International Trade

B.Com Fiscal Studies

Trade in the Global Economy: Overview

Prepared by

Edson Mbedzi
Outline

• Political determinants of international trade

• Economic and Social factors influencing International Trade

• Benefits of International Trade in the Economy

• International Trade and National Characteristics

• The Sectorial structure of International Trade

• Linkages between Trade, economic growth and poverty reduction –

Evidences

• Trade exports and Poverty reduction

• Trade Policies and Poverty reduction

 Overview
•International trade refers to a commercial system in which countries
or economies exchange goods and services with one another on a
formalised transaction basis.

•It is the exchange across national boundaries of goods, services and

factors, and impact of this trade on domestic and global economies
(Markusen, 1995)

•In the past most economies were self-sufficient operating in “autarky”,

but today most economies are open, despite the fact that the level of
openness varies from economy to economy.
Political determinants of international trade

1. Wars

2. Trade Missions

3. Taxes

4. Sanctions

5. Trade blocks

6. Political Systems
 Economic and Social factors influencing
International Trade

i) Differences in resource endowment and human capital

ii) Climate

iii) Differences in Technological Advancement

iv) Culture
Benefits of International Trade in the Economy

1. Growth of International trade

• Trade growth broadens goods and services variety.

• Implies the welfare of the citizens increases (welfare means utility

and standard of living).

• Between 1963 and 1979, the rate of the expansion of world trade
averages 11.8% compared to global growth in world GDP
averaging 6.1% per year (Markusen, 1995).
Benefits of International Trade in the Economy

1. Growth of International trade

Here is a chart that shows just how fast international trade has
been growing relative to the size of the global economy
 Benefits of International Trade in the Economy

1. Growth of International trade

• Since 1980, while world GDP has grown at just under 3.5% annually,
trade has been growing at about 5.7% annually.

• The growth in trade is interesting because it largely reflects the effects of

specialisation and trade in intermediate goods.

• Most of the growth in trade (and GDP) has happened outside the US
(mostly in Asia) and it has created a demand for US dollars to facilitate
much of it.

• This demand, in turn, transformed the global banking system.

• This growth has resulted in better welfare

 Benefits of International Trade in the Economy
Case 1: Trade improves PPC
2. Increase in production levels G1

• International trade improves G0

production processes and techniques

as nations use raw materials and inputs
more economically, therefore improve
their production possibilities. B 0 B1

• GoBo is a PPC of an economy operating without international trade

(autarky).
• When the economy engages in international trade, it releases scarce
factors of production from non-core industries to main industries (guns
and butter) and that it shifts its PPC outwards to G1B1.

The diagram can also illustrate improvements in production technology.

Assume technology in agriculture improves as a results of discovery of
better agricultural equipment from China, this implies that the food
production industry will experience an improvement in production whilst
guns production producing industry remains more or less the same.
 Benefits of International Trade in the Economy
Case 2: Technology improves
2. Increase in production levels PPC
PPC can also be used to illustrate improvements
in production technology. Assume technology
in agriculture improves as a results of
discovery of better agricultural equipment
from China, this implies that the food
production industry experiences an
improvement in production whilst clothing
production producing industry remains more
or less the same.

• PPC only shifts outwards as the discovery of new technology which

produces more using the same capital and labour inputs.

• Hence the PPC will pivot outwards but anchored on Go/50.

• The economy is able to produce more on both goods because

technology improvement in food industry reduces labour costs which
were being used in that industry and hence labour costs will also fall in
the clothing producing industry due to additional supply of labour.
 Benefits of International Trade in the Economy
3. Pattern of Growth of International trade
GNP Per Capita Exports/GDP
Country GDP Annual Average Exports 1991 Imports Exports/GDP Exports/GDP
($bln) Growth ($b) 1991($bln) 1970 % 1991 %
Uganda 236 -2.4 0.2 0.6 16.7 7.9
India 350 1.9 17.7 20.4 3.8 7.8
China 370 5.8 72.1 63.8 1.8 19.5
Indonesia 570 4.5 29.0 25.9 12.4 24.9
Turkey 1630 2.6 13.6 21.0 5.3 14.2
Mexico 2490 2.8 27.1 38.2 3.4 9.6
Brazil 2680 3.3 31.6 23.0 7.6 7.6
Rep. of 5400 7.1 71.7 81.3 9.0 25.3
Korea
Spain 11020 2.4 60.1 93.1 6.3 11.4
Singapore 11160 6.5 58.9 66.0 84.2 147.3
UK 16100 2.0 185.1 210.0 18.2 21.1
Canada 20470 2.7 124.8 117.6 22.6 24.4
USA 21790 1.7 397.7 506.2 4.3 7.1
Germany 22320 2.4 401.8 387.9 18.5 22.4
Japan 25430 4.1 314.4 234.1 9.5 9.4
Switzerland 32680 1.4 61.5 66.3 25.1 26.5
World 401000 1.5 3336.6 3508.2 10.1 15.4
 Benefits of International Trade in the Economy

