Infrastructure projects in the Republic of GeorgiaThe Republic of Georgia has been doing fairly well despite a shaky recovery after gaining independence from the former Soviet Union in 1991. The Republic of Georgia and the Russian Federation are still important trade partners despite past conflicts. Trade between Russia and Georgia accounted for 14.5 percent of Georgia’s exports in 2017.  The government has recognized this and, in 2017, it laid out a 3-year plan outlining infrastructure projects in the Republic of Georgia. Its goal is not only to increase the ease of trade but also increase the standard of living for Georgians.

Infrastructure Projects in the Republic of Georgia

Railroads, roadways, seaports, airports, pipelines and electrical transmission lines are all in need of either an upgrade or an overhaul. Infrastructure projects in the Republic of Georgia are being handled organized by the Georgian government, but they are being financed by companies and countries all around the world. For example, Japan signed $38 million agreement to fund investments for improvements on one of Georgia’s main highways.

Much of this investment is organized and promoted by the Georgian International Investment Agency. The agency was developed and established in 2002 outside of direct government control due to the laws at the time. In 2015, the agency was moved under the direct control of the office of Prime Minister as a result of its growing importance and investments. The job of the agency is to ensure that investors and the nation are treated fairly.

Western Trade Partners

As the government of Georgia is seeking closer ties to the west by looking to join both the European Union and NATO, it has formed an important trading partnership with the United States. USAID has been working with Tetra Tech, an international engineering firm, on infrastructure projects in the Republic of Georgia, specifically in the energy sector.

USAID along with Tetra Tech have been working together with the government of Georgia, and other nations in the Caucasus region, on the Georgia Power and Gas Infrastructure Oversight Project (PGIOP). The project includes the construction of 119 kilometers of gas pipelines and the replacement of substations and power lines that were damaged or dismantled during the 1992 Georgian Civil War.

Improved Infrastructure Benefits Trade

Georgia’s other neighbors, Azerbaijan, Turkey, Armenia, Bulgaria and Ukraine, are all important trade partners that share either a land or sea border with the Republic of Georgia. Improving infrastructure in Georgia will facilitate important trade between the county and its neighbors, helping the economies of all countries involved. The World Bank is working with the government of Georgia to help improve the infrastructure needed for this trade.

The World Banks has been investing millions into the Republic of Georgia not only to help stimulate trade within Georgia’s sphere of influence but also though the Caucasus Transit Corridor. The area is an important corridor between Asia and Europe. Modern infrastructure will help facilitate trade across the Black Sea and through all of the nations that border it. Both natural gas and trade goods will need to move faster as consumption increases.

Georgia is a nation tucked in a region with ever-growing tensions. The wars in Iraq and Syria are not far away. Its neighbors Armenia and Azerbaijan are in a constant state of alert. Russia, Turkey and Iran are all beginning to flex their muscles on the world stage more freely. Through improving infrastructure projects in the Republic of Georgia, the country can hope to become too important for any side to lose, allowing it to continue to grow freely and democratically.

Nicholas Anthony DeMarco
Photo: Unsplash

New Industries UgandaThe Ugandan government recently announced the decision to draft a new national policy that will aid the country’s economic growth and assist in the creation of new industries in Uganda. Such development could draw more investment into the country and bolster the nation as a whole, and the silk industry might be the best way to achieve economic prosperity.

A New National Industrial Policy

In 2008, Uganda’s parliament passed the National Industrial Policy to combat the country’s slow economic growth. The policy was highly anticipated as it aimed to transform the structure of the country as a whole rather than just one specific industry. The National Industrial Policy was not only meant to lead to the creation of new industries in Uganda but it also to lead to the cooperation of the state by providing a plan of action.

Fast forward 10 years and many Ugandan citizens are disappointed with the policy’s impact. By 2018, only 30 percent of the policy has been realized. The main reason for this underachievement is the fact that the policy was not properly implemented. The plan and prediction were that GDP in Uganda would grow to 30 percent, but between 2008 and 2017, it only grew by 18.5 percent. The new policy seeks to rectify this situation by making investment easier, increasing funding to the industrial sector and strengthening existing laws that help industrial development.

Focus on Industrialization

Many economists and politicians believe that industrialization is a key component in lifting countries out of poverty and into a modern, industrial economy. The far-reaching goal of industrialization is to change the system, and such widespread aims can help lead to nationwide development.

One aim of the new industrial policy is the silk industry. Due to the high demand for silk, Uganda is looking to farm silkworms in a process called sericulture to produce more silk. Many hope to expand the silk industry through this new policy. China and India are the ultimate silk producers at this moment, but both are currently experiencing declines. Estimates state that Uganda could make almost $94 million and create up to 50,000 jobs every year in the silk industry; time will tell if such potential can be realized.

