular on the areas of globalization and its impact in integrating the economies of West African countries.

1.5 LITERATURE REVIEW

There is an avalanche of literature relating to issues of globalization and sub regional integration. However, the aim of this review is to examine studies carried out by other scholars with respect to the following research questions     raised in the study, viz: is there any link between trade liberalization and diminishing level of intra-regional trade in West Africa? Has liberalization of global finance enhanced monetary cooperation and integration among states in West Africa? Does liberalizations of investment practices increased the inflow of Foreign Direct Investment (FDI) into the West African sub-region? with a view to discovering the lacuna in the existing literature.

Based on this, we shall review the literature under the following sub-headings which deals with the questions raised in the research viz; trade liberalization and intra-regional trade in West Africa, liberalization of global finance and monetary integration/cooperation in West Africa and investment liberalization and the flow of foreign direct investment into west Africa.

1.5.1 TRADE LIBERALISATION AND INTRA-REGIONAL TRADE IN WEST AFRICA
            Regional integration in West Africa is anchored primarily on trade, any process which impedes both extra and intra-regional trade constitutes an obstacle to integration in the sub-region (Alaba, 1998:8). In this light, a lot of studies have tried to examine the factors that impinge on intra-regional trade in West Africa especially how trade liberalization, engendered by globalization undermines intra-regional trade in West Africa. However, most of the studies only present a vague analysis without actually establishing a link between trade liberalization and diminishing intra-regional trade in West Africa.

World Bank (2006) argued that trade among West African countries is only a small fraction of their total external trade. In 2004 alone, the total amount of merchandise exported by member countries to other member countries was about 8.6 percent of their total exports and 9.1 percent of their total imports. It argued that even at that, the figure for total exports from West African countries is heavily based on the importance of Nigeria’s total exports of which oil represents close to 98%. Thus, Nigeria’s oil exports to other West African countries accounts for large part of intra-regional trade. They argued that eliminating oil trade from total imports by member countries would reduce the ratio of intra-regional trade to total imports to a low 5.7 percent. Page and Bilal (2001) opposed this view, using ECOWAS as an institutional framework. They opined that there has been an increase in intra-regional trade within ECOWAS as several members of UEMOA have increased their trade with the rest of ECOWAS, and the non UEMOA members of ECOWAS also show an increase in trade within ECOWAS. They argued that this increase in ECOWAS trade, however, may also be explained by shifts from unrecorded to recorded trade. These studies only examined the rate of intra-regional trade without examining factors that affect increase or decrease of intra-regional trade in West Africa.

Abdoulahi (2005) examined trade liberalization vis-â-vis intra-regional trade in West Africa and argued that trade liberalization is a reform measure adumbrated in the Structural Adjustment Programmes financed by Bretton Woods institutions under which countries pursue trade reform measures relating to the liberalization of imports and currency regimes as well as the reduction of tariff and non-tariff barriers. He argued that although, African countries have liberalized trade, intra-ECOWAS trade is still low consisting of only 10% of total exports. He further argued that despite the importance attached to bolstering intra-regional trade and the many institutional mechanisms put in place with a view to improving intra-regional trade, the share of intra-regional trade has remained modest with export mostly targeted to the European, Asian and North American markets.

In the same vein, Oyejide (2004) examined trade liberalization and regional integration in Africa and argued that an assessment of the performance of most African regional integration reveals, inter alia, that intra-regional trade as a proportion of total trade is quite low and that trade performance (measured by changes in trade/GDP ratio) of the “integrated” areas worsened

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