3. Pattern of Growth of International trade

• Generally poorer countries grew faster than richer countries, except for
Uganda whose standard of living deteriorated over the last 25 years.

• East Asia; China, Indonesia, Rep of Korea, and Japan, registered the
strongest economic growth among regions of the world.

• Generally, developing countries tend to have lower exports/GDP and

imports/GDP figures primarily due to the fact that they tend to be more
closed than developed economies.

• For Spain, Canada and Japan both exports and imports figures are high
because of high levels of specialisation in these economies.

• Then there are developed economies which are more diversified such as
the USA with both lower imports and exports figures due to the existence
of broad range of industries which deprive the economy of benefits of
specialisation
 Interface between International trade and
national Characteristics
The data above signify that international trade is heavily influenced by the
national characteristics of trading economies.

For instance, Singapore is a city state, that is, the country is urban and the
major economic characteristics of Singapore are ‘entrepot’ trade. This kind
of trading involves provision of warehousing, transport facilities, and services
in transhipping goods from one economy to another. The common
destinations of most of Malaysia’s exports processed through Singapore are
mainly China and a few African states.

Canada for long had a high proportion of its GDP devoted to exports mainly
because for many years it has been an under-populated country. It is one
country that in international trade is regarded as very open.

The EU engaged a lot in international trade mainly because of its orientation

as a customs union. In the EU member countries do not have barriers to
imports from other members but do have barriers to imports from outside
the Euro Zone.
 Interface between International trade and
national Characteristics
In some big economies there is a lot of regional trade which compensate for
levels of international trade such as in the USA.

From the 1990s to 2000, China dominated international trade and as a

result, even though China is the leading producer of coal, it was a net
importer of it mainly from Australia and more iron from Africa.

At the end of 1990, China started to grow very fast economically with a
growth rate averaging 9% per annum. This was so because towards it
shifted from its communism model to capitalism and introduced friendly
investor policies which promoted international trade and establishment of
many firms.

That lead to development of many export processing zones in China. From

2000 to 2010 the exports of China to other countries increased at a faster
rate than trade within it.

Therefore from the experience of China case study, it can be drawn that
there is a positive relationship between international trade and
economic growth
 Poverty dimensions and why trade
• The total population of the African region is about 1 billion
(2011 est.)-second largest after Asia - good market for trade

• Projected to grow at an average of 1.7% per annum between

2005-2015-one of the highest growths.

• World total growth is projected at 1.2% for the same period.

• Poverty in Africa is predominantly rural. More than 70% of the

continent’s poor people live in rural areas and depend on
agriculture for food and livelihood

• Sub-Saharan Africa-more than 218 million people live in

extreme poverty.
 Poverty-Global Distribution

• Poverty headcount ratio at $1.25 a day (PPP) (%

of population)

• East Asia & Pacific 14.3% 2008

• Europe & Central Asia 0.5% 2008
• Latin America & Caribbean 6.5% 2008
• Middle East & North Africa 2.7% 2008
• South Asia 36.0% 2008
• Sub-Saharan Africa 47.5% 2008
 Poverty Global distribution
• Poverty headcount ratio at $2 a day (PPP) (% of
population)

• East Asia & Pacific 33.2% 2008

• Europe & Central Asia 2.2% 2008

• Latin America & Caribbean 12.4% 2008

• Middle East & North Africa 13.9% 2008

• South Asia 70.9% 2008

• Sub-Saharan Africa 69.2% 2008

 Elementary Engines of Growth

1. Beggar your neighbour-Theft via Conquest;

taxation of the defeated.
Enslavement of the defeated

2. Cartel Formation (e.g. OPEC)

3. International Commodity Price Fluctuations

 1. Beggar your neighbour

• Improve your lot by impoverishing someone else -

common with pre-industrial history.
– Looting and raiding
– Taxing the defeated
– Indirectly eliminating a competitor – MNCs versus
small local firms argument.
– In recent times the invasion of Kuwait by Saddam
Hussein
 2. Fluctuations of international
commodity prices
• Important where export structures are highly dependent
on a small number of primary products.

