Inflammation and stories on trade

Georgia's integration into the E.U.Since the end of the Russo-Georgian War in 2008, poverty reduction and higher employment have accompanied an expanding Georgian economy. However, fears of renewed conflict with Russia, Georgia’s northern-neighbor, jeopardize the progress the nation has made in curtailing poverty and handling the refugee crisis. Georgia’s integration into the E.U. will not only reap economic benefits and accelerate a decline in poverty levels, but also provide Georgia security from Russian aggression.

Georgia’s Relationship to the EU

Despite being a member of the Organization for Security and Cooperation in Europe and the Council of Europe, Georgia is not a member-state of the European Union. Since Georgia’s Rose Revolution in 2003, politicians of diverse ideologies have prioritized E.U. membership as an ultimate goal. In fact, a 2009 survey of over 2,400 Georgians found that 50 percent of the population believed that Georgia would join the E.U. within 10 years. While Georgia has yet to join the E.U. in 2019, the Georgian government continues to introduce various reforms to align the country with the tenets of E.U. institutional structures. E.U. membership would help Georgia tackle poverty and inequality.

Free Trade with Europe Increasing National Welfare

Poverty in Georgia remains at 16.3 percent and unemployment at 12.7 percent. Currently, Georgia is allowed to trade in certain industries with the E.U. as a part of the Deep and Comprehensive Free Trade Area (DCFTA). Once the E.U. admits Georgia and Georgia is able to trade freely with E.U. member-states in all industries, poverty and unemployment will likely decline.

Free trade makes a country more productive by selecting a country’s most productive industries for exporting. Import competition will replace less productive industries, but Georgians will specialize in their more productive exporting sectors and reap the benefits of specialization. Enhanced specialization from trade will raise Georgia’s gross domestic product and increase consumer welfare because Georgians will be able to purchase foreign-produced goods at cheaper prices while specializing in exporting sectors, such as copper ores and wine. Coupled with appropriate distributional policies, free trade will have a positive impact on reducing poverty and unemployment.

EU Membership Shielding Georgia from Russian Aggression

During the 2008 war, 130,000 Georgians became displaced; Action Against Hunger reports that the number of refugees has increased over time. If Russia were to invade again, there would be serious economic consequences. Furthermore, the refugee crisis would deteriorate substantially. Georgia’s integration into the E.U. provides a security agreement under the auspices of the European Defence Union; if Russia interferes with one E.U. member-country, it faces the backlash of Europe. George could reverse its progress in reducing poverty over the past decade. E.U. membership will serve as a security buffer from Russian aggression and a defender of the nation’s recent economic progress.

Because of the protection and economic boost E.U. membership would bring, many political scientists and economists agree with the 67 percent of Georgians who advocate for Georgia’s integration into the E.U.

– Grayson Cox
Photo: Flickr

The African Continental Free Trade Agreement The African Continental Free Trade Agreement is the largest free-trade agreement in the world with a 1.2 billion-person market and a combined GDP of 2.5 trillion dollars. It was signed in March of 2018 by 44 African heads of state, and following the initial signing, 5 more countries joined in July for a total of 49. The African Continental Free Trade Agreement’s primary focus is to increase intra-African trade by promoting free movement of goods and tariff-free trade. In fact, for the countries that joined, tariffs are expected to decrease by 90 percent within 5 years.

According to an article by The Economist, roughly 82 percent of African goods are exported to other countries. Due to high transport costs, poor infrastructure (e.g. in West Africa, less than one-fifth of the roads are paved) and time-consuming border procedures, it is more costly to trade within Africa than to export to foreign countries.

With the new free-trade agreement, a more competitive market will emerge that will reduce costs for consumers. Additionally, producers will have access to a larger number of potential buyers, as well as more investment opportunities from foreign countries. Strengthening intercontinental trade has the potential to protect the countries in Africa from the impact of exogenous trade shocks.

Maximizing the Impacts of AfCFTA

In order to reap the highest benefits from the new intra-continental free trade agreement, it is imperative to make adjustments to Africa’s trade structure. However, trade facilitation is not an easy task. It involves coordination between countries, transparency in policies and easing the movement of goods. Currently, intra-African trade accounts for only 16 percent of Africa’s total exports, while the bulk of its exports are to Europe (38 percent), China (19 percent), and the U.S. (15 percent). With the implementation of the African Continental Free Trade Agreement, The United Nations Economic Commission for Africa estimates that intra-African trade will see a 52 percent increase by 2022.

