DECOLONIZATION AND INTERNATIONAL TRADE

DECOLONIZATION AND INTERNATIONAL TRADE Dr. Albert J. Milhomme, Texas State University at San Marcos ABSTRACT Former colonies may have acquired their independence after violently struggling against the colonizer. Others may have acquired their independence peacefully. The process has been described by the rupture intensity factor. This study focuses on the short and long term impact, if any, of a low and a high rupture intensity factor on the achievement of the economic independence of two former British colonies. HYPOTHESIS For some time now, many countries, former colonies of some colonial powers like Great Britain have acceded to their political independence. Some did acquire their political independence through peaceful negotiations, some others got their independence through brutal and bloody confrontations. The question is: What about their economic independence? Was there any short term impact on their economic independence on the way the political independence was achieved? Is there any long term impact on their economic independence on the way their political independence was acquired? The answer to these questions could be no. British companies seem to have maintained an active position in their former colonies. The reasons for this are the cultural ties and traditions established during colonial rule. The colonial language used for business, the education system of the country, the legal systems, the financial connections with outside world, the type of product or produce especially adapted to the colonizer market, and expatriates staying in the country after independence are all factors which will contribute to a paradoxical degree of dependence upon the former colonizer on the part of many newly dependent countries, especially those with a low rupture intensity factor (peaceful and smooth transition). The answer to these questions could be yes. Before independence, ostracism was high in many former colonies and the events preceding independence made some people believe that former colonized countries would reject companies from the colonial power. If dependence of former colonies to their colonizers existed then it would be for a short time. Colonizers will very quickly loose their historically acquired economic advantages, especially if the independence was the result of some brutal and bloody confrontation, i.e. a high rupture intensity factor (violent and acrimonious transition) (Johansson). To measure the evolution of the economic independence with respect to the former colonizer, one can look at the evolution of the international trade pattern, exports and imports, before the independence, just after the independence, and today, almost half a century after the political independence. Ghana and Kenya appear to be the right countries to compare, Ghana having got its independence very peacefully and Kenya having got its independence through a fierce military struggle. In 1957, as a colony of Great Britain, Ghana exported 38 percent of its total exports to Great Britain and imported 45 percent of its total imports from Great Britain. This was the result of more than a century of effort to create and protect trade, to pump in finished products into Ghana and pump out raw materials. Ghana was the 21 st largest importer of goods from the U.K. and the 32 nd largest exporter of goods to the U.K. a rank without any relationship with Ghana s Gross Domestic Product. In 1963, Kenya as a colony of Great Britain exported 24 percent of its exports to Great Britain and imported 41 percent of its imports from Great Britain. The United Kingdom had also at that time a

dominant position in Kenya. This position was also mainly the result of a century of effort to create and protect trade, to pump in the finished product and pump out the desired raw material. At that time, Kenya was the 29th largest customer of the U. K. in terms of imports and the 45th largest supplier in terms of exports, a rank without any relationship with Kenya s Gross Domestic Product. What was the evolution of the economic independence, measured by an international trade concept like the geographical concentration factor, of those two countries having acceded to political independence through two opposite schemes, Ghana peacefully, and Kenya violently? SHORT TERM IMPACT OF THE RUPTURE INTENSITY FACTOR: THE FIRST FIVE YEARS AFTER THE POLITICAL INDEPENDENCE To measure the impact on the Country Mood just after the political independence and its short term impact on the trade with the former colonizer, one will study the evolution of the trade (Imports and Exports) five years before the independence and five years after the independence, for both countries. 1 GHANA Independence 1957 A - Short term evolution of the imports (1952-1962) Chart 1 is a graphical representation of the evolution of the Ghana Imports from U.K. during the five years (1953-1957) before the Independence. Chart 1 Ghana: Imports from U.K. from 1953 to 1957 1 9 8 7 y = -1.8688x + 835.41 6 5 4 3 2 1 current dollars y = 2.2x + 15 Chart 1 shows a slight decrease of the imports during the five years preceding the independence. Chart 2 is a graphical representation of the evolution of the Ghana Imports during the five years following Independence (1958-1962). Any sharp modification could be the result of the short term impact of the political ties severance. A slight increase in the rate of growth of the imports from U.K. is observed.