• Commodity prices fluctuate due to international demand.

• Contradictory processes - increased demand for raw

materials and the development of cheaper substitutes
 3. Cartel formation

• Fluctuations in commodity prices and cartel formation.

• Secular decline of commodity prices/dependency theory.

• Expansion of primary exports and fallacy of composition

hence formation of cartels.

• By forming a cartel and behaving like a monopolist,

countries increase their collective welfare by reducing
quantities and forcing prices up
 Relevance for Africa?

• Beggar your neighbour

– Colonialism, slave trade, apartheid system, oppressive
taxation systems etc.
– Is looting and plundering through multinationals
responsible for Africa’s underperformance?

• Price fluctuations

• Cartel formation-OPEC Vs non-oil producers in Africa

 Static Engines of Growth

– See growth as springing from the removal of barriers to

economic efficiency.

– Requires a modification of the structure of production

to generate an increase in prosperity

3 main approaches:

1.“Vent for Surplus” or “Put idle resources to work” How?

….
2.“Allocative Efficiency”: allocate resources in the most
efficient way possible. How? “get the prices right; cut
interference by the state; anti-combines policy…
3.Trade & Comparative Advantage
 1. Vent for surplus

• Archive growth by putting all idle resources to work-

– exploit mineral resources, unused land etc.
– Engage underemployed labour

• Popular during the colonial period-recent times?

• What happens when all resources are fully employed

(PPF)?
 2. Allocative Efficiency

• Why is it that allocative efficiency may be unattainable?

• Chief culprit is government - price distortions through

differential taxes, rationing, or price controls.

• Policy - eliminate all price distortions; get prices right

 3. Promote International Trade

• Comparative advantage and higher social

welfare.

• Why will a country not take advantage of

gains from trade?

• Remove trade distortions, establish

commercial infrastructures and institutions
 Relevance for Africa?

• Vent for surplus - commercial agriculture and mining

• Comparative advantage –

• But are these long-term engines of growth?

These are important, but do not explain the rise of

incomes in DMEs or middle income LDCs
 Trade and Growth

• In addition to other factors, trade can be an important source of

economic growth
• International trade can expand markets, facilitate
competition and disseminate knowledge, creating
opportunities for growth, poverty reduction and human
development.

• Trade can also raise productivity and increase exposure to

new technologies, which often spurs growth.

• Trade liberalization promotes higher economic growth in the

longer term (Sachs-Warner 1995, Dollar and Kray, 2000)
 Trade and Growth

• Trade and macroeconomic policies are highly linked.

– Macroeconomic variables such as national income,

employment, price level, aggregate investment and
consumption (savings) are affected by trade
 Trade and Growth

• Imports:
• May be used as inputs in production - affects the
level of output and indirectly employment

• Imports of consumer goods reflects choices of

consumers and hence decisions to spend or save.

• Imports compete with domestic production and

hence affect employment adversely if domestic
industries cannot compete.
 Trade and growth

• Exports:
• Main component of aggregate demand stimulates
growth of domestic output and hence income and
employment.

• By expanding markets for domestic firms , exports

create conditions for production costs to fall as
firms gain from economies of scale - productivity
increases.

• Hence many countries have relied on exports as

an “engine” of growth
 Is trade important for macroeconomic
performance?
Yes!!!!!
• Empirical evidence:
– Most studies testify to the importance of trade for economic
growth:
• Dollar and Kray, 2001; Burnside and Dollar, 1977; Arteta,
Eichengreen and Wyplosz, 2001; show that the degree of
trade openness is significant in explaining differences in
economic growth of countries.
• Most models included trade elements as part of
macroeconomic variables that co-determine the
explanation of growth performance and were statistically
significant.
• Macroeconomic conditions together with open trade
policies are found by most economists as critical for
explaining faster economic growth.
 Trade Developments in Africa

• International trade is a prominent economic activity in Africa

• Merchandise trade in SSA as a share of GDP increased
from 38% to 58% between 1988-89 and 2010-2011.