Infrastructure Development

Reducing non-tariff barriers, like transport time for goods, is an essential component of solidifying the new free-trade agreement. According to the International Monetary Fund, the average cost of importing a container in Africa is about $2,492, which is significantly more expensive than the cost of exporting to another continent. This helps to explain Africa’s high incentive to export the majority of its goods.

In order to aid with the implementation of infrastructure projects, the New Partnership for African Development (NEPAD) has facilitated two main systems of information. The African Infrastructure Database (AID) concerns itself mainly with data management and stores information about ongoing infrastructure development projects including the location as well as relevant financial and economic information. The Virtual PIDA Information Centre contains regional and continental infrastructure projects and promotes investment opportunities.

Clearly, higher access to information regarding infrastructure projects can help countries organize themselves around infrastructure development efficiently. This will help to reduce the intra-African costs of trade by fostering more easily navigable and cheaper transport routes between countries.

Economic Integration

It is crucial to consider that the informal trade sector contributes to a large amount of overall trade in Africa. The Africa Economic Brief is a document published by Jean-Guy Afrika and Gerald Ajumbo that discusses the specifics of informal trade in Africa. It states that the informal cross border trade sector (ICBT) represents 30-40 percent of total intra-African trade. In West and Central Africa, women make up almost 60 percent of informal traders, and 70 percent in Southern Africa.

Problems that affect the formal sector, like infrastructure and trade, have a disproportionate effect on the informal sector—especially for marginalized groups such as women and youth. It is unclear how the African Continental Free Trade Agreement will affect these groups as trade is adjusted; however, an increased focus on local trade and easier trade routes will likely facilitate trade for everyone involved. Since informal trade struggles with the same main issues as formal trade, making trade more accessible in the formal sector can create positive spillovers.

The informal trade sector is an important one to protect. Big businesses often avoid trading with rural areas due to high transportation costs, so instead these areas rely on informal trade for food, clothing and other commodities. Furthermore, ICBT provides a vital source of income to individuals who are often low-income or low-skilled. According to the Africa Economic Brief, studies estimate the average value of informal cross border trade to be 17.6 billion dollars per year in the Southern African Development Community (SADC).

In order to provide support for informal traders in Eastern and Southern Africa, the United Nations is funding a project to help decrease gender-specific obstacles in Malawi, Tanzania and Zambia. A focus on female empowerment will help maintain and improve the informal trade sector and contribute to poverty reduction.

With support from various organizations, countries in Africa are taking defining steps to reduce taxes, transport times, and an increase in market competition. Signing the African Continental Free Trade Agreement opens Africa up to free trade and, if facilitated effectively, it will have enormous positive implications for Africa’s economy.

– Tera Hofmann
Photo: Flickr

Poverty in Comoros
Comoros is a group of three volcanic islands located between Africa and Madagascar with a population of just over 800,000. Mount Karthala, which is located on the island of Ngazidja and the bigger of the two active volcanoes in Comoros, has frequent eruptions. The last largest eruption took place in 2005 and caused thousands of citizens to flee. Here are five facts about poverty in Comoros.

5 Facts About Poverty in Comoros

  1. Limited Economic and Trade Opportunities – Comoros relies heavily on its exported goods. The three main crops that are important to the country’s economy are vanilla, cloves and ylang-ylang, all of which people use for perfume essence and essential oils. Most of the earnings from these crops go towards natural disasters that occur regularly, primarily fires and severe weather.
  2. Rapid Population Growth – The population has steadily been growing since the 1970s. There are approximately four births to every one death. According to the World Population Review, the average adult woman has about 4.7 babies. The population should continue rising at an even pace.
  3. High Dropout Rates – Comoros has access to two different types of schools; the primary and secondary school system that France established and the traditional Islamic school system. Despite access to an education program, the dropout rate is continuing to steadily rise. Causes of this rate are teacher strikes from lack of proper pay, student strikes from the continuous school shutdowns and political instability. Students who do finish school and obtain a higher education typically do so in another country and do not return after.
  4. Inadequate Health Care Access – Comoros lacks a public health care system. Despite this, the country has been able to keep many of its illness rates low, including HIV and tuberculosis. Many believe that access to clean water that is available to over 90 percent of the country contributed to this. The highest cause of death in Comoros is malnutrition which caused nearly 45.1 percent of deaths between 2007 and 2017.
  5. Lack of Natural Resources – Deforestation is causing the natural forests to decrease due to the lack of re-growing trees. With the increase of population, agricultural lands have less time to regenerate and the food source to decline as a result. These factors and changing weather patterns are affecting natural resources in Comoros at a rapid pace leaving the country in a vulnerable state. Heavy rains and a decline in forest protection are causing floods and landslides, which causes more damage to already weakening agricultural fields. It also causes soil erosion to silt the coral reefs and disturbs the marine life ecosystem and the livelihood of fishing due to fish being Comoros’ main source of protein.

