Much has been made by the IMF of emerging markets (.pdf) in Africa. Dani Rodrik looks at what happens in the current period where rich countries, especially the US, are in a ‘slowdown’, and there is much anti-globalisation sentiments among Americans. Add to this a not-so-hospitable disposition towards exports from developing countries (actually, China is the biggest deal, and for outsourcing, India), an American current-account deficit of $739 billion (5.3% of its GDP), and an emerging markets and oil-exporting countries surplus of $631 billion and you have a recipe for protectionism in developed countries. He concludes by writing:

Long-term success still depends on what happens at home rather than abroad. What is moderately bad news at the moment will become terrible news only if economic distress in the advanced countries – especially the US – is allowed to morph into xenophobia and all-out protectionism; if large emerging markets such as China, India, and Brazil fail to realize that they have become too important to free ride on global economic governance; and if, as a consequence, others overreact by turning their back on the world economy and pursue autarkic policies.

Of course, a lot depends on what happens inside developing countries. Rodrik is big with institutions, and I am firmly with him on that; institutions matter, and in really serious ways. But so does the international policy environment. I am concerned with what happens if an all-out protectionism breaks out. But then, why do I fear for Nigeria? It is not like we export anything, right? As long as there is still oil we are fine. Anybody says non?

Rodrik’s full article, part of Project Syndicate, is here. The post announcing the article is on Dani Rodrik’s blog here.