Inflammation and stories on trade

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U.S. Benefits from Foreign Aid to Equatorial Guinea

U.S. Benefits from Foreign Aid to Equatorial Guinea
People often think of foreign aid as the provision of emergency assistance without many tangible benefits in return. However, providing foreign aid offers numerous benefits to countries such as the U.S. For the U.S., Equatorial Guinea is by far one of the most important potential trading partners in the world, and aid to Equatorial Guinea is one of the surest ways to create such partnerships. The U.S. benefits from foreign aid to Equatorial Guinea, as it gains access to one of the world’s largest energy exporters.

Equatorial Guinea and Its Neighbors

In order to see how the U.S. benefits from providing aid, it is important to first understand the situation in Equatorial Guinea. As a largely underdeveloped country, Equatorial Guinea also suffers from the woes that plague many of its continental neighbors.

Political turmoil and internal corruption have caused sharp drops in foreign development assistance to the country since 1993. For example, in 2013 the government cracked down on freedom of assembly by shutting down protests and arresting political dissenters, sparking international outcry.

In addition, worsening economic conditions have caused the country’s economy to shrink by nearly 25 percent since 2014 despite this trend of reversed growth being rare among African countries. Most African states have managed to maintain positive economic growth rates in spite of rampant poverty.

For example, although Equatorial Guinea’s fall in growth stabilized at -3.2 percent in 2017 from its all-time low of -9 percent in 2015, most of its neighbors have maintained positive growth rates for years.

Cameroon to the north had GDP growth of 3.2 percent for 2017 and hasn’t dipped below zero since 1993. To the south, Gabon had a growth rate of 1.1 percent for 2017. Although Gabon’s growth has steadily declined since 2008, Equatorial Guinea is unique for having a consistently negative rate several years in a row.

Increasing Economic Prosperity

Nonetheless, the country has a strong export-based economy. In 2016 alone, Equatorial Guinea exported around $4 billion worth of goods, while importing a little over $1 billion. Its trading power has made it one of the few countries in the world with a trade surplus, especially one of that magnitude.

Equatorial Guinea’s economic health relies heavily on its natural resources. In 2016, its largest exports consisted of crude oil (which comprised over half of its exports, at $2.79 billion out of $4.06 billion) and petroleum gas (which accounted for approximately $762 million). Increasing global demand for oil, coupled with heavy reliance on this finite energy product, could make Equatorial Guinea one of the most important developing economies in the 21st century.

The Value of Foreign Aid and Investment

Equatorial Guinea’s economic potential suggests that it is a viable potential trading partner for any country, and providing foreign aid to Equatorial Guinea may be a strong gage for determining how robust such potential trade agreements could be. Increased foreign aid could encourage Equatorial Guinea to work with donor countries in opening new supply chains through trade agreements, complementing international development assistance with long-term economic partnerships.

Providing foreign aid will also help Equatorial Guinea grow its economy and reach its full potential. For example, as foreign donors began slashing development funds to Equatorial Guinea between 2010 and 2014 (from $85 million to $520,000 respectively), its economy began to contract several years later, from $22 billion in 2012 to $12 billion in 2017.

However, despite such alarming figures, there has been some help in the form of an increased focus on infrastructure development. In 2015, China agreed to commit $2 billion to Equatoguinean infrastructure. This support has not only helped revitalize Equatorial Guinea’s economic growth but also brought Equatorial Guinea and China closer together diplomatically.

Equatorial Guinea and the U.S.

In contrast, the U.S. has no trade agreements with Equatorial Guinea. In fact, it currently exports more to Equatorial Guinea (at $278 million) than it imports (at $193 million), signaling a large trade imbalance for Equatorial Guinea.

Furthermore, the U.S. does not supply any foreign aid to Equatorial Guinea. However, it does provide a generous amount to Equatorial Guinea’s neighbors; in 2017, Cameroon received approximately $80 million in U.S. foreign aid funds, while Gabon received over $2 million.

