Conscious industrialization policy in Africa, as in most other underdeveloped countries, began in the post–World War II period. Since the developed countries were industrialized, while the underdeveloped countries were primary producers, economic development came to be identifed with industrialization. While prices of industrial exports persistently increased relative to those of primary products, prices of exported primary products were unstable and tended to decline or at best stagnant over time (Prebisch 1950; Singer 1950). As markets for primary products stagnated, and as synthetics were increasingly substituted for primary products, underdeveloped countries turned to industrialization as a strategy for economic growth and development.
Having decided to industrialize, the underdeveloped countries planned to substitute their industrial imports with local production. This was the strategy of import substitution industrialization. It was thought that underdeveloped economies would progress from the simpler level of manufacturing consumer goods to intermediate goods and eventually to the manufacture of capital goods.
Import substitution was expected to improve the balance of payments of underdeveloped countries as more manufactured imports would be produced domestically. Tariffs were imposed to protect the infant industries from foreign competition. But these tariffs became progressively higher with higher stages of processing. Foreign frms were encouraged to establish "tariff factories" to circumvent the protective tariffs. Their use of capital-intensive technologies resulted in limited employment opportunities. Frustrations with foreign frms led to their nationalization and/or the establishment of national public development corporations. However, neither proved viable in most underdeveloped countries.
The capital-intensive consumer industries themselves required more imports of spare parts, raw materials, and replacement capital goods, thus requiring more foreign exchange to service them. Consequently, more resources were being devoted to these urban industries than to the agri cultural sector and rural development. Moreover, rural development was just understood in a narrow sense as just being agricultural development. Rural-urban migration increased, but because the capital-intensive industries created few jobs, open urban unemployment increased. While the urban unemployment did not generate much instability because the migrants were gullible peasants who largely blamed themselves for their misfortune, this is no longer the attitude of many of the urban poor as they have increasingly come to consist of school-leavers. Soon the majority of the urban poor will come to consist of university graduates who will not fear to directly challenge those wielding political and military power. The dire economic situation will lead to more serious social and political problems and confrontations between the authorities and unemployed who will increasingly come to consist of the politically conscious educated. With increases in university enrollments and output, the numbers and sophistication of the politically conscious unemployed is greatly increasing. Only expanding opportunities through viable self-sustaining economic development will greatly minimize socio-political instability.
Because of the limitations of import-substitution industrialization, underdeveloped countries changed their industrialization strategy to manufacturing for export. The export-of-manufactures strategy was recommended particularly for small economies with limited domestic markets. At the early stages of manufacturing, most underdeveloped countries produced similar products and could not absorb much of each other’s products. Tariffs in the more industrially developed economies progressively increased with the degree of value added of manufactured imports from the underdeveloped economies unless an under developed country was a satellite of a major industrial country3 (Todaro and Smith 2015: 588–614; Krugman and Obstfeld 2006: 243–258).
Given the barriers to export of manufactures, underdeveloped countries intensifed efforts on promoting regional integration so as to pool their markets. But while the cooperating and integrating countries could see the joint benefts of integration, they could not easily agree on equitable sharing of these potential benefts. The partner states were at different low levels of industrialization, and each partner wanted to accelerate its own rate of industrialization and development. Hence, agreements on the location of industries among members of an integrating group became almost impossible. This outlook toward economic integration has not changed much, and hence the slow pace of regional integration in Africa.