In studying poverty in Comoros, not everything is bad. An NGO called Dahari stemmed from the Engagement for Sustainable Development (ECDD) in 2013 and has since been working in the Comoros islands to provide sustainable agriculture, technology to farmers and increase environmental protection. It provides aid towards controlling the environmental factors and shaping landscapes for future generations and increase the economy. The organization also uses ecotourism to help manage marine life and natural terrestrial resources. Dahari works closely with local communities to achieve peaceful collaboration and help adapt locals to the new technologies and ways they can increase their agricultural development.

The Comoros government continues to work towards its country’s improvement. Despite its efforts, these five facts about poverty in Comoros show that the rapid rise in population and ecosystem decline that changing weather patterns caused continues to affect the country’s efforts to climb out of poverty. With much-needed help, Comoros can work towards rising out of poverty and work towards becoming a resilient and prosperous country.

– Chelsea Wolfe
Photo: Flickr

African Union PassportEconomic development does not occur in isolation, and neither does the end of extreme poverty. Instead of working individually, African nations are uniting to find ways to improve Africa’s economy and lower poverty rates. Their latest attempt involves the deployment of the African Union Passport, which allows African citizens to travel freely throughout the continent.

Extreme Poverty Crisis

Africa is the world’s second-fastest-growing economic region. Economic growth usually leads to higher employment levels and overall standards of living. Despite recent improvements in Africa’s economy, extreme poverty levels have not decreased as expected. Instead, they have continued to rise. With an average poverty rate of 41 percent, sub-Saharan Africa is the region suffering the most from extreme poverty. The World Bank Group concluded that most of the global poor reside in sub-Saharan Africa. This region is made up of almost all the African countries except Algeria, Egypt, Libya, Morocco and Tunisia.

Despite a growing economy, many obstacles stand in the way of reducing poverty in Africa, including conflict and war and weak institutions.

Restricted Mobility

Another problem plaguing the African continent is a lack of regional mobility. African residents face stricter restrictions to travel across the continent compared to their European counterparts. In fact, the free movement of people, as well as goods, throughout the African continent, has been virtually nonexistent. For instance, a Nigerian businessman reported that he had to apply for 38 separate visas to conduct intra-regional business.

Regional mobility is a factor that generally drives economic development. The free movement of goods can boost a country’s GDP while the free movement of people can fill gaps in the labor market. Intra-regional movement accounts for a significant portion of Europe’s economy. Around 70 percent of all trade in Europe is intra-regional. In Africa, intra-regional accounts for less than 15 percent. As a result, Africa is missing various opportunities to boost its economy and reduce extreme poverty.

The Africa Visa Openness Index

In 2016, the African Development Bank had the vision to build a global market in Africa. The group believed regional mobility and intra-regional trade created more attractive markets. As a result, the African Development Bank began to track each African country’s visa entry requirements. The group also measured how freely African citizens were able to move through the continent. The Africa Visa Openness Index reports the group’s findings.

The Index ranks each of the 55 African countries in terms of visa openness. The following factors were used to determine the rankings: visa required (low openness ranking); visa on arrival (medium openness ranking) and no visa required (high openness ranking).

The Africa Visa Openness Index has influenced several African nations to make improvements to their trade and visa policies. For example, two years after ranking 28th on the Index in 2016, Benin’s President Patrice Talon announced that the country will no longer require visas for other Africans.