The Ugandan government is set to put in about $102 million into this endeavor over the course of five years with the hopes of making about $340 million. While the new national policy seeks the creation of new industries in Uganda, the silk industry has existed in the country before and had been implemented in the 2008 National Industrial Policy. Uganda has grown and produced silk since the 1920s and had had silkworm farms up until the late 1990s. Now, the nation seeks to revitalize the product and its process.

What’s Next?

While this new national policy has yet to be implemented in the Ugandan government, there is still the hope that this policy will create more domestic growth within the nation. It is necessary to wait and see the effects of the policy since the same problems that the 2008 policy faced could still exist. The effects are unknown, but now there is hope that the creation of new industries in Uganda is the start that the country needs.

Isabella Niemeyer
Photo: Flickr

global economy is on the risePeople around the globe experienced the mania of the Dow Jones’ historic low in February 2018. Some traders even questioned if this was a sign of a global stock market crash. But as the U.S. stock market recovers from its volatile hijinks, global trade as a whole is rising, and rapidly. This rapid rise has many economists optimistic that the global economy is on the rise as well.

The global economy is driven by trade. As international trade rises, so do technological developments as nations tear down trade barriers. According to a report by the CPB Netherlands Bureau for Economics Policy Analysis, the volume of imports and exports grew by 4.5 percent in 2017. To gain perspective, this is a significant spike from a stagnant 1.5 percent rate of growth the previous year, which was the lowest since the global financial crisis in 2007-2008.

Globalization a Reason Why the Global Economy Is on the Rise

The world is changing. Globalization moves the market, just as we move through our interconnected culture of technology, digital communications and transportation. As markets evolve, global poverty is decreasing, while the global economy is on the rise.

Old business practices are being phased out, technology is replacing hard labor and workers are rising to higher levels of efficiency. Automation is shifting the way goods and services are distributed, easing mass production.

Nations have outsourced businesses to developing nations, partly to reduce wage costs. Yet, business process outsourcing provides an oasis of income for people in developing countries such as India, the Philippines and Malaysia. In many places, this opportunity to earn a living would not be possible without outsourcing.

As technology advances, the market shifts and standards of living rise across the globe. Developing countries who have broken trade barriers have developed competitive advantages in the production of certain products. Ukraine, for example, is known as the breadbasket for its richness in wheat and farmland. Venezuela is known for its vast oil supply and China’s factories are known for producing more than half of the world’s clothing.

Tariff Reduction Has a History of Success in Developing Countries

History reveals that nations who open their economies to trade with the global economy experience faster growth and poverty reduction. During the past 30 years, global poverty has been cut in half. Studies show that developing countries that lowered tariffs in the 1980s experienced quicker economic growth in the 1990s compared to those that did not. Tariffs, or taxes on imports and exports between sovereign states, are often viewed as barriers affecting the global economy.

Developing nations have tariffs that are three to four times higher than industrial countries, and they are even higher on agriculture. Average tariff protection in agriculture is about nine times higher than in manufacturing. This can undermine a developing country’s agricultural sector and exports by depressing world prices.

The outlook for the global economy depends on these countries tearing down trade barriers. Yet, political decisions in developed countries are affected by trade barriers as well. In Venezuela’s case, the U.S. has imposed investor-related sanctions on Venezuelan oil to pressure its government to address its humanitarian crisis of inflation and starvation. According to Reuters, U.S. officials are not ruling out a complete ban on Venezuelan oil in order to send a strong message to its dictator, Nicolás Maduro.

Trade Wars Are Common and May Not Affect Global Trend

China’s trade practices have also affected U.S. trade on a political level. Elon Musk, the CEO of Tesla, recently called on U.S. President Trump for equal and fair rules for cars, citing China’s pressure on foreign businesses to partner with Chinese carmakers before manufacturing in China. Musk noted China’s 25 percent import duty on cars compared to America’s 2.5 percent duty. President Trump proposed a sweeping tariff on steel and aluminum on March 8, 2018, which characterizes the trade wars.

Skeptics believe this political decision could take the global economy down the rabbit hole. Others are bracing for a global crash for different reasons. “I still believe that we’ll face a financial crisis within the next two years if we don’t solve the debt problems,” said Bjorn Ritschewald, a civil engineer with the government Road and Traffic office in Bremen, Germany, a city popular for its maritime trade. “Almost every country spends more than its income. Actually, I don’t know any country that spends less than what it takes in.”