Value in U.S. Dollars Chart 2 Ghana: Imports from U.K. from 1958 to 1962 1 9 8 7 y = 9.4887x + 791.68 6 5 4 3 2 1 y = 3.8x + 112.8 years after Independence B Short Term Evolution of the Exports (1952-1962) A better measure of the economic independence of a country is the geographical concentration index (GCI). This index is defined as the ratio of the exports of a country A (here Ghana) to another country B (here U.K.), over the total amount of exports of the country A (here Ghana) to the World. A portfolio of customers, with smaller geographical concentration indexes will make the economy of this country less vulnerable to the ups and downs of the economy of its customers. Let us observe the evolution of this index for five years before the independence, and 5 years after the independence. Chart 3 Ghana: Exports to U.K. from 1953 to 1957 12 1 8 y = -63.427x + 972.38 6 4 2 y = -6.3x + 123.7 Chart 3 indicates already a decrease in the amount of Ghana exports to U.K. during the five years preceding the independence. Chart 4 represents the evolution of the geographical concentration index (GCI) exports from Ghana to U.K./Exports from Ghana to the World during the same period. The CGI is

Geographical Concentration Index already shrinking at a rate of 1.46% a year. Chart 4 Geographical Concentration Index from 1953 to 1957 (with U.K.).45.4 y = -.146x +.4334.35.3.25.2.15.1.5. Chart 5 indicates a continuous decrease of the exports from Ghana to the U.K., but at a rate three times smaller than before Independence. Chart 5 Ghana: Exports to U.K. from 1958 to 1962 8 7 6 y = -23.949x + 74 5 4 3 2 1 y = -1.5x + 15.5 Chart 6, a representation of the GCI evolution during the 5 years following Independence indicates a continuous decrease of the GCI but at a slower path. The independence has not fundamentally modified the trajectory of the GCI.

Geographical Concentration Index Chart 6 Ghana: Geographical Concentration Index from 1958 to 1962 (with U.K.).4.35.3 y = -.118x +.3559.25.2.15.1.5. 2 - KENYA Independence 1963 A Short Term Evolution of the Imports (1958-1968) Chart 7 shows a moderate shrinkage of the U.K. product imports well before the independence. This could be the consequences of the insurrection which started in 1952. Chart 7 Kenya: Imports from U.K. from 1959 to 1963 6 5 y = -1.352x + 578.54 4 3 2 1 Current Dollars y =.29x + 83.79 Chart 8 shows a large increase of the imports from U.K (almost 1% per year in constant dollars), just after the political independence. The fact that the rupture was the result of a fierce struggle had no negative short term influences on the imports from U.K.

Value in U.S. Dollars Chart 8 Kenya: Imports from U.K. from 1964 to 1968 7 6 5 y = 36.822x + 381.62 4 3 2 1 y = 9.8x + 58.82 B Short Term Evolution of the Exports (1958-1968) Chart 9 shows an increase in the amount of the exports from Kenya toward the U.K. before Independence. Kenya s goods were moving to U.K. at a faster rate. Chart 9 Kenya: Exports to U.K. from 1959 to 1963 25 2 y = 7.674x + 166.13 15 1 5 y = 1.86x + 23.72 Current Dollars Chart 1 is a representation of the GCI evolution during the same period. A slight decrease of the GCI, which indicates a larger increase of exports to the World than to the U.K.

Geographical Concentration Index Chart 1 Kenya: Geographical Concentration Index from 1959 to 1963.27.26.25.24 y = -.15x +.2475.23.22.21.2 Chart 11 shows the evolution of exports to U.K. during the five years (1964-1968) following Independence. Chart 11 Kenya: Exports to U.K. from 1964 to 1968 25 2 y = 12.133x + 171.6 15 1 5 y = 3.62x + 26.4 Chart 12 shows the evolution of the GCI during the same time interval. The GCI did in fact increase after the independence. The economic independence as measured by the GCI was less than before the political independence. The harshness of the rupture had, if any, a short term impact inverted.