The launch of the African Passport will be the final stage in facilitating the free movement of people and goods across Africa. Africa’s entire population, approximately 1.2 billion people, will have an African Union Passport. This passport will serve as the key to freely move between African nations.

The idea for the African Union Passport is not new. The concept was proposed and approved by all 55 African nations decades ago. However, the dream of regional mobility became a reality after Rwandan President Paul Kagame and Chadian President Idriss Deby unveiled the prototype of the passport in 2016.

By 2020, all Africans will have an African Union Passport. The goal of the passport is to discourage regional isolation by increasing accessibility to intra-regional travel, tourism and trade. By working as a unit, Africa has the chance to boost economic development and end extreme poverty.

– Paola Nuñez
Photo: Wikimedia

negative impact of regional instability
India and Pakistan have had a long and tumultuous history that the global community is witnessing play out on the world stage to this day. This history is an example of the negative impact of India and Pakistan’s regional instability. While a fortified wall separates these two countries now, they and their majority Muslim and Hindu populations were living harmoniously at one time, although it was also oppressively under British colonial rule.

History Between India and Pakistan

The partition between India and Pakistan involved the forced migration as a result of the British empire’s reckless geopolitical mismanagement. People began to realize that colonialism was soon losing ground following the catastrophe that befell Great Britain during the Second World War–and the British colony of India would soon become successful acquisitions of sovereignty and independence. Tasked with creating the new geographic lines that would separate the Hindu and Muslim populations, British lawyer Sir Cyril Radcliffe would inadvertently cause one of the worst forced migration crises in human history, including the deaths of more than 1 million people and the displacement of another 14 million.

When it became clear that the new state of India would form with a majority Hindu population and leadership, millions of Muslim refugees fled the now free country of India to Pakistan seeking peace and were hoping to quell their fears of political and economic repression. Many of the Hindu population living in Pakistani territory would soon follow suit and migrate to India for the same reasons.

India and Pakistan’s regional instability is negative and the chaos that ensues when millions must become refugees and migrate out of their homes and communities and away from their family, friends and the only lives they have ever known. Partition would create a humanitarian crisis of food shortages, economic instability and violence during its 1947 unraveling.

Not only have the geographical lines been under scrutiny since their drawings, for their awkward placements and razor-like cuts through established communities, it also gave birth to a heavily fortified border wall. Each evening at the now-famous border checkpoint, inhabitants from both Pakistan and India are welcome to witness a surreal performance showcasing each nation’s military strength – there is a crescendo when the border gate is open, briefly and military members from each nation perform a rehearsed dance with one another to the pleasure of the audience.

Trade Between India and Pakistan

The Economist once described India and Pakistan as “natural trading partners.” However, due to political and social tensions between the two countries, due mostly to perceptions of political and security hostilities, with both nations deeming attacks of terrorism to have state sponsorship and encouragement, these regional partners have been unable to grasp and cultivate mutual economic benefits.

While trade does exist between the two countries, it is only $2.4 billion compared to the potential $37 billion that the countries could make if there were no tariff barriers, according to the World Bank.

And while India is a vast country in both population and resources, which have played to its economic strengths, Pakistan has been less than fortunate, plagued by high inflation and domestic debt. Therefore, from the point of view of Pakistan, the political and security volatility puts a tremendous strain on what and who is there. Also, it has become more likely that the working-class of Pakistan would garner most of the economic hurt as a direct result of steep custom responsibilities that India imposed.

Pakistan is not able to suffer the repeated economic blows that will come from prolonged conflicts with India. As of this writing, Pakistan’s economy is shambolic and not prone to swift economic recovery. This is having far-reaching negative impacts, not only on the economy but on economic development as well. Pakistan is unable to make long-game, much-needed investments in its country and must rely heavily on foreign aid.

As two developing countries with a combined 2 million people living in abject poverty, it would be beneficial to both nations to commit to an era of de-escalation. In addition to this, both countries are struggling with high numbers of unemployment and necessary funds that could come from easing economic and political tensions to go towards projects and divisions for development, such as health and education.

While India and Pakistan’s regional instability is currently palpable on this Indian subcontinent, the tensions that have experienced countless rises and freefalls for over 70 years, have the potential to stabilize for good. An eye to mutual understanding and cooperation will help ensure that there are lasting and vast positive economic, social and political effects.

