Trade has existed for several centuries colonial rule began in the late nineteenth century and has almost disappeared and the investment in the African economy has been increasing steadily in the present century. “The things which bring Africa into the capitalist market system are trade, colonial domination, and capitalist investment. It also takes the form of loans to African governments, which have to be repaid with interest. Imperialism, on the other hand, as manifested for instance in Europeans’ ownership of land and mines (and banks, factories, etc.) in Africa, entails the outflow of revenue from Africa to the foreign owners, which forestalls African development. They also set the prices of the manufactured products they produce, which of course are higher than those of the former category. For example, the big capitalist countries effectively establish the prices of minerals and agricultural products and “subject these prices to frequent reductions,” thus harming Africa’s economy (depriving it of revenue). The former has to do with the terms of trade. Like Robin Hahnel in The ABCs of Political Economy (2003), he postulates two main mechanisms of underdevelopment: exploitation through trade and exploitation through investment (i.e., imperialism). Walter Rodney’s classic How Europe Underdeveloped Africa (1972) is certainly worth reading.
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