IT trade and investment flows between Africa and Asia—South-South commerce—have risen dramatically since 2000. According to Africa’s Silk Road, published by the World Bank in 2007, Africa’s exports to Asia today are almost on par with Africa’s traditional commerce with the United States and the European Union. Asia’s exports to Africa—which are increasing at a rate of about 18 percent a year—are growing more rapidly than exports to any other region. Asian foreign direct investment in Africa is also soaring.

With this newest phase in world trade and investment, Africans cannot afford to be left behind, especially if opportunities for trade and investment with traditional partners continue to be limited. Trade between Africa and Asia’s two largest countries, China and India, represents an enormous opportunity because it involves far more than natural resources and is opening the way for Africa to become a competitive processor of goods and services to these countries. But for Africa to proactively seize these opportunities within the developing world, it is imperative that countries pursue rigorous reforms not only at their borders but, more important, “behind their borders.” In particular, they must adopt reforms that strengthen domestic governance, foster competition among domestic businesses, and create flexible and mobile labor and capital markets.