Connor Dobson
Photo: Flickr

 

Intra-African tradeSince 2015, the African Union (AU) has been working to boost intra-African trade. In May 2019, 52 out of the 55 AU member countries signed the African Continental Free Trade Area (AfCFTA) agreement, making Africa the largest free trade area in the world. Africa, as a whole, has struggled with extreme global poverty and economic development. AfCFTA aims to unlock Africa’s economic potential and improve the lives of over 1.2 billion people. Here are eight ways AfCFTA will positively impact Africa.

Eight Ways the African Continental Free Trade Area Agreement Will Impact Africa

  1. AfCFTA will lower tariffs. Within five years, AfCFTA plans to cut tariffs by 90 percent. Currently, it is easier for AU members to export goods to the U.S. and Europe than to other African countries. Only 15 percent of trade in Africa is intra-regional. In comparison, intra-regional trade accounts for approximately 70 percent of all trade in Europe. By reducing the cost of importing and exporting goods in Africa, AfCFTA hopes to increase trade negotiations between African countries.
  2. AfCFTA will replace Africa’s Regional Economic Communities. Since 1991, eight sub-regional bodies called Regional Economic Communities (RECs) were the key building blocks for economic growth. RECs were one of the obstacles that prevented intra-regional trade from blooming. Essentially, Africa was home to eight different trading blocks. Each REC followed its own unique set of trade rules and regulations. AfCFTA will replace RECs as the authority over trade and ultimately unify all the RECs into one trading block.
  3. AfCFTA will standardize trade rules and regulations. Time and money were frequently wasted due to the ambiguity and guesswork required for intra-regional trading. AfCFTA will simplify the process for AU members to trade with each other by standardizing trade rules and regulations. Standardization eliminates the inefficiencies related to intra-regional trading and gives AU members the freedom to build trade relationships with neighboring countries.
  4. AfCFTA will promote a shift towards industrialization. Africa’s new trade agreement came at the best time. China, the lead producer of industrial goods, is increasing its efforts to move away from industrializations. China’s trade tensions with the U.S. has prompted the country to find other ways to sustain their economy. Many economists have predicted that Africa will become the next hub for industrial goods. By allowing goods to move more freely across the continent, AfCFTA will give AU members an incentive to shift towards industrialization.
  5. AfCFTA will advance manufacturing opportunities. With the new focus on industrialization, Africa will have to add more factories to produce more goods. AfCFTA gives small and large African countries alike the opportunity to advance manufacturing opportunities. Many economists believe that manufacturing is one of the main drivers of economic growth. Since global trade is based on goods, countries that produce the most goods often have the highest economies. The increase in factories and goods produced in Africa will help drive economic development.
  6. AfCFTA will replenish Africa’s natural resources. Raw materials, such as oils and minerals are currently one of Africa’s main exports. These extractive exports account for 75 percent of Africa’s external exports. The U.S., Europe and China are the main consumers. The extractive market is a volatile one and severely depletes African countries from valuable natural resources. The shift towards industrialization and manufacturing will help stabilize reserves of oils and minerals in Africa. AfCFTA also opens a new demand for extractives within Africa, allowing for the continent’s natural resources to move freely throughout its borders.
  7. AfCFTA will create more job opportunities. Employment is another important factor for economic development. Agriculture is the biggest industry in Africa and therefore the source of most employment opportunities.  As AfCFTA encourages AU members to invest in industrialization, the labor force will shift from agriculture to manufacturing. Research has shown that one manufacturing job has created an additional job in another sector that supports the work being done by the manufacturers.
  8. Through AfCFTA, Africa hopes to improve the lives of its citizens. Today, Eritrea remains the only AU country that has not signed the AfCFTA. Benin and Nigeria signed the agreement in early July. Once all 55 countries sign the agreement, it is predicted that intra-African trade will spike up to 52.3 percent. Industrialization and manufacturing opportunities are predicted to develop rapidly in Africa as well.

These changes will not occur overnight. But in a couple of years, through intra-African trade, Africa can expect to see an overall improvement in its economy and a significant dip in extreme global poverty thanks to the African Continental Free Trade Area Agreement.

