Menu

Why Africa will be missing on ‘Globalisation 3.0’ 08 May 2025

President Trump is upsetting the globalisation cart. Since coming back to the US presidency, Trump has upped the fight against globalisation as we understand it. If there was any doubt that the new US administration has a principled grouse with globalisation, the Vice President, JD Vance, put that to rest with his recent speech on the subject. Vance argued that globalisation has failed because, contrary to the script that developed countries would move to a higher level of value creation while developing countries would be stuck in the lower run of value creation, it has seen China, and many Asian countries, break the rule and competing at the high rung of value creation.

Globalisation did not go as planned. As Branko Milanovic argued in a recent essay, titled “After Globalisation 2.0, What Next?’, globalisations 1.0 and 2.0 differ in their consequence. The former saw greater economic growth in developing countries, more inequality between developed and developing countries, and less inequality between classes in developed countries. The result of the latter is less inequality between developed countries in Europe and America and developing countries and more inequality between classes in developing economies.

The neoliberal policies benefited developing countries in the sense that Westerns capitalists moved manufacturing to developing countries to take advantage of domestic liberalisation to manufacture cheaper. This enriched capitalists in the west and to some extent provided employment to the poor in developing economies. By some measures, the poor in developing countries closed the GDP per capital difference between them and the poor in the developed countries as outsourcing helped to create jobs and enhance income in the global south, especially in Asia. Inequality increased in the developed countries as capitalists got richer and worker got poorer or stagnant because of de-industrialisation.

Milanovic’s analysis is poignant and enlightening as it shows the irony that since the 1980s, we have witnessed the contradiction of globalisation leading to reduction in global inequality and increase in domestic inequality. Furthermore, it provides a context to the merit of JD Vance’s much maligned attack against globalisation. Vance argues that globalisation benefited the left-behind countries and not the developed countries, contrary to its advertised merits. Milanovic’s analysis shows that in terms of the working class in developed economies, globalisation was not a blessing. The capitalists benefited immensely, but the working people did not benefit that much. Also, the sense of nationality and community values moved with the economic winds.

The other little incongruity is that whereas China and many Asian countries benefited from Globalisation 2.0, Africa did not. Yes, Globalization 2.0 saw some new jobs from outsourcing, but the liberalisation of their economies and failure to take advantage of international liberalisation meant that African countries did not see any increase in GDP per capita. As a matter of facts, Africa’s GDP per capita grew during Globalization 1.0 when there was no economic liberalisation and free trade than under the regime of neoliberalism. China benefited most from Globalization 2.0 because it rejected domestic neoliberalism and embraced international neoliberalism. As a developmental state, it governed the market and fast-tracked production and export. Africa embraced domestic neoliberalism and did not take advantage of international neoliberalism.

The African tragedy on Globalisation 2.0 is very stark. As Milanovic argues, “the convergence of worldwide incomes did not extend to Africa, which continued in its path of relative decline. If that is not changed – and the likelihood of such change seems low – the relative decline of Africa will, in the decades to come, overturn the forces currently pushing global inequality downward and usher in a new era of rising global inequality”. Africa is the outlier. Africa will re-pollute the global economy with rising inequality.

The context of this essay is Trump 2.0, which has deranged or completely upturned Globalisation 2.0. Milanovic believes that the end of Globalisation 2.0 may have dated to the Trump 1.0, considering how he tried to change the principles of multilateralism and liberalism of global trade by slamming tariffs on China. Maybe this dating is right or wrong. But no one argues against the notion that Trump 2.0, in many ways, ends globalisation as we have known it since after Word War 2.

How should Africa play differently to benefit from reformatted Globalisation 2.0 or Globalisation 3.0? First, what does Trump’s disruption of Globalisation mean? Again, Milanovic offers a good insight. According to him, we are entering “a new world of nation- and region-specific trade and foreign economic policies, moving away from universalism and internationalism and into neo-mercantilism”. Many describe this as the death of liberal internationalism and the rebirth of transactional leadership built around the notion of state sovereignty and the great power concept.

As usual, Africa does not seem to be prepared. We are still racked by extreme political instability and acute poverty. The poverty and conflicts traps are tightening. African policy intellectuals are still mourning the world order that did not benefit it, instead of strategising on how to take advantage of “a new world of nation- and region-specific trade and economic policies’ and be part of the convergence of global economic growth. The problem is that African states are both weak and disoriented. China rejected domestic neoliberalism and accepted international neoliberalism because it offers opportunity for national economic growth. China could do this because it is a developmental state – a strong and coherent state.

Africa countries missed out on Globalisation 2.0 because they are weak, incoherent states that embraced domestic neoliberalism. They will still miss Globalisation 3.0 if it continues to embrace the discredited domestic neoliberal policies that make the state weaker and more incoherent.

Sam Amadi, PhD, a former Chairman of the Nigerian Electricity Regulatory Commission, is the Director of Abuja School of Social and Political Thoughts.