• Higher commodity prices, combined with increased

export volumes resulted in a marked increase in the
region’s export value in 2010

• The growth in export earnings sustained the growth

of imports which rose by more than 20% between
2003-2005. However, merchandise exports exceeded
imports for the fourth consecutive year.
 Share of Africa in World Trade
1980 1985 1990 1995 2000 2003 2004

Region E X P O R T S

World 100 100 100 100 100 100 100

Developing Economies 29.5 25.4 24.3 27.6 31.6 32.1 33.5

North Africa 2.1 1.7 1.2 0.7 0.8 0.8 0.9

SSA 3.8 2.6 2.0 1.5 1.5 1.6 1.6

Developing Economies: 5.5 5.6 4.1 4.4 5.5 5.0 5.1
America
Developing Economies: Asia 18.0 15.6 16.9 21.0 23.8 24.7 25.8
Developing Economies 28.6 24.1 22.5 24.7 27.8 26.2 27.1
excluding China
I M P O R T S
World 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Developing economies 24.0 23.2 22.5 28.8 28.7 29.0 30.4
Developing Economies: 4.6 3.7 2.9 2.5 2.0 2.2 2.2
Africa
North Africa 1.4 1.6 1.2 0.9 0.7 0.7 0.7
SSA 3.2 2.1 1.6 1.6 1.2 1.5 1.4
Developing economies: 6.1 4.2 3.7 4.9 5.9 4.8 4.7
America
Developing economies: Asia 13.1 15.1 15.8 21.4 20.8 21.9 23.5
Developing economies 23.0 21.1 21.0 26.3 25.3 23.6 24.4
excluding China
 Composition of Africa’s Exports
• Merchandise exports expanded by 6% in 2011

• Mining rose by 24 %, manufacturing by 22% and agriculture

by 16%

• Although the performance of manufacturing and agriculture

were below mining, the rates exceeded the respective growth
rates of world exports.

• Despite the rapid rate of growth of manufacturing, export

dependency on primary commodities remain striking.

• Commercial services was also outstanding in 2010 underlined

mainly by expansion of travel receipts.
 Manufacturing and poverty reduction

• High export growth in manufacturing could make it a

good sector to support poverty reducing strategies.

• But, only a handful of African countries will be able to

achieve this because

• Slow pace of diversification.

• Competitiveness hampered by
– Low productivity and inappropriate exchange rates in the
move towards the exports of processed goods and
services.
 Mineral exports and Poverty reduction

• Mining has some potential positive poverty impacts:

– Fiscal impact on foreign exchange
– Income generation
– Local economic development
– Improved land-use planning
– Source of energy

• However, it also habours potential negative poverty impacts:

– Governance, corruption and macroeconomic issues.
– Environment
– Health and human development
– Socio-cultural impact
 Mineral exports and Poverty Reduction
Potentials
• By far the greatest complain against mining is its inability to
generate employment (limited spillovers)

• Though a net foreign exchange earner, the labour force is

often highly skilled and specialized.

• The poor do not participate in the economic opportunities of

mining but bear the costs and the risks when a mine is
situated in the community.

• Solution: Encourage artisanal and small-scale mining

• Has the potential to employ men and women
• Has the potential to generate resources for training and education
• Enhancing local government capabilities.
• Beneficiation government policies
 Tourism Trade and poverty reduction

• Tourism is an important component of commercial services export: most

relevant to poverty reduction in Africa is tourism trade.

• Tourism accounts for about one-third of the global trade in services

• Industrialised countries have the largest shares in the market.

• However, the increasing importance of South Asia and the Pacific as

tourist destinations is remarkable.

• Africa with its vast potentials still lag behind in this area.

• Tourism is labour-intensive. According to the World Travel and Tourism

Council, it is the most important employer in the world - 200m
employees
Agriculture Trade and Poverty reduction

• Most African countries do not have good prospects in

mining and tourism.

• Mining and tourism may have weak linkages and high

leakages.

• Poverty is directly linked to agricultural productivity (Irz,

Xavierer et al; 2001).
 Agriculture Trade and Poverty reduction
• If physical productivity increases, poverty will diminish because:
– Agriculture is central to the livelihoods of the rural poor.
• Even with rapid urbanization, more than 50% of the poor will be
in rural areas by 2050, and depend significantly on agriculture.
– Agriculture provides two thirds of employment, half of exports, and
more than one third of Gross national Income
– For each point in growth of agricultural yield, the number of those
living on less than 1$ per day reduces by between 0.6 and 1.2 %.
– 73% of the poor live in rural areas, and most depend on agriculture
– Agriculture and agro-processing account for 30-40% of GDP in
developing countries
– General economic development requires prior growth and
productivity gains in agriculture.
 But agricultural productivity in Africa
faces severe problems.
• Secular decline in terms of trade since the early 1980s
due to declines in export prices and wide fluctuation
in real export prices of primary commodities - coffee,
cocoa, cotton, copper etc.
• Resulted in marginalization of the region in world
trade - Africa’s share of world agricultural exports
declined substantially.