Increased foreign aid to Equatorial Guinea is one of the most practical ways to improve trade relations between the two countries. Each nation has something that the other needs. As one of the wealthiest countries in the world, the U.S. has plenty of foreign aid funds available (specifically, a foreign assistance budget of $50 billion in 2015) to improve the economic outlook of Equatorial Guinea.

Additionally, as one of the largest oil harvesters in the world, Equatorial Guinea has a slew of energy reserves available to export to the U.S., at a total of 1.1 billion barrels of oil as of 2012. It is evident that the U.S. benefits from foreign aid to Equatorial Guinea, due to greater access to a growing Equatoguinean hydrocarbon sector.

How the U.S. Benefits from Foreign Aid to Equatorial Guinea

A diversified import sector is critical to the financial well-being of any country. For the U.S., an oil industry with diversified imports creates stable international supply lines and an even stronger economy. Equatorial Guinea’s resources and economic potential suggest that it could be an ideal trading partner.

The U.S. benefits from foreign aid to Equatorial Guinea by improving relations between the two states and opening up new energy markets for American consumers. In addition, robust trade agreements could yield incentives for elevated oil production, thus helping to reverse Equatorial Guinea’s negative economic growth.

– Vincent Giordano

Photo: Flickr

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How the U.S. Benefits from Foreign Aid to Mauritius

U.S. Benefits from Foreign Aid to Mauritius

After becoming independent from Britain in 1968, the country of Mauritius began a diplomatic relationship with the United States that is still important today. Mauritius, a small island nation in the Indian Ocean, has become one of Africa’s most developed and stable economies, transforming itself from an impoverished country dependent on sugar to a middle-income nation with a diverse economy. Throughout this period of growth and success, the U.S. has been an important partner and has seen great benefits from foreign aid invested in Mauritius. There are three main ways the U.S. benefits from foreign aid to Mauritius.

Maritime Security

One of the biggest priorities for U.S. foreign aid in Mauritius is maritime security: keeping the Indian Ocean safe from piracy and crime. Maritime security allows for safer trade routes and prevents terrorism that could potentially spring up in the area.

Mauritius is one of the only countries in the region with a strong program for maritime protection and has been an important player in U.S. efforts to keep the Indian Ocean secure. U.S. foreign aid in Mauritius provides security officers with training that deals with counterterrorism methods, seamanship, forensics and maritime law enforcement. Without such measures in place, shipping and trading on the high seas, which have benefited the U.S. and Mauritius, could be more challenging.

Trade and Economic Growth

Mauritius is an example of how foreign aid is a form of investment. As the U.S. used foreign aid to develop Mauritius’ economy and improve trade relations, more and more U.S. businesses invested in Mauritius and experienced great results. The U.S. and Mauritius have a bilateral trade and investment agreement and are active trading partners.

As one of Africa’s most developed economies, Mauritius has engaged in many trade agreements and embraced free-market opportunities, some of which were only made possible with U.S. foreign assistance. In 2016, for example, the East Africa Trade and Investment Hub (funded by USAID) and Mauritius’ Board of Investment signed a Memorandum of Understanding to work together in investment promotion activities. The Hub also agreed to help Mauritius take advantage of trading opportunities with the U.S. and incentivize trade in the nation.

Since Mauritius’ has grown to an upper middle-income country and U.S. brands are purchased commonly in this new market, more than 200 companies and products from the U.S. do business in Mauritius. The U.S. exports agricultural and industrial machinery, jewelry and medical instruments to Mauritius and benefits from Mauritius imports such as textiles, precious stones, processed fish and sugar. Bilateral trade between these two countries is currently valued at $337 million.

Diplomacy and Political Stability

An important sector of U.S. foreign assistance is democracy, human rights and governance. Although Mauritius is already a multi-party democracy, foreign aid to Mauritius is still used to secure future democratic peace and stability in Mauritius and throughout Africa. Political stability in Africa is beneficial to the U.S., as unstable African countries that lack strong governments sometimes become havens for terrorism, threatening national security.

