Implications for Foreign Direct Investment in Sub-Saharan Africa under the African Growth Opportunity Act

Trent, Rebecca | January 1, 2002

In the wake of the September 11th attacks on the United States, there has been an outcry in the media over the economic, social, and political rights of individuals in less developed nations. The need to integrate developing nations into the global economy has been called for, not only for sheer humanitarian reasons, but also as a means to prevent catastrophic actions by those who feel left out when it comes to globalization. It is said that “rich countries will pay a price” if they cannot find ways to integrate developing nations into the international economy and that “security depends on the idea that others [meaning lesser developed nations] have a stake in our international system.” While some critics argue that integration of developing nations can be achieved through revised foreign aid programs and debt forgiveness, such programs do not foster the sort of autonomy that is needed for these nations to truly become viable players in the global market. Debt forgiveness, such as that required by the latest Heavily Indebted Poor Countries Initiative (“HIPC”) is essential. Moreover, foreign aid is needed to assist nascent development initiatives across the globe. Debt forgiveness and aid, however, are only the first elements needed to solve the disparities created by globalization. If integrated markets within a truly globalized world are to be sustained, foreign direct investment and free trade will need to become a reality. This paper will focus on the United States’ relation to the former by examining implications for foreign direct investment under a piece of Congressional legislation entitled the African Growth Opportunity Act (“AGOA”). Ultimately this paper illustrates that foreign direct investment will benefit from a universal policy that offers broad accessibility and transparency to investors, while simultaneously preserving individual nuances and recognizing the autonomy of each unique nation in Sub-Saharan Africa.