– Paola Nuñez
Photo: Flickr

Trade EmbargoesIn a world dominated by complex international relations, tumultuous geopolitical conflicts and volatile financial climates, the sense of protectionism and the implementation of trade barriers are becoming more widespread. An embargo is a term that can be defined as the complete or partial ban on trade, business activities and relations occurring between two countries. Similar to trade sanctions, trade embargoes are involved when countries seek to establish barriers or constraints often for political motives, purposes and gains. But, do they work?

Cuba and the U.S. Trade Embargo

Countries like Cuba, Libya, North Korea, Venezuela, China and Russia have often been on the receiving end of trade embargoes for decades. In the past, U.S. trade embargoes have resulted in sporadic political changes and dire effects on foreign policy.

For instance, Cuba, in particular, has been adversely impacted by the U.S. trade embargo since the culmination of the Cuban Missile Crisis of the 1960s, particularly in regard to the collapse of the sugar industry. The initial decline was catalyzed by the imposition of the Smoot-Hawley Tariff Act. Production further declined after the fall of the Soviet Union and a rise in the embargoes by the United States.

Trade Embargoes and Economies

At times, trade embargoes work because they can contribute to more peace and stability, and they can even prevent the debilitation of human rights violations, terrorism, aggression and nuclear threat. However, long term restrictions can be quite damaging and aggravate poverty and the standard of living for civilians. Owing to the sheer level of economic isolation and threat to trading relationships, the effects of trade embargoes can be especially damaging to the business, trade and commerce of a country, impacting a country’s GDP as well.

As a result of the negative effects of trade embargoes, domestic industries and producers often suffer a decline in their export markets and revenues, thereby threatening jobs and livelihoods. Countries that tend to overspecialize in certain commodities, goods and services may be most affected by these constraints as key sectors of the economy may be adversely impacted. Given their level of development, poorer countries are often restricted to producing goods in the primary industry that may have relatively lower returns.

Unintended Consequences

Trade embargoes may lead to grave economic and geopolitical problems like retaliation, such as the Russian counter-embargo after the 2014 EU Energy embargo during the Russian annexation of Crimea. This can result in an escalation in trade and price wars in the long run. Incidentally, the U.S. and China may now also be on the verge of a major trade war due to the new imposition of trade barriers, most recently on steel and China’s HUWEI chip sales.

Due to deficiencies in the country’s power to export goods and services during an embargo, its trade balance will also tend to suffer to a great degree. For instance, a U.N. arms embargo has been placed on North Korea concerning all armaments and related goods. Since December 2017, trade restraints have also been placed on key industries like oil and agriculture. This has created issues for the North Korean economy, but it has done little to deter the government from nuclear testing.

Open Trade Benefits Economies

According to the IMF, there is significant evidence that countries with open economies are more likely to achieve higher levels of economic growth. With new levels of trade liberalization and globalization, expanding economies are benefitting from massive inflows of capital and investment from stakeholder groups around the world. Moreover, in recent years, burgeoning and fast-paced economies like China are graduating to an open trade policy so that they can bolster trading ties with other key trading players.

In the year 2014, members of the World Trade Organization (WTO) agreed to sign the Trade Facilitation Agreement (TFA). In order to ensure greater ease, competitiveness, and efficiency in trade in the future, trade facilitation measures are now being implemented so that weak bureaucracy and productivity issues may be addressed. TFA will also aid developing economies to boost their exports and have greater access to markets.

The answer is not simple. Trade embargos can work under the right circumstances, but they are not always as effective as one would hope. Furthermore, they can have unexpected consequences. Given the vast scope and potential of free trade and development in a dynamically changing world, eliminating barriers and encouraging greater economic integration may provide a more effective way to address important social and economic issues and have profoundly positive impacts in the long term.

Shivani Ekkanath
Photo: Flickr

Changes in Transcontinental Trade Look to Lift African Economies
Despite being home to many rapidly growing economies and an abundance of essential natural resources, Africa also contains numerous countries with some of the highest poverty and food insecurity rates in the world. However, new legislation and foreign support hope to ease the flow of domestic trade in Africa, allowing broader access to necessities and helping to build a strong continental economy.

The High Cost of Shipping

While Africa regularly exports goods to places such as the U.S. and Europe, only 13 percent of traded goods remain in Africa. Underdeveloped road and highway systems between neighboring countries translate to high costs in transcontinental shipments, ultimately raising the cost of transported goods to the point of unaffordability for most impoverished Africans.