One way that foreign aid is used to foster diplomacy with Mauritius is through exchange programs such as the Young African Leaders Initiative (YALI). This program, started by President Obama in 2010, is an important U.S. effort to invest in future African leaders. The YALI program’s goal is to educate and network young African leaders to work for a peaceful future in Africa.

Since 2010, 66 Mauritians participated in the YALI program in the U.S. and then returned to their country to start new businesses, organizations and programs. There are also Mauritians involved in the YALI Regional Leadership Center in South Africa. These centers act as hubs throughout Africa that enhance leadership skills and teach young people to play important roles in their communities. There are about 1,300 members from Mauritius in the YALI Network, which continually provides online resources for young leaders to learn the skills and connections needed to bring change to their communities and stability to their countries.

These examples demonstrate how the U.S. benefits from foreign aid to Mauritius and the importance of this partnership both now and in the future.

– Alexandra Eppenauer
Photo: Flickr

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10 Examples of Trade Embargoes

Examples of Trade Embargoes
Trade embargoes are government-imposed barriers to international trade. Countries often justify these restrictions using political reasons, such as violations of national security or human rights.

10 Examples of Trade Embargoes

  1. U.S. Sanctions on Nicaragua: On July 5, 2018, the U.S. imposed sanctions on three Nicaraguan government officials, in response to the Nicaraguan government’s treatment of anti-government protesters, which has led to over 200 people being killed during violent demonstrations. Due to the 2012 Global Magnitsky Act, the U.S. can implement sanctions against those who commit human rights violations and corruption. The LA Times reported that under the sanctions, “any assets the three men have in the United States will be frozen, and U.S. citizens are barred from business transactions with them or any companies in which they have 50 percent or more ownership.”
  2. U.S. Sanctions on Russia: In April 2018, the U.S. passed new sanctions against Russia, intending to penalize Russian officials for their alleged involvement in the 2016 U.S. presidential election and their presence in Crimea, Ukraine, and Syria. According to CNN, assets will be frozen for 17 senior Russian officials.
  3. European Union (EU) Sanctions on Russia: As of July 5, 2018, the EU unanimously agreed to extend sanctions against Russia for at least another six months. According to PBS, the sanctions’ extension was no surprise and were “imposed after Russia annexed Ukraine’s Crimean Peninsula in 2014 and backed pro-Russia separatists fighting the government in eastern Ukraine.”
  4. Canada Sanctions on Venezuela: In September 2017, Canada enforced an asset freeze and dealings ban on Venezuela. Under the Special Economic Measures Act, Canada prohibits citizens and any Canadian residents from providing  “any goods, wherever situated, to a listed [Veneuelan] or to a person acting on behalf of a listed [Veneuelan].” The sanctions are based upon a U.S.-Canada alliance in response to human rights violations in Venezuela. For example, the Venezuelan government arrested thousands of protestors in April 2017, and many civilians were injured or killed during the protests.
  5. U.N. Sanctions on North Korea: In 2006, the U.N. Security Council (UNSC) imposed sanctions in response to North Korea’s first nuclear test. The sanction prohibited the supply of heavy weapons and select luxury goods. According to the Council on Foreign Relations, the UNSC announced more restrictions—extending to oil and metal imports, agricultural exports, and labor exports in December 2017. However, the U.N. does allow humanitarian aid to enter North Korea.
  6. U.S. Sanctions on China: Most recently, the U.S. and China are in trade wars—each responding with their own tariffs. On April 16, 2018, the U.S. imposed a seven-year ban on exports to ZTE, a Chinese telecom company. The Washington Post explained that ZTE was reprimanded for “illegally exporting U.S. goods to North Korea and Iran.” On June 7, the U.S. ended the ban.
  7. U.S. Embargo on Cuba: In 1962, the U.S. placed a full embargo against Cuba when the Kennedy administration announced the ceasing of all trade. However, in March 2016, President Obama and Cuban President Raul Castro agreed to “allow commercial flights between the two countries for the first time in more than fifty years.” In September 2017, President Trump proposed the withdrawal of two-thirds of his embassy staff from Havana, Cuba and announced the return of travel restrictions.
  8. EU Sanctions on Sudan: The EU imposed an arms embargo on Sudan in 1994. The embargo was amended in 2011 due to the independence of South Sudan and now applies to both Sudan and South Sudan.
  9. U.N. Sanctions on Iran: In 2006, the U.N. authorized an embargo on supplies for uranium production and ballistic missile development, harming Iran’s economy. In April 2015, the U.S. Treasury Secretary Jacob Lew noted that “Iran’s economy was 15 to 20 percent smaller than it would have been had sanctions not been ratcheted up in 2012.”
  10. U.S. Embargo on Japan: In 1941, the same year the U.S. entered World War II, the U.S. imposed a comprehensive trade embargo against Japan. The U.S. froze “all Japanese assets in America,” which eventually contributed to Japan’s loss of “access to three-fourths of its overseas trade and 88 percent of its imported oil.”

