Over the past decade, trade between China and Africa has rapidly expanded and has led to strong growth rates in Africa mainly buoyed by natural resource export. Geographical economics – the study of where economic activity takes place, and why – offers theoretical explanations for these observed spatial patterns of economic development and explains how economic activity in one place may influence that in another. That is, using these data, commodity-based exports are 11 per cent of GDP and 35 per cent of total exports. Utilizing Losch’s Industrialized Location Theory, this study tentatively assessed Ghana’s policy on industrialization dubbed “One District One Factory Policy (1D1FP)”to These diversification strategies can contribute to meeting the 17 Sustainable Development Goals set by the international community in 2015 – notably creating jobs and inclusive growth (Goal 8) and fostering the process of industrialization (Goal 9). Many commodity-dependent developing countries rely heavily on the production and export of a few commodities with minimal value addition and even fewer forward and backward linkages with other sectors of the economy. Since ECOWAS members are heavily dependent on commodity export and are therefore vulnerable to external shocks, export diversification is one of the strategies for trade expansion, stability in export earnings and increased per capita income. The social benefits from primary commodity rents depend upon the government being able to use these resources effectively. These economies are vulnerable to volatile global prices. This suggests that there is a unidirectional causality running from primary commodities export to economic growth in the Namibian context. Second, for various reasons, the rents generated by primary commodities have been associated with poor governance. In the rest of the developing world, recent decades have seen a rapid diversification in export structures, away from primary commodities. Short-term policy should therefore focus on expanding fiscal space, rehabilitating physical infrastructure using labor-intensive techniques, and providing social safety nets, such as employment protection. Using data at various geographical scales and employing different econometric techniques, it shows the relevance of geographical economic theory in understanding such diverse issues as the differences in economic success between Sub-Saharan African countries, the observed increase in regional inequality in South Africa after the end of the Apartheid regime, and the long-term effects of the heavy destruction during World War II on West German cities. Indeed, the non representative character of the governance of these institutions increasingly threatens the integrity of the international monetary system, as countries in Asia and elsewhere move away from the IMF and take distance from the World Bank, leaving the institutions to deal mainly with low-income countries. After the first few years of independence, education policy was concentrated for the development of agriculture education from secondary to tertiary level because government considered agriculture as potential to economy. They argue that openness and export orientation are main policy variables affecting growth and that lack of social capital and deficient political institutions have cause bad policies. However, in response to recent skepticism, this paper examines whether the conventional wisdom about agriculture’s contribution to the development process can still be applied to Africa today. ^ A random sample of 30 countries is analyzed using binomial cross-sectional time series. Does this indicate that Africa has an immutable comparative advantage in primary commodities? Because of their macroeconomic instability and fragility developing countries face to crisis and affected by global economic crisis more than developed countries. This article analyzes how the global financial crisis is affecting African economies and identifies risks ahead with respect to prospects for development. This paper provides an overview of the international monetary system, briefly discussing six key problems 1 in which the concentration of power in a few countries and the limited participation of developing countries in the discussion of systemic issues leads to poor results: 1. the correction of global imbalances; 2. the role of the IMF in the adjustment process; 1 For reasons of space, other important problems, such as the issue of negative net transfers of resources to developing countries, and the problems of the low income countries will not be discussed. Topic B: Commodity Dependent Developing Countries âEvery wise, just, and mild government, by rendering the condition of its subjects easy and secure, will always abound most in people, as well as in commodities and riches.â1-David Hume Commodity dependence refers to the ratio of the value of commodity exports to the value of (Collier, , 1999. With narrations, this article proposes a policy change towards agriculture education aiming an improvement of agriculture economics of the country which ultimately will bring national development. Climate Finance for Developing Country Mitigation: Blessing or Curse? From 2000-07, real GDP growth averaged between 5 and 6 percent but in 2009, GDP growth averaged only 1.1 percent and per capita income declined for the first time in a decade. Staples are the main products that are regularly produced in a country. Foreign Aid, Resources and Export Diversification in Africa: A New Test of Existing Theories, The Global Financial Crisis and Recession. First, because commodity prices are highly volatile, countries had to cope with large shocks, both positive and negative. Findings show that agriculture was the main economic sector with an employment of 95% of total population with a share of 78% of Gross Domestic Product (GDP) in 1971. After decades of continuous flows of mineral exports to rich Western countries and a failed development in Africa, the arrival of China on the African resource market with large infrastructure projects in exchange for access to resources has created completely new growth dynamics for oil-rich African economies. Manufacturing