“Waves in trade flow are common, but it depends on the goods,” Ritschewald told The Borgen Project. “You can’t just look at the financial numbers. You also have to look at the real amount of goods and which kind of goods are being sold.” World markets experienced the rippling effects of the Dow Jones’ plunge. The plunge is characterized as market correction, a phenomenon where unusual market success sparks panicked selling, driving market drops across the globe.

On the other hand, many economists believe that the global economy is on the rise. Their confidence stems from positive trade initiatives such as the Trans-Pacific Partnership, a free trade agreement set to be signed by 11 countries in March. The trade wars and other trade barriers are pitfalls that affect the global economy. However, with trade growth booming, there is much optimism in the air about a healthy global economy in the future.

– Alex Galante

Photo: Google

AGOA and MCA Modernization ActOn Jan. 17, 2018, the House of Representative passed H.R. 3445, the AGOA and MCA Modernization Act. The legislation adds on to the original African Growth and Opportunity Act, or AGOA, which was passed into law on May 18, 2000, by the 106th Congress.

As an extension of AGOA, the AGOA and MCA Modernization Act encourages plans to promote trade and cooperation while also providing aid to countries that are AGOA eligible. The region of focus of the legislation is sub-Saharan Africa, with the goals being to build private sector growth. Under the bill, the President will be directed to create a website with information about AGOA along with encouraging embassies in chosen countries to promote export opportunities to the United States.

In addition, the​ ​bill​ ​would​ ​give​ ​the​ ​Millennial Challenge Corporation (MCC)​ ​the​ ​authority​ ​to​ ​develop​ ​a​ ​second​ ​concurrent​ ​compact​ ​with countries,​ ​provided​ ​the​ ​compact​ ​focuses​ ​on​ ​regional​ ​economic​ ​development.​ The​ ​ability​ ​to​ ​enter​ ​into​ ​a​ ​second​ ​compact​ ​will​ ​be​ ​limited​ ​to​ ​countries​ ​that​ ​demonstrate​ ​progress toward​ ​meeting​ ​the​ ​objectives​ ​of​ ​the​ ​first​ ​compact​ ​and​ ​capacity​ ​to​ ​handle​ ​an​ ​additional​ ​compact.

The MCC was created in 2004 by the Bush administration, with the aim to reduce poverty through economic growth. The MCC has committed more than $10 billion in 58 projects in 25 countries. Around 70 percent of this investment has gone into infrastructure projects like highways and ports and an increasing percentage is being invested in energy.

On the House floor prior to the vote, House Foreign Affairs Committee Chairman Rep. Ed Royce (R-CA-39) said that the AGOA and MCA Modernization Act “seeks to facilitate trade and private sector-led growth in poor but relatively well-governed countries, particularly in Africa, so they can grow their own way out of poverty.”

“Through AGOA, goods produced in eligible African countries enter the U.S. on a duty-free basis. To be eligible, countries must be committed to the rule of law, eliminating barriers to U.S. trade and investment, combating corruption and supporting counterterrorism activities. So AGOA advances U.S. interests on many levels.”

Trade being a driver of economic development and increased civilian participation in politics is one of the main arguments for passing the AGOA and MCA Modernization Act. Economists and experts agree that the legislation does not just benefit sub-Saharan Africa, but also the United States, as it helps create jobs and benefits consumers and companies through free-market principles.

Rep. Karen Bass (D-CA-37) was enthusiastic about the passage of the AGOA and MCA Modernization Act by a unanimous vote. Bass is a ranking member of the House Africa Subcommittee. She is an avid supporter of the legislation and said the policy would foster economic development, as well as strengthen the United States as an international leader and boost the domestic job market and economy.

The bill was introduced to the House by Rep. Royce. At the time the bill was initially introduced, Rep. Royce along with fellow representatives Bass, Eliot Engel (D-NY) and Chris Smith (R-NJ), stated that steering developing countries toward trade and away from aid helps African countries and women. Africa’s consumer spending nearing $1 trillion was what prompted the four to push for the passing of the AGOA and MCA Modernization Act.

The AGOA and MCA Modernization Act still needs to be approved by the Senate. The bill has been introduced by Sens. Ben Cardin (D-MD), Johnny Isakson (R-GA) and Chris Coons (D-DE) as S.832. Sen. Coons stated that it is vital that Congress does all it can do to promote economic growth in developing countries and expand American business access to foreign markets. He is excited that the act will encourage trade with sub-Saharan Africa.

The recent passing of the AGOA and MCA Modernization Act in the House may give the legislation the momentum it needs to soon be accepted in the Senate. Visit The Borgen Project Action Center to contact your representative about this critical legislation.

– Blake Chambers

Photo: Wikimedia Commons