These 10 examples of trade embargoes demonstrate how countries engage with one another to serve their domestic interests and to punish others for violations of human rights.

– Christine Leung
Photo: Flickr

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U.S. Benefits from Foreign Aid to Niger

U.S. Benefits from Foreign Aid to Niger
Within the U.S., there is a misconception of the amount of foreign aid given to developing countries. Some Americans believe the government gives up to 25 percent of the budget, but less than 1 percent gets put towards foreign aid. Niger relies heavily on U.S. aid and from additional U.N. agencies; 45 percent of Niger government’s FY 2002 budget comes from foreign aid. The U.S. benefits from giving foreign aid to Niger because of the positive image and the fiscal and potential foreign policy opportunities.

Niger and the U.S. relations

Niger and the U.S. have maintained a diplomatic relationship since the 1960s. The U.S. is a principal donor to Niger, giving up to $10 million yearly in aid, along with helping to coordinate policy in matters like HIV/AIDS and food security. The U.S. benefits from giving foreign aid to Niger because of Niger’s involvement in the Economic Community of West Africa, a program the U.S. maintains a trade and investment agreement to. Along with this program, there is a bilateral investment agreement the U.S. and Niger share with each other.

Foreign aid in Niger

Being one of the poorest countries in Africa, Niger’s economy relies heavily on agricultural production, which is continuously interrupted by extreme heat and droughts. From June to August in 2010, Niger’s crops were destroyed due to the heat, which caused a famine where almost 350,000 people were facing starvation. International food aid was provided when Niger citizens began suffering from malnutrition and respiratory diseases that sickened many children. In addition to international food aid, U.S. foreign aid aims to improve food security, maintain peacekeeping methods and increase healthcare services. With the Millennium Challenge Corporation compact, which began in January 2018, $437 million will be given to enhance Niger’s agricultural capabilities by increasing access to water, roads and markets. Additionally, Niger is one of six other countries that are involved in the Security Governance Initiative, a program that is labeled as a Counterterrorism Partnership Fund.

With programs and partnerships that the Niger and the U.S. participate in, Niger benefits from foreign aid because it is representative of their yearly budget and allows them to develop more resources to eventually become more self-reliant. In addition to providing aid, the U.S. additionally benefits from foreign aid to Niger. Microsoft founder Bill Gates explains how the U.S. benefits from foreign aid: “The 1 percent we spend on aid for the poorest not only saves millions of lives, it has an enormous impact on developing economies – which means it has an impact on our economy.” This shows that giving aid to third-world countries will positively affect the image of the U.S. and the economy.