Geographical Concentration Index Chart 12 Kenya: Geographical Concentration Index from 1964 to 1968 (with U.K.).3.25 y =.12x +.1928.2.15.1.5. LONG TERM IMPACT OF THE RUPTURE INTENSITY FACTOR 1 GHANA (1958-1997) A Low Rupture Intensity Factor s Long Term Impact on Imports from U.K. Chart 13 is a graphical representation of the evolution of the Ghana Imports from U.K. during the 4-year period which has followed the independence. A comparison of Chart 13 and Chart 2 could bring some lights on the trend observed just after the independence. Chart 13 Ghana: Imports from U.K. from 1958 to 1997 1 9 8 7 6 5 y = -9.3968x + 674.69 4 3 2 y = 8.5684x + 22.23 1 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 after Independence Ghana is reducing its imports from U.K. at a rate of $ 9.4 million in constant dollars (base 1996). The softness of the rupture has not lead to the maintaining of U.K. as a large supplier. New relations have been

Geographical Concentration Index Value in U.S. Dollars created with other suppliers, old U.K. foes or neighbors. The percentage of British imports by Ghana has decreased from 37 percent of the world imports in 1958 to 15 percent in 1997, a decrease of about.55 percent per year. Ghana is today the 67the largest importer of British goods, from being Britain s 21 st largest importer in 1957. B Low Rupture Intensity Factor s Long Term Impact on Exports to U.K. Chart 14 represents exports from Ghana to the U. K. from independence in 1958 to 1997 (forty year-period) Chart 14 Ghana: Exports to U.K. from 1958 to 1997 8 7 6 5 4 3 y = -12.768x + 622.53 2 1 y = 2.7393x + 69.719 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 The ratio of Ghana s exports to the U.K. to Ghana s total export activity has been computed in order to measure the today vulnerability of Ghana s economy to the U.K. s economy. (Chart 15) Chart 15 Ghana: Geographical Concentration Index from 1958 to 1997 (with U.K.).4.35.3.25.2.15.1 y = -.53x +.316.5. 6 7 8 9 1 11 12 13 14 15 16 17 18 19 2 21 22 23 24 25 26 27 28 29 3 31 32 33 34 35 36 37 38 39 4

Value in Million U.S. Dollars Value in U.S. Dollars Ghana s export share (GCI) to the U.K. have decreased from 3 percent in 1958 to 9 percent in 1997, a rate decrease of the GCI of about.53 percent per year. Ghana today ranks as the 63 rd largest supplier for the British, down from its position as the U.K. s 32 nd largest supplier in 1958. Ghana, 4 years after, has really improved its economic independence vis-à-vis the United Kingdom. 2 KENYA (1963-22) A High Rupture Intensity Factor s Long Term Impact on Imports from U.K. The chart below (Chart 16) shows the evolution of imports by Kenya from Independence to 22 in current dollars and constant dollars. There was a shrinkage of the amount of imports from U.K. during this 4-year period at a yearly rate of $ 8.4 million constant U.S. dollars (base 1996) comparable to the attrition rate of imports by Ghana from U.K. (9.4 million), for a level of imports of about the same at their independence (7 million constant U.S. dollars base 1996). Chart 16 Kenya: Imports from U.K. from 1963 to 22 12 1 8 6 y = -9.3913x + 678.12 4 2 y = 7.1292x + 17.95 Current Dollars 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 B High Rupture Intensity Factor s Long Term Impact on Exports to U.K. Chart 17 shows the evolution of exports from Kenya from 1963 to 22, while chart 18 shows the evolution of the Geographical Concentration Index during the same period. Chart 17 Kenya: Exports to the U.K. from 1963 to 22 5 45 4 35 3 y =.4946x + 243.91 25 2 15 1 y = 6.8517x + 6.7441 5 6 7 8 9 1 11 12 13 14 15 16 17 18 19 2 21 22 23 24 25 26 27 28 29 3 31 32 33 34 35 36 37 38 39 from Independence

