Pursuing an outward-oriented strategy is even more crucial for most African countries because their domestic markets are particularly small. Participating in the global economy also entails significant risks. Participating in the global economy also poses significant challenges for the economic management of fragile economies and can lead to major problems. In particular, as shown by the recent Southeast Asian experiences, the risks of liberalization are particularly high for capital accounts due to the massive size and fluctuating nature of financial flows. Although few countries in Africa are likely to face the scale of inflows that precipitated the Asian crisis, a key lesson concerns the importance of developing sound financial systems.
Successful participation requires a strategic approach that is actively pursued.
It is vital that African countries actively engage the forces of globalization. But the specific nature and scale of the benefits and costs depend on the forms of integration. A strategic approach is needed. First , integration is multi-dimensional, involving among others the aspects of trade, investment, capital flows and technology. The optimal level of openness may differ for each aspect, which itself depends critically on the stage of development in each particular market.