– Alyssa Hannam
Photo: Flickr

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Illustrating How the U.S. Benefits From Foreign Aid to Senegal

U.S. Benefits From Foreign Aid to Senegal
Since 2001, the United States has consistently provided foreign aid to Senegal. Washington’s contributions have continuously been above $30 million per year and peaked at $141 million in 2014. As a result, this financial support has had significant impacts on the developing nation.

Combined global aid has improved Senegal’s agricultural efficiency by shifting losses into profits of over $300 million per year, enhanced water access to over 140,000 people and increased access to secondary education by over 75 percent. GDP has increased from four to nearly 15 billion.

How the U.S. Benefits from Foreign Aid to Senegal

Such improvements may seem praise-worthy from a charitable standpoint. Foreign aid, however, is not just a one-way street. In fact, the U.S benefits from foreign aid to Senegal. In one way, foreign aid can be seen as a macro-level investment by a government into an underdeveloped market. Foreign aid is unique in that the risk-level is nearly negligible given that the intent is not to see a personal return on the investment, but rather to accelerate growth to meet basic humanitarian needs.

Despite the moral and seemingly charitable nature of foreign aid, it can pay dividends to the provider in the future. As the receiving state experiences economic growth and stabilizes over time, it becomes more able to establish economic moats and reciprocate the help it received. This is typically though not exclusively seen through an increased ability to trade.

Education

According to the Department of Commerce, current U.S.-Senegal trade relations are limited. While U.S. exports have gone up roughly 90 percent from 2006, U.S. exports to Senegal support only about 900 jobs as of 2015. That number, however, could rise significantly through increased foreign aid in education.

As more individuals become educated and start businesses that leverage increasingly efficient agricultural resources or other products, more jobs and growth could materialize as ‘what goes around comes around’ in giving back to aid nations. Increased trade with Senegal in the future could help the U.S. receive money given as aid back into its economy.

Economic and Political Stability

The U.S. benefits from foreign aid to Senegal by also bolstering economic stability so that it may develop into an emerging market. After the U.S. started providing foreign aid, the IMF in 2015 reported that Senegal’s financial soundness metrics suggested that it was stronger than West Africa as a whole.

The democratic state has also improved politically in the years since foreign aid started. Given the key transfers of peaceful power and the absence of violent conflict, the World Bank has regarded Senegal as one of the most stable states on the continent. Positive ratings have been helpful in slowly pushing Senegal onto the world stage as a prospective future power and perhaps, one day, a true regional hegemon in West Africa.

Investing in Senegal

Today, the nation’s political and economic harmony has drawn talks and the interest of private investors. Senegal’s “Plan Sénégal Emergent” is a new policy framework that seeks to combine social justice with good governance and economic growth to stimulate development. The purpose, as the name suggests, is to establish Senegal as an ‘emerging market’ by 2035.

An emerging market is a state that features characteristics of a developed market, but has not gotten there just yet. Such markets have potential for high growth and profitability – drawing the attention of the world’s financial companies.

While the road ahead seems long and arduous, President Macky Sall remains optimistic that his country can work towards achieving the goal. Foreign aid and a demonstrated domestic interest in maintaining stability show that Senegal wants to be a model for pioneering change in West Africa.

Lucrative Give and Take

The U.S. benefits from foreign aid to Senegal if this happens. Emerging markets are known for high growth opportunities that can be lucrative. Current examples of such markets include states such as China, India and Brazil, which have made big waves in the financial world. Senegal, as a result of development from foreign aid, hopes to be next. Investors could be able to capitalize on growth opportunities in a developing nation, which would materialize benefits to U.S. citizens.

With several nations still struggling with similar issues, there is still work to be done. The Senegal case-study shows that there is a need for foreign aid, and the argument for it is no longer exclusive to just global altruism.

