The deadline for the Tenth Bastiat Prize has been extended to August 15, 2011. Entrants to the Bastiat Prize may also enter the Hoiles Prize, with a top prize of $10,000.

Tenth Bastiat Prize rules: http://www.policynetwork.net/2011-bastiat-prize-rules

International Policy Network is pleased to announce the first annual R.C. Hoiles Prize. The deadline for submissions has been extended to August 15, 2011.

Last night at an awards dinner in New York City, Julian Morris announced the winners of the 2010 Bastiat Prize and the 2010 Bastiat Prize for Online Journalism. The ten finalists' articles are available in an online PDF.

Bastiat Prize

It appears that Robert Mugabe is not the only politician in Zimbabwe who is willing to use ‘anti-colonialist’ rhetoric to justify their ruinous policies.  Saviour Kasukuwere - who holds the somewhat Orwellian post of “Indigenization Minister”- has justified Zanu PF’s latest efforts to control foreign owned business ventures as part of a “struggle for freedom”. The perception that foreign owners are in some way “plundering” wealth at the expense Zimbabwean people is economically illiterate and only serves the interests of those politicians that stand to gain as a result of forced nationalisation.   

In reality, as amply demonstrated by Zimbabwe’s state-owned diamond industry, government control of the private sector has led to whole scale plunder of assets.  This latest push to deter foreign investment will almost certainly exacerbate this predicament by getting rid of productive sectors.  As Roger Bate has recently noted in the Wall Street Journal, it was precisely such policies that led to Zimbabwe’s initial economic collapse.

Furthermore, the policy of expropriating capital from foreign owned businesses bears more resemblance to racist xenophobic idealism than it does to sound economic planning. Elsewhere in Africa, such as in Botswana, Rwanda and Mauritius, enormous benefits have ensued from foreign investment and expertise creating jobs, providing services and ultimately contributing to fiscal revenues. Any government that is truly concerned about the material progress and economic welfare of its citizens should be looking to welcome investors with open arms.

Sadly, in the case of Zimbabwe, politicians remain eager to further their own ends by evoking populist anti-colonial rhetoric.  It is time that the world acknowledged that such vocabulary is used to justify policies that should be viewed by the international community with contempt for the harm they will cause to their people.

The news that China and Nigeria are partnering to form a 16,500 hectare free trade zone near Lagos could be a boon for potential investors and the Nigerian economy.  But, the devil lies in the details: success depends on implementation.  Similar “free trade” or “enterprise” zones have been tried before and have produced mixed results. Nigeria can look across Africa to the Mauritian experience to see that trading zones are not a “silver-bullet” but they can help promote lasting change if other pro-growth policies are pursued.

The idea in Nigeria is to create a free trade area that will allow foreign businesses to invest in Nigeria by circumventing the wide array of existing government imposed barriers. The need for a streamlined system of investment in Nigeria cannot be overstated. The World Bank reports that it currently takes over a month to satisfy the eight procedures in order to start a business at a cost of three quarters of a year’s average wages. In the new free trade zone this procedure is expected to take less than a week.

A similar country-wide Export Processing Zone was launched in Mauritius in 1970, allowing traders to import duty-free “inputs” (e.g. products used in exports) to circumvent vertiginous tariff barriers that crippled the rest of the economy. Yet success for the EPZs in Mauritius did not come until further liberalisation took place almost a decade later. A series of economic reforms launched in the late 1970’s, including reducing (eventually abolishing) the minimum wage (which had contributed to record levels of unemployment in the 1970s) and simplifying import licensing restrictions enabled the EPZ firms to develop and prosper, along with the wider economy. Since the mid 1980s the volume of imports and exports has grown, on average, by 8.7 per cent and 5.4 per cent respectively each year.  At its peak, in 1999, EPZ firms contributed 12.5 per cent to total GDP and accounted for up to 75 per cent of all exports.  And yet even these figures still do not fully account for the value of investment, migration and trade in goods and services that Mauritius’ EPZ garnered for the country’s wider economy.

The underlying point, that the government must listen to the needs of its businesses and investors, was essential to overcoming initial difficulties for the EPZs in Mauritius.  The original reforms in 1970 needed to be bolstered by further reforms, which have helped the EPZs and the wider economy boom.  This is essential to the success of the Nigerian experiment. Nigerian politicians should abandon their historical scepticism towards trade and allow their businesses and consumers to enjoy the expertise, investment and opportunities that opening up to the global economy will bring. 

A free trade island surrounded by a fortress of protectionism is a good start.  Let’s hope the free trade zone provides a beacon for the reforms so badly needed across the economy at large.