Deepening Integration: The Political Economy of Regionalism in East Africa IDEAs Workshop, Nairobi Jan 2007 By Dr. Julius Kiiza, Dept of Political Science, Makerere University

Introduction Purpose of this paper is to critically reflect on regional integration in East Africa Focus will be on the key individual and institutional political economy actors; esp: Contest between the go-slow & the first- tracking integrationists will be highlighted Central argument:

Central Argument Integration should be deepened and hastened, given: The enormous challenges posed by the harsh global political economy The domestic developmental challenges esp the massive poverty (31% Uganda; 56% Kenya; over 50% Tanzania) The shortfalls of our donor-driven PEAPs/PRSPs; and The potential benefits of integration

The Debates Two major debates have emerged on regionalism: 1. Feasibility & the real or perceived benefits of regionalism 2. Appropriate pace or speed of integration Theorists of globalization argue that: Globalization has resulted in Ungovernable Markets That Nation-States Need to Liberalize Domestic Markets Regional Integration: Higher Level of Liberalized Domestic Mkts

From perspective of Globalization Orthodoxy: Purpose of Regionalism is: To fit in the emerging free global markets Attract FDI Be compliant with WTO rules (on freer trade) Adopt global best practices: Look! Every regional is integrating - ASEAN, EU, NAFTA Globalization Theories ….

Skeptical Viewpoint Critics of the globalization orthodoxy urge caution Critics do not oppose increased regionalism Their contention is over the purpose The claim is that: Integration should serve to govern, not deepen globalization But Why? Globalization has two faces, not one. Beneficial to advanced (OECD) countries; & largely detrimental to poor commodity economies Regionalism should distort free global markets for the benefit of cooperating member-states

Skeptical Viewpoint … ToT in international markets - unfavourable to developing countries Thus, regionalism must enhance quality of exports Attracting foreign K - esp FDI (not portfolio K) is important Regionalism also promotes economies of scale in international diplomacy

On the Pace of Integration Again 2 major debates: The Go-Slow Argument; and The Fast-Tracking Strategy The Go-Slow claim alleges that integration is like marriage PLO Lumumba (2006) for example argues: U cant meet a lady for 1st time and say: I love U, I need U, I want to marry U right now! 2nd Claim: Need for broad consultation

The Fast-Tracking Initiative Argues : Time is a scarce resource Zeit ist Geld! Globalization poses serious challenges calling for urgent action WTO evolving into a Monster: Unity is Our Strength (as small economies) Poverty - a serious problem (31% Uganda; 56% Kenya; over 50% Tanzania) Our State officials typically move at snails pace Nobody in their right mind asks a snail to go-slow Conclusion: GET SERIOUS!

Who Shd Get Serious - and How The foll institutional political economy actors must get serious: Our Presidents + Cabinet (Initiate policies) Rotating President: Announces policy priorities EALA Members: Our lawmakers National Parliaments Sectoral Committees Elite Academics Our bureaucrats/ Civil Servants Donors? Development Partners??

How Should the Actors Get Serious? Rethink the dominant trade theory of integration Revisit the contest btn trade theory and production economics theory Address the fundamental question of trade in what? An appropriate trade policy must be STRATEGIC

Key Elements of Strategic Trade (and Industrial) Policy Import of Capital goods is encouraged Country or region-specific industrial policies Promote selected priority industrial sectors Export of raw materials is prohibited Infant industry protection - is promoted Build developmentalist institutions eg EADB, UDC, the railways, etc Massive use of subsidies Struggle for structural economic transformation from primary commodities to value added pdts

Lessons from Successful Integration The go-slow theorists point to EU as a model for African integration This is erroneous The best models for EA integration are: German Unification - Bizmark Unification of USA - 18th C Unification of Japan - 19th C Unification of Italy CRITICISM: THE TIMES HAVE CHANGED

Conclusion & The Way Forward Integration is not an end in itself It is a means to larger developmental goals Global political economy is harsh Poverty is a serious problem Time is a scarce resource Hence the need for deeper and faster economic integration But this calls for economic integration and political union as joint objectives

Thank You Ladies & Gentlemen I hope you enjoyed my Talk