– Mrinal Singh
Photo: Flickr

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The Multiple Ways That The U.S. Benefits from Foreign Aid to St. Lucia

U.S. Benefits from Foreign Aid to St. Lucia
As of 2016, the United States has provided over $38,000 worth of foreign aid to St. Lucia through the United States Agency for International Development (USAID). This small Caribbean island, with a population of 170,015, has a Gross National Income of $11,370 and continues to be at risk for high crime, labor instability and a high level of substance abuse.

Through its many programs and funding ventures via USAID, the U.S. continues to better St. Lucia. However, this foreign aid does not only help the island; the U.S. benefits from foreign aid to St. Lucia as well.

Agriculture and Tourism

Most USAID funding in St. Lucia is allocated to agriculture. By investing in the country’s department of agriculture, the U.S. is aiding as well as fortifying a potential trade relationship. Within the first four months of 2018, almost 10 percent of U.S. imports from St. Lucia were food related — a number that will most likely rise as the country’s agriculture department strengthens.

Another way that the U.S. benefits from foreign aid to St. Lucia is through tourism. St. Lucia’s tourism industry profits greatly from the U.S. as a majority of tourists to the island are American, who tend to buy St. Lucian products. This exchange of goods thus benefits both economies.

The more the U.S. invests in foreign aid to St. Lucia, the more return on investment it will receive. By giving USAID in order to strengthen St. Lucia’s economy, the U.S. is strengthening a trading partner. However, in order to build a secure relationship between the countries, crime and violence must also decrease.

Violence Prevention and Education

One USAID program focuses on targeting violence in a preventative way. In a partnership with St. Lucia’s Department of Education, Innovation, Gender Relations and Sustainable Development, the U.S. has commenced a coding and robotics program into St. Lucia’s secondary education curriculum.

As of June 12, four students and 12 teachers have been trained in the robotics and coding curriculum; more math, physics, computer and traditional classes will be later introduced into St. Lucian secondary schools.

The new initiative creates a new and exciting way for St. Lucian students to become and remain involved in their education as they attend school. In this program, education is not just the knowledge that students gain from learning robotics and coding. The USAID and St. Lucia’s Department of Education also aim to instill a love of learning, teamwork and critical thinking skills into the students.

By introducing the robotics and coding program into secondary schools and impressing a love for learning, as well as teamwork and critical thinking skills, onto St. Lucian students, the two countries hope to decrease the overall violence in St. Lucia.

Sustainable Progress and Growth

People who think critically and are more prone to work together are far less likely to commit violent crimes than their counterparts. By teaching St. Lucian students to be not only better learners, but also better citizens is vitally necessary to the growth of St. Lucia.

With the help of this program, the country’s future adults will be more aptly prepared to participate within St. Lucia as well as the global economy. As the program continues to succeed, St. Lucia will benefit from its future leaders just as the U.S. benefits from foreign aid to St. Lucia.

– Savannah Hawley
Photo: Flickr

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How the US Benefits from Foreign Aid to Namibia

U.S. Benefits from Foreign Aid to Namibia
Namibia is a sparsely populated country on the southwestern coast of Africa whose priceless natural resources and small population of 2.5 million enable its upper-middle income status. Relations between the United States and Namibia are friendly, and the U.S. has supported the country’s recovery after the damage of apartheid through programs that improve healthcare, education and economic opportunities.

About two-thirds of Namibian citizens live in rural areas, and two-thirds of the people in rural areas rely on subsistence farming for a living. The country has seen a reduction in poverty, yet this has not had an effect on the rather high unemployment rate of 28.1 percent and the socioeconomic inequalities that linger from the apartheid era. Outside of satisfying a moral need, the U.S. benefits from foreign aid to Namibia in its efforts to address these issues.

A History of U.S. Involvement

USAID involvement in Namibia started in 1990 with the country’s independence from South Africa. South Africa seized the territory from Germany, which was then called South-West Africa, during World War I and annexed it after World War II. The South-West Africa People’s Organization guerrilla group spurred a war for independence in 1966, but South Africa did not release the territory until 1988 under the United Nations peace plan. 

