As contained in NEPAD document ‘Africa’s place in the global community is defined by the fact that the continent is an indispensable resource base that served humanity for so many centuries.’ The underpinning theory of the current economic order is to large extent classical and neoclassical trade theories. According to them, all countries would gain in participating in international trade. Free trade maximises global output by permitting each country to specialise in what it does best. According to the IMF, outward oriented trade policies are conducive to faster growth for they promote competition, encourage learning-by-doing, improve access to trade opportunities and raise efficiency of resource allocation. In order not to miss this turning of history and thereby remain loser, Africa and other LDCs should undergo a deep reflection so as to gain advantages of globalisation. A challenge which can not be delayed or neglected in a context of high risk for these countries to miss the few opportunities they already had: the protection of recent inventions and the rush of multinational corporations in the LDCs markets of goods and services are evident dangers. The simple liberal approach to trade is not consistent with the historical experience of many developing countries. First the theory of trade so applauded by some is built on assumptions that are violated in most international markets.

Much of world trade is in oligopolistic industries such as cars, chemicals, electronics and steel. The increasing importance of multinational corporations is a clear indication that imperfect competition matters. On this point Krugman(1987) states ‘the insights of new models incorporating imperfect competition, learning and economies of scale has reduced the doctrine of free trade from an optimal first best strategy to a reasonable rule of thumb.

Our aim in conducting this analysis is to demonstrate regional economic integration and a more effective South-South cooperation among countries could enable third world countries to not fall prey into the dangerous trap of a simplistic participation in world trade.

SOUTH-SOUTH COOPERATION FOR SELF RELIANCE

As Todaro(1992) pointed out while it may be possible for many less developed countries to be self reliant on an individual country to country basis, some form of trade and economic cooperation among equals is probably preferable to each country trying to ‘go alone’ in a world of unequal trade, technology dominance, increasing protectionism among developed countries and various forms of non market price determination. This means more than ever before, before initiatives toward south south cooperation should be perceived as the basement of any sound economic policy undertaken by a third world country possessing a potential or a resource to exchange.

The south-south cooperation will accelerate the pace and render effective the economic independence of LDCs. The Northern partners of southern countries would be progressively replaced by southern partners. For instance, Nestlé could rightly face a competition from Brazilian coffee, South African milk whose industries in these domains of activities could quickly develop to satisfy that aim. The result would actually be a multiplication of vendors which will inevitably affect the prices of those commodities, in such a situation it’s quite sure the customer would soon pay the real price. In addition, one could believe, the relative proximity (geographical, cultural and sociological) makes south partners more suited to provide satisfying products among themselves. For their needs are relatively the same. Arthur Lewis (1977) stated that ‘the LDCs have within themselves all that is required for growth. They have enough land to feed themselves, if they cultivate it properly. They are capable of learning the skills of manufacturing and of saving the capital required for modernization.’