• Resource losses due to terms of trade declines

have been a major factor in the poor economic
performance in the region.
 What role for Trade Reforms?

• Sustained trade reforms doubled growth in the agricultural

sector (Michaely, Choksi, Papageorgiou).

• Agricultural trade liberalisation gives much higher aggregate

growth rate- 5.75 vs. 1.1% (Valdes).
• Trade liberalisation - easing tariffs and other import
restrictions, reducing or eliminating domestic supports
and export subsidies-tends to boost economic growth in
the longer term.

• SSA countries with large improvement in macro/trade policies

had higher growth rate-3.5% vs. 0.3% for those with
deterioration (World Bank)
 Trade reforms and poverty reduction

• Trade liberalization can enhance food security by:

• increasing rural growth and reducing rural poverty.

• Keeping food prices affordable.

• Improving access to imported agricultural technology,

mostly embedded in inputs.

• Providing cash to buy inputs (Nash, 2005).

 Market access
• Developed countries must make it easier for developing
countries to export to their markets by improving market
access through reducing tariffs and non-tariff barriers, and
providing duty-free and quota free access for all products
exported from LDCS.

• Specifically, developed countries were suppose to end

agricultural export subsidies by 2010 and substantially reduce
tariffs against developing country agricultural exports.

• African countries must develop their own trade reforms in

line with clear development plans.
African perspective on trade liberalization
• The Uruguay round of the General Agreement on Tariffs and
Trade (GATT) led to the establishment of the World Trade
Organization (WTO), with the membership of the original
123 GATT member-countries.

• The current WTO membership stands at 157 countries, with

32 Least-developed countries (LDCs).

• African membership currently stand at 47

The Doha Development Agenda (DDA)

• The agenda for the present round of negotiations under

WTO were set in Doha in 2001, during the Fourth WTO
Ministerial Conference.

• The Ministerial adopted the 'Doha Development Agenda'

(DDA), which for the first time promised to address the
interests of developing countries, especially LDCs.

• The Doha Declaration also states “Special and

Differential Treatment” for developing countries shall
be an integral part of all elements of the negotiations.“
 DDA on SDT

• Unfortunately, the implementation of DDA is very slow,

thus the developing countries are feeling that developed
countries are not committed to the Doha Round and the
development agenda remains to be mere lip service.

• The WTO Ministerial Meeting held in September 2003 -

in Cancun (Mexico) collapsed without agreement on the
way forward, due to rifts between developed and
developing countries.
 Doha, Cancun, Hong Kong etc.
The General Council Decision of 1 August 2004 (also called the
“July Package”) and the Sixth Ministerial Conference held in
Hong Kong in 2005 sought to bring the DDA back in track.

The Hong Kong Ministerial agreed to complete the Doha Work

programme and conclude negotiations launched in Doha by
2006. The DDA negotiations continued, albeit with dismal
performance.

But, on 24 July 2006, the DDA was suspended due to wide gaps
that remained between key players.
Major Negotiation Issues and Africa’s Interest

• Major negotiation issues, of Africa’s interest, under DDA are:

– Agriculture (removal of agricultural subsidies),
– Non-agriculture Market Access (NAMA),
– Services
– Trade Facilitation
– Special & Differential Treatment (S&DT)
• Duty Free Market Access to LDCs products.
– Aid for Trade (Trade Related Technical Assistance)
– Others include:
– Democracy and Transparency
– Public health
Major Negotiation Issues (I)

A. Agriculture:

• Mainstay of Africa’s economy (30% of GDP, 70% of

employment opportunities and most important sector for
poverty alleviation).

• Under WTO, the Agreement on Agriculture (AoA), provides

international rules governing trade in agriculture sector.

• As agriculture is directly related to food security and livelihood

issues, it has been a matter of heated debates.

• Agriculture negotiations have been at the centre of WTO

negotiations, and a major source of discord between developed
and developing countries and the suspension of the Doha
round of negotiations.
 Agriculture

• Agriculture negotiations are taking place in two major

issues: market access and domestic support.
• Market access:
 Reduction in tariffs has remained a contentious
issue during WTO negotiations.
 Developed countries have been pushing for tariff
reductions, seeking to access developing country
markets while protecting their own agriculture
industry through tariffs and subsidies.
 Agriculture
• A majority of developing countries want market access to
developed countries.

