Uganda and Globalization by Arielle Maldonado

Category: Globalization

Uganda’s agriculture is the most important sector of the economy, employing over 80% of the work force. However, they heavily rely on income from exports of coffee.
GDP growth rate: 6%
Labor Force composition: Farmers
Inflation Rate: 5.8%
With the international prices of coffee, cotton and tobacco falling, they lack a profitable, or even practical, cash crop. The International Coffee Organization tells these small farmers that global price instability is responsible for the low prices of their coffee. The answer, the politicians tell them, is to diversify their crops. Besides coffee, Uganda also grows many tropical fruits such as mangoes and bananas. With so much production of high quality fruits, the fruit sector is a prime candidate for diversification. But unless Uganda can attract investments in fruit processing plants and thus add value to its raw produce, it cannot reap fully the abundant bounty that globalization promises. Yet foreign investors have neglected this productive sector, preferring instead to invest in services like mobile phones, cheap electronics, and gigantic supermarkets. Globalization's proponents point to a few success stories to argue that lowering tariffs and eliminating import quotas will attract capital to new export industries, raise incomes, and bring new jobs. But this idealized view overlooks the adverse effects that can result from globalization's free-rein market processes and by the movement of multinational corporations (MNCs). MNCs relocate to developing countries because they are guaranteed low production costs, large markets, and abundant natural resources. In Africa and elsewhere, MNCs also benefit from lax environmental regulations, weak trade unions, and the near absence of competing products. But because of civil unrest, it is more convenient to go to more stable countries in Latin America or just go to China.
Source: http://yaleglobal.yale.edu/article.print?id=2721