For example, while the United States Agency for International Development (USAID) estimates that East Africa produces enough food to support everyone living in the region, the high cost of transportation has halted trade in the area, resulting in food insecurity for 27 percent of the people living on the continent. However, recent legislative changes and foreign support signal that trade in Africa is beginning to take on a new shape that allows for transcontinental trade and a collective African economy.

The Transcontinental Trade in Africa

The Continental Free Trade Area (CFTA), which was proposed at a meeting of the African Union in 2012, set forth goals of enhancing trade among the eight Regional Economic Communities (RECs), made up of geographic subdivisions with interconnected economies, and creating a continental trading system that would encourage foreign investment and a competitive marketplace.

While the CFTA has yet to be fully implemented, ongoing discussions, including the December 2017 meeting in Niger of 54 countries in Africa, emphasize that an economic overhaul of this magnitude is a long-term goal with results that will not be immediately apparent despite the progress being made.

In addition to internal policy changes by African governmental leaders, foreign investors seeking to take early advantage of the promising African markets have expedited growth with contributions to urban development. In Ethiopia alone, Chinese investors funded the construction of the African Union’s headquarters in the capital city of Addis Ababa in the amount of $100 million. Road and highway systems, an airport and various energy and rail transportation programs are underway with the intent of modernizing Africa’s infrastructure and turning its economy into a thriving market with a high return rate.

Improving Agriculture and Trade

USAID has been working to improve trade in Africa through the creation of Trade and Investment hubs. Furthermore, through their Feed the Future initiative, USAID is working to educate various African countries on how to improve agricultural production and how to create trading systems that both improve the economy in the trading region’s while giving others access to goods not ordinarily available in their own region.

To complement the interests from investors abroad, foreign government organizations have worked from afar and on the ground to improve trade in Africa to create a flourishing, self-sufficient set of nations and to improve living conditions for the impoverished and the food insecure people throughout the continent.

Due to the large scale of growing trade in Africa to a place of higher economic security, progress may not be readily apparent or may not appear to be moving quickly enough. However, African government officials are hopeful that, by improving trade and economic conditions at the regional level and working outwards toward an efficient continental market, Africa may soon achieve its ultimate goal and find itself in a competitive position in the world market.

Rob Lee

Photo: Flickr

U.S. Benefits From Foreign Aid to Gabon
As the United States faces potential cuts to its foreign aid budget, it is important to recognize that the relationship between the United States and any country receiving aid is not a one-way transaction. The benefits reaped by both countries outweigh any costs. The many ways the U.S. benefits from foreign aid to Gabon is one such example. With a diplomatic friendship stretching back 58 years, the U.S. assists Gabon with funds that power humanitarian programs. These programs fight poverty, human trafficking and disease in Gabon. In return, the U.S. has gained a stable trading partner and international ally.   

The Partnership Between the U.S. and Gabon

When Gabon gained independence from France in 1960, U.S.-Gabon relations grew quickly. During the cold war era, Gabon was an ally of the West and has always sought to remain close with U.S. leaders, no matter who occupies the Oval Office. Gabon’s large oil reserves have received investments from U.S. presidential administrations, starting with Nixon and going all the way to the Obama administration. Gabon’s oil industry has been key to the development of strong trade partnerships with the U.S.

As reported in 2018, the U.S. had been importing about 30,000 barrels of crude oil from Gabon daily.  However, it isn’t all about oil; Gabon is ranked 134 as the U.S.’ largest goods trading partner. In 2016, there was a total of $192 million in goods traded. The U.S. exported a total of $89 million in goods to Gabon, and in return, imported $199 million in Gabonese products, clearly showing that the trading benefits alone outweigh any foreign aid costs.

The main products being imported from Gabon include mineral fuels, wood products and rubber while the U.S. mainly exports poultry products, beef products, cotton and sweeteners. While there is a certain amount of trade occurring between both nations, the number of goods being exchanged could be improved substantially by an increase in the amount of aid that Gabon is receiving from America. As more trading occurs as a result of Gabon’s ongoing development, the more the U.S. benefits from foreign aid to Gabon.    