In 2014, the Millennium Challenge Account Compact that aimed to reduce poverty and stimulate growth in education, tourism and agriculture proved to be a success. Namibia is also one of the countries participating in the President’s Emergency Plan for AIDS Relief (PEPFAR), which was initiated by USAID and the Centers for Disease Control and Prevention. Considering the global epidemic of HIV/AIDS and the changing needs within Namibia, USAID has since shifted its main attention to HIV/AIDS work, making large investments in Namibia’s health services. 

How the U.S. Benefits from Foreign Aid to Namibia: Economic Growth and Trade 

Namibia has many strengths that make it a viable country for economic growth. It is politically stable and has developed infrastructure and a modern telecommunication system.

As Bill Gates has noted in several op-eds supporting foreign aid, foreign U.S. investments are beneficial to American businesses by providing opportunities for new customers and new suppliers. When private companies collaborate with organizations like USAID, it creates a market for American goods. One example of a way in which the U.S. benefits from foreign aid to Namibia is if an American company were to help to raise the productivity of subsistence farmers in Namibia, this would benefit farmers and workers in the U.S. while opening the possibility for a larger market in that part of the world.

In regard to fighting HIV/AIDS and disease globally, Gates says societies are more productive when there are healthy “teachers, police officers and entrepreneurs.” Countries such as Namibia that worked with PEPFAR have “improved three times more on one measure of economic development than their non-PEPFAR counterparts,” Gates confirmed. Gates observes that foreign aid alone is not an immediate solution to global poverty, but it stimulates sustainable growth that improves global well-being. Continued support of Namibia and other countries can bring wide-ranging benefits to the U.S. and the world.

– Camille Wilson
Photo: Flickr

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Understanding Why Providing Foreign Aid Helps the U.S.

foreign aid helps the U.S.
Giving, especially in the form of foreign aid, has shown to cultivate meaningful relationships among people and countries, some that lead to rewarding trading agreements amid other benefits. Recent history has particularly exhibited how foreign aid helps the U.S., which is a crucial consideration in the political dialogue surrounding the current foreign aid budget.

Foreign Aid Helps the U.S. with Trade

One valuable return the U.S. has received in its giving of foreign aid to other developing countries has been the increase in American jobs as well as trade. Foreign aid is much like an investment; it helps to forge the foundation needed for low-income countries to build up and become middle-income, sustainable states. Here are some examples:

  1. After World War II, U.S. foreign aid to Japan helped recover Japan’s infrastructure and highly contributed to the success of American companies like Microsoft.
  2. The U.S. now trades and does business with former recipients of foreign aid, such as South Korea, Brazil, Mexico, Vietnam and Thailand.
  3. The President’s Emergency Plan For AIDS Relief (PEPFAR) successfully slowed down the AIDS epidemic and countries that received such aid have, in turn, consumed more American goods. Exports rose 77 percent in Tanzania, 189 percent in Zambia and 241 percent in Ethiopia.
  4. PEPFAR is one of the strong determinants of increases in the trade of pharmaceuticals.
  5. Foreign aid has attributed $46 billion more in U.S. exports and 920,000 more jobs in the U.S.
  6. In 2011, 44.6 percent of U.S. exports went to developing countries.
  7. In Tennessee alone, more than $33 billion in goods and services were exported to foreign countries in 2014 and this trade, in turn, supports over 22 percent of jobs, 830,000 local jobs to be specific.

Foreign Aid Helps with Health

Foreign aid helps the U.S. in preventing global epidemics that could otherwise be much worse. While assisting developing countries with their challenges in health, the U.S. also does its duty to minimize any possible health issues and diseases from traveling overseas or across borders to the U.S. There has been a great number of such instances, such as:

  • The U.S. was the largest funder of a number of health workers stationed in Nigeria with the original goal of polio eradication. The workers were later reassigned and succeeded in countering the infamous Ebola epidemic.
  • The PEPFAR program has helped stop the spread