REGIONAL TRADE LIBERALISATION AS A PRISONERS’ DILEMMA GAME: UNDERSTANDING THE EFFECTS OF STRATEGIC FACTORS ON REGIONAL COOPERATION

Abstract

African governments regularly advocate regionalism as a means for facilitating economic development, but the record of intergovernmental cooperation to implement regional initiatives has been disappointing. Conventional explanations for this record are based on a simplistic portrayal of the challenges of cooperation; if it is in the interest of governments to cooperate, they do, if not, they do not. This article uses an alternative framework, derived from a game-theoretic perspective to show that regional trade liberalisation initiatives do not succeed or fail simply because of the presence or absence of mutual gains from cooperation. I employ the ‘game theoretic’ analysis to illustrate that attempts by a group of self-interested governments to reap mutual gains from trade liberalisation encounter a strategic problem commonly known as the Prisoners’ Dilemma .The inability to overcome this type of problem explains why regional initiatives may fail despite their obvious potential for being mutually rewarding and enjoying the support of participant governments. This study uses the SADC trade liberalisation initiative to illuminate the collective action problem that typically afflicts similar initiatives and how it can be resolved. The aim is not just to present a new theoretical perspective on regional cooperation in Africa, but also to illuminate the practical challenges that must be addressed if African trade liberalisation initiatives are to succeed.