Unraveling Madagascar’s Success
In a sad and unsatisfactory “I told you so” moment, William Easterly laments Madagascar’s economic woes. Justifiably, he blames the US for countermanding African Growth and Opportunity Act (AGOA), which was created to stimulate economic growth and improve trade relations by relieving certain African exports of US tariffs and quotas.
Unburdened by import duties—some were as high as 34%—Madagascar and Lesotho cultivated a flourishing textile industry that employed 50,000 and indirectly created jobs for an additional 100,000. Textiles accounted for 60% of Malgasy exports, which tripled in the first three years.
However, AGOA is an example of tied aid; the US has license to revoke it depending on a country’s commitment to democracy. Easterly protests these arbitrary eligibility criteria, considering unwholesome countries like the DRC, Guinea, Gabon and Angola still enjoy preferential access to US markets.
However, when Andry Rajoelina staged a coup in June 2009 and refused to hold elections, the US threatened to nullify AGOA and did so in December. In response, textile factory owners ran a heartbreaking ad in Politico that appealed to President Obama to “consider the human tragedy of an action that will wipe out 100,000 good jobs,” which, unfortunately, has happened.