Geographical Concentration Index The GCI index (chart 18) shrunk from 24% in 1963 to less than 15% in 22 (mean attrition of the geographical concentration index of.14% per year) Kenya is now the 63rd largest customer of the U.K. and the 55 th largest supplier of the U.K. Compare to Ghana s GCI, the Kenya s GCI has shrunk at a rate three times slower than the one of Ghana. In spite of the rupture intensity factor, high for Kenya, this country has today an economy more tied up to its former colonizer s economy than Ghana (with a lower initial GCI, but higher today GCI). Chart 18 Kenya: Geographical Concentration Index from 1963 to 22 (with U.K.).3.25.2.15 y = -.14x +.1847.1.5. 6 7 8 9 1 11 12 13 14 15 16 17 18 19 2 21 22 23 24 25 26 27 28 29 3 31 32 33 34 35 36 37 38 39 CONCLUSIONS The violent or non violent achievement of the political independence of former colonies from their former masters does not appear to have any impact on the achievement of their economic independence. The observed figures for Ghana and Kenya might even lead to the opposite conclusion! Kenya s insurgency against U.K. during ten years before the recognition of some political independence has not lead to a bigger or faster rejection of the British buyers and sellers. The attrition rate of the international trade with U.K. over a forty year period is a fact for all former British colonies, but appears not to be a dependent variable of the rupture intensity factor.

LIST OF CHARTS Chart 1: Ghana: Imports from U.K. from 1953 to 1957 Chart 2: Ghana: Imports from U.K. from 1958 to 1962 Chart 3: Ghana: Exports to U.K. from 1953 to 1957 Chart 4: Ghana/U.K. Geographical Concentration Index from 1953 to 1957 Chart 5: Ghana Exports to U.K. from 1958 to 1962 Chart 6: Ghana/U/K. Geographical Concentration Index from 1958 to 1962 Chart 7: Kenya: Imports from U.K. from 1959 to 1963 Chart 8: Kenya: Imports from U.K. from 1964 to 1968 Chart 9: Kenya: Exports to U.K. from 1959 to 1963 Chart 1: Kenya/U.K. Geographical Concentration Index from 1959 to 1963 Chart 11: Kenya: Exports to U.K. from1964 to 1968 Chart 12: Kenya/U.K. Geographical Concentration Index from 1964 to 1968 Chart 13: Ghana: Imports from U.K. from 1958 to 1997 Chart 14: Ghana Exports to U.K. from 1958 to 1997 Chart 15: Ghana/U.K. geographical Concentration Index from 1958 to 1997 Chart 16: Kenya: Imports from U.K. from 1963 to 22 Chart 17: Kenya: Exports to U.K. from 1963 to 22 Chart 18: Kenya/U.K. Geographical Concentration Index from 1963 to 22 BIBLIOGRAPHY Bureau of Economic Analysis. International Account Data 22 Direction of Trade Statistics Yearbooks from 1952 to 22 published by the International Monetary Fund. Johny K. Johansson. Global Marketing. Irwin editor 1997 Milhomme, Albert J. (25). Decolonization and International Trade: the Kenya Case. The Journal of American Academy of Business, Cambridge, Vol. 6, Number 1, March 25, p 164-174. Milhomme, Albert J. (24). Decolonization and International Trade: the Ghana Case. The Journal of American Academy of Business, Cambridge, Vol..5, Number 1, September 24, p. 153-163. National Science Foundation. Division of Science Resources Studies. Survey of Industrial research and Development 1997 http://www/.ghana.gov http://tradeport.org/ts/countries/ghana/tradex.html http://www.kenyaembasy.com http://www.cia.gov/cia/publications/factbook/geos/ke.html http://reference.allrefer.com/encyclopedia/k/kenya-history.html