The Rainforest

The two countries also cooperate to spearhead conservation efforts that seek to protect the country’s rainforest from deforestation and poaching. As a central African nation, Gabon part of the second largest rainforest in the world: the Congo Basin. The Congo Basin’s many natural resources provide food and shelter to more than 60 million of its inhabitants. Land in this area creates many viable, renewable products that have long reinforced a strong trading partnership with the U.S.

The United States Agency for International Development, (USAID), has employed an initiative called the Central Africa Regional Program for the Environment (CARPE) in Gabon and six other nations in the Congo Basin: the Central African Republic, Cameroon, Equatorial Guinea, Democratic Republic of Congo, and the Republic of the Congo.

The program seeks to bolster conservation efforts in these six countries as they battle poaching and deforestation while, at the same time, trying to improve responsible land management in the Congo Basin. CARPE works with communities and governments and nonprofits in these central African nations to speed up the transition from developing states to financially and politically secure democracies. It provides funding to ensure that the region’s rich, biodiverse habitat is preserved and that the transition from developing nation to developed nation is accompanied by low emissions and environmentally conscious economic strategies.  

Looking Ahead

Looking to the future, it is clear that the relationship between the U.S. and Gabon is beneficial for both countries. The ways that the U.S. benefits from foreign aid to Gabon will only be strengthened as Gabon continues to develop, bolstered by USAID through programs such as CARPE. The 58-year relationship between the two countries serves as an example of the mutually beneficial results of foreign aid. 

Jason Crosby
Photo: Flickr

Brexit and Poverty in Britain
In 2016, 51.9 percent of voters in The United Kingdom voted for Britain to leave The European Union. This controversial decision left many scholars and politicians scrambling to predict what social and economic consequences would follow for the country. Many significant studies have been conducted on the possible effects of Brexit and poverty in Britain, but it is impossible to definitively know what repercussions the transition will bring.

In March 2019, the transition out of the EU is set to begin. Many facets of British life, politics and economics will be impacted by this shift, yet the effect of Brexit on poverty in Britain remains complicated and vague. Some may claim that Brexit will not increase British poverty rates while others argue that it will. Some of the most influential determinants of national poverty are healthcare, food security, and household income and expenditure.

Health Care and Medical Services

The British National Healthcare System (NHS) has historically been dependent on non-U.K./ EU nationals to contribute to the medical workforce. In 2017, 60,000 workers in the NHS were non-U.K./EU nationals. Since Brexit, however, many medical professionals have left The U.K. due to uncertainty about legal status and protections post-Brexit. Leaving the EU also makes recruiting international employees more difficult as there will be less recognition of professional qualifications received in other countries.

Immediately after the Brexit vote, the number of non-U.K./EU nurses applying to join the British nursing register fell by about 96 percent. Patients are being forced to wait over longer periods of time for treatment simply because there are not enough medical professionals available. This is a dangerous and potentially fatal repercussion of Brexit.

Food security

In the case of a no-deal Brexit, food security would suffer as 30 percent of the national food supply comes from the EU The country does not have a clear food stockpiling location as it is accustomed to importing food and consuming it rather quickly afterward. The EU is such a large provider of food for Britain that no other country could easily replace this supply.

The U.K. itself will have trouble producing enough to make up for the deficit since it faces its own problems with food production as a result of things like changing weather conditions. Many are concerned that a no-deal Brexit could cause catastrophic food shortages in the country.

Household costs and incomes

Brexit will have a negative impact on the ability of the U.K. to import any kinds of foreign European goods and services. Because of this, the prices of goods and services will increase. Of course, this will affect all populations in Britain, but it will be felt most intensely by poorer households who will not be able to keep up with these price increases.

On the other hand, it is possible that if Brexit may lead non-U.K./EU workers to leave Britain, there may be an influx of job opportunities in the country. This could mean that some poor British citizens may be able to find more lucrative work.

As Brexit approaches, the United Kingdom is beginning to take precautions to ensure that the transition occurs smoothly. Though there is disagreement on what a proper Brexit would entail, all seem to agree that the priority should be the protection of the British citizenry. The political and partisan debates over what Brexit will mean for the country can only involve precaution and prediction as no one can be certain what March 2019 will bring or what the effect of Brexit on poverty in Britain will be. One can only hope that the well being of vulnerable citizens will be considered.

Julia Bloechl
Photo: Flickr