• Developing countries are also unwilling to cut tariff rates at

the level demanded by the US and other developed
countries, as agriculture is closely linked to food and
livelihood issues.

• It would be in Africa’s interest to first identify market

access barriers (both tariff and non-tariff barriers) it faces
on its agro-exports in the international market, and then
negotiate to reduce or remove these barriers.
 Agriculture
• Export subsidies: A decision made at Hong Kong for
parallel elimination of all forms of export subsidies and
disciplines on export measures by the end of 2013.

• The US, EU and Japan account for over 90 percept of global

agriculture domestic subsidies.

• Developed world channels nearly US$ 1 billion a day on trade

distorting agriculture subsidies. A high level of subsidies
leads to overproduction and drives down world food prices.
 Agriculture
Contrasting views for Removal of Agricultural Subsidies

• Thus, the presumption is that removal of agriculture

subsidies in developed countries will benefit poor countries.

• However, it should be noted that a majority of low-income

countries, especially LDCs are net food-importers (FAO,
2001).

• Thus, the removal of subsidies and the increase in world

food prices are expected to have a negative impact on them
resulting in increased poverty and weakening food security.
Non-Agricultural Market Access (NAMA)

• NAMA refers to all those products that are not covered

by the Agreement on Agriculture such as: manufacturing
products, fuels and mining products, fish and fish
products, and forestry products.

• NAMA account for almost 90 per cent of the worlds

merchandise exports.

• The methodology for tariff reduction is also at the core

of NAMA negotiations.
.
 Special and Differential Treatment (SDT)
• Developing countries, particularly LDCs would be given less
onerous recourse in implementing the provisions of various WTO
agreements.
• LDCs should hence be granted better market access, be allowed
greater flexibility in implementing trade rules, and be allowed to
sign agreements with developed countries that do not require full
“reciprocity.”
• SDT provisions were not mandatory. They depended on the
political will of the rich countries for implementation.

• The position of African countries is that the non-implementation be

reviewed, made mandatory and binding on developed countries.
 Democracy and Transparency

• Theoretically, WTO operates by consensus - all countries have

the right to negotiate on matters affecting them on trade
issues.

• In practice, key decisions, including formulation of documents

presented as “consensus” positions, take place in smaller,
informal meetings that are closed or manoeuvred and
engineered exclusively by the developed countries.

• Even when meetings are open, African countries are

underrepresented - they may not be able to afford delegation
at such meetings.

• The unspoken rule - absence or inability to raise valid

objections is considered as consensus.
Diversifying exports - Why should Africa
Diversify?
• Vital for two reasons
(1)Export receipts are needed to finance imports of
consumer, intermediate and capital goods.

– Receipts have been compromised

• by falling trade shares for traditional products.
• Concentration on a few primary products with low
demand elasticity.
 Why Diversify?

(2) African economies are small - there can be no successful

diversification drive based solely on domestic markets.

– Exports, especially of industrial and non-traditional

products, will provide the best avenue for attracting high
and productive investment.
– Vicious cycle of investment, high growth, increased
savings and high investment is only triggered by broad
and growing markets.

Therefore there is need to integrate !!

 Why diversify?

• Will African firms enjoy higher productivity gains from

exporting than firms from other regions?

– Minimum efficient plant size is large relative to the

domestic market - exporting will make plants more
effective.

– Firms are likely to be exposed to greater competitive

pressures than is available in domestic markets.

– Exporters learn from their buyers

 Where is Africa Now?
• Africa has made progress, but….

– Decade of progress in Africa on:

• Improved regional trade and growth.
• HIV/AIDS.
• Private versus Government debate – privatisation.
• Freer political systems (shift from command to democratic
political systems e.g. Ghana, South Africa etc).
• Less Conflicts.
 The Economist’s Top Growers 2010-2015

Rank Country GDP Growth (%)

1. CHINA 9.5
2. INDIA 8.2
3. ETHIOPIA 8.1
4. MOZAMBIQUE 7.7
5. TANZANIA 7.2
6. VIETNAM 7.2
7. CONGO 7.0
8. GHANA 7.0
9. ZAMBIA 6.9
10. NIGERIA 6.8

Seven of the top growers in the world are in Africa

May 2000 June 2003
Aug 2002
July 2005
Sept. 2009

March 2008
December 2011
The End for Today