exports, and particularly high-tech exports, are crucial to sustainable, equitable development. Commodity-dependent countries need to pursue diversification strategies to address the longstanding risks associated with continuous price volatility, Ms. Durant added. The main reason for such mixed results is the choice of a single aggregate list of countries, regardless of the disparities in levels of development. Today, price volatility has put paid to those dreams. ideas of GHB and his colleagues are still valid, feasible and relevant for today’s economic institutions and developed countries to effectively abandon promotion We test this effect by introducing, in a industry-augmented gravity equation, an interaction term representing the joint effect of the level of differentiation of the sector, the development level of the target country market (proxied by its GDP) and a proxy of trade capacity. Export Promotion, the Fallacy of Composition and Declining Terms of Trade (or the Moors’ Last Sigh). The ongoing global rebalancing may negatively affect economic growth prospects in Africa. The dependence of African countries on revenues from the export of primary commodities led to shortfalls in export revenues 2 , current and budget deficits. UNCTAD defines a country as dependent on commodities when these account for more than 60% of its total merchandise exports in value terms. Therefore, we can expect existing trade capacity to significantly affect the outcome of diversification strategies, with an impact which should be stronger the more developed are the markets and the more differentiated the products. The limited number of studies analyzing the export competitiveness of a single city with relevant formats in the literature reveal the significance of the study. Those tenets have antecedents in Western political philosophy. Based Ghana's exports on a per capita basis failed to grow over the course of the twentieth century. ... (Matsuyama 1991:11) Structural models of economic development show that countries should develop their 6 export structure from primary exports into manufactured exports in order to achieve sustained economic growth. Open menu. In the framework of sound national development strategies, foreign trade polices can promote competition, encourage learning-by-doing, improve access to trade opportunities, and raise the efficiency of resource allocation (. Behind the scene is the unglamorous reality of the lives of most coffee and cocoa farmers,” Mr. Pipitone said. IISD receives core operating, Development Policy, Statistics and Research Branch Working Paper 3/2012, United Nations Industrial Development Organization (UNIDO). Developing countries that depend on commodities ought to pursue diversification strategies to address the adverse effects of price volatility in international markets, said speakers at UNCTAD’s meeting of experts on commodities and development on 15 April at the UN’s European headquarters in Geneva, Switzerland. In other words, how a regime was replaced and how the previous regime governed has a significant impact on how the new regime is perceived. Simulating the effect of a package of policy reform and increased aid on the average aid recipient country, we find that after five years the risk of conflict is reduced by nearly 30%. However, a careful examination of the doctrine reveals no concern for the type of regime that has been overthrown or replaced. In general, the study presented identifies a strong correlation between discriminatory policy change and ethnopolitical violence, particularly as states become more democratic. Is Sino-African Trade Exacerbating Resource Dependence in Africa? Within 4 The Global Trade Alert Database contains measures imposed by governments all around the world during and after the global economic crisis. Interactive world map of commodity dependence. In many African countries, the lack of export diversification has been a structural constraint on growth and has undoubtedly contributed to their inability to generate economic prosperity for their populations. In this article we use a dynamic panel data model to examine whether the Angola-mode deals have reinforced resource dependence and impeded export diversification in African countries. The book explores the consequences of this, and comes to some surprising conclusions. In most of the cases, the frameworks and models utilized are adopted from the developed world with inherent characteristics of the developed world and when these are introduced on the African scene, they provide a contextual mismatch. UNCTAD defines a country as dependent on commodities when these account for more than 60% of its total merchandise exports in value terms. All rights reserved. The book commences with a review of the theoretical foundations for inter-dependence between commodity specialisation and economic underdevelopment. The results of this study support the theoretical hypothesis that a positive relationship between aid and GDP growth exists, but only for low-income African countries, not middle-income ones. This article examines the role played by Sino-African resource-for-infrastructure swap projects in Africa's new development dynamics. Suggest as a translation of "dependence on commodity exports" Copy; DeepL Translator Linguee. The nature of this policy failure is discussed. Findings suggest that state characteristics, including colonial history, cultural polarization, and geographic region, matter. This most handicaps those activities that are intensive in transactions. First, because commodity prices are highly volatile, countries had to cope with large shocks, both positive and negative. Hence, the doctrine provides no guide to the expectations of the people who now have a new government. To complete the analysis the study presents in general some other areas affecting the development of trade relations – Official development assistance, foreign direct investment, remittances, etc. In this paper we try to provide some empirical evidence on this supposed role of trade capacity. Giga-fren. This paper analyses the causal relationship between primary commodities exports and economic growth in Namibia using quarterly data for the period 1998 to 2014. By their very definition, differentiated goods are likely to require more trade capacity to be exported and there is, at least anecdotic, evidence that the more developed the markets the higher the trade capacity required to access them. Though the continent did not fall into a recession, the crisis severely impacted on economic growth and trade volumes. de la Paix, 1211 Geneva 10, Switzerland, Welcome to the United Nations Conference on Trade and Development, meeting of experts on commodities and development, Recent developments, challenges and opportunities in commodity markets, Managing commodity price risk in commodity-dependent developing countries, Expert Meeting on Commodities and Development, UNCTAD's work on Commodities and Sustainable Development. Currently, 75% of the populations' professions are agriculture industry and contribution towards GDP is only 22%. Delivery of basic goods and services affected. There appear to be two main reasons. Weak trade capacity, defined by the ability to gain access to foreign markets, is seen as a significant obstacle to diversification away from traditional, often primary, exports. Given these problems, diversification seems desirable, and indeed on average over the past two decades developing countries have massively diversified their exports so that such dependence is a thing of the past. The price index for energy products increased, particularly from its low level in 2016. This most handicaps those activities that are intensive in transactions. Using Zambia as a case study, this article presents some of the challenges that small resource-dependent economies faced during the commodity boom and the financial crisis. Groups who feel disadvantaged by the policy may begin to fear for their own security and political interests, motivating them to rebel. Second, marginal returns to education could have fallen rapidly as the supply of educated labor expanded while demand remained stagnant. The advent of the present millennium has seen a persistent unravelling of the narrative of pathological dysfunctionality hitherto associated with Africa and a gradual paradigm shift to a new narrative that sees Africa as a growing continent with profound possibilities. How countries depending on its exports and countries that have the least dependence on its exports have affected their gross domestic product figures and its effect on their overall economy. These regimes will outwardly appear to be liberalizing and adopting democratic norms to satisfy the international community's concerns but internally the regime will continue to retain authority. According to this model, the quality and type of governance determine the capacity of an economy to industrialize. Broad welfare indicators, such as mortality rates and education levels, indicate that women's well-being improves on average with development, both in absolute terms and relative to men. Due to the volatility of commodity prices, export-oriented developing countries suffered from economic, political, and social turmoil. Recent theoretical literature suggests that aid, geography, and resource endowments affect diversification of exports in Africa. Since the 1980s, African countries have undertaken various reforms aimed at ensuring economic stability and improving trade. IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States. The stylised fact detected in Section 2could be the simple consequence of a conventional form of natural resource curse: if a high dependence on primary commodity exports reduces income and income is a key determinant of social outcomes, then a high dependence on primary commodity exports worsens social outcomes. “Cobalt is a key component of lithium-ion batteries widely used in electric cars…electric cars are booming yet in Congo we have a crisis,” observed UNCTAD’s director of international trade and commodities, Pamela Coke-Hamilton. On an annual average basis, the region's share of global FDI inflows was 1.8 percent in the period 1986-90 and 0.8 percent in the period 1999-2000. This paper examines the implications of the intensificaions of trade relations between Africa and China on the export composition of African economies. This paper discusses how ECOWAS members could adopt export diversification strategies in fostering export-led economic growth. Africa has not experienced this diversification and remains heavily dependent upon primary commodities. are deliberate, dynamic and comprehensive sets of state-directed, synergistic interventions Within this analysis the place of the EU Central and Eastern Europe member states in the EU's trade relations with the Economic partnership agreements in Africa. The lack of adequate representation of the developing countries and emerging market economies in the governance of the global economy and the declining commitment of major countries to a multilateral rules-based system of international monetary cooperation has resulted in short-sighted, and politically motivated decisions by major shareholders, which undermine the efficacy of the IMF and World Bank and have adverse consequences for world economic growth and stability. For the poorest countries, food security relies on their ability to benefit from integration into the world market. 1984; ... 14 11 See, Auty, 1998;Warner, 1995 and1997. Based on these facts, the study tries to investigate the impact of export diversification and composition on GDP growth and GDP per capita respectively. La securite alimentaire des pays les plus pauvres, importateurs nets, depend de leur capacite a tirer benefice de leur insertion dans le marche mondial. âExporting primary products means getting money â that is to say, getting financing so you can import what [your country doesn't] produce," he says. Transnational Trade in ECOWAS: Does Export Content Matter? This thesis assesses the empirical relevance of these theories. Given these problems, diversification seems desirable, and indeed on average over the past two decades developing countries have massively diversified their exports so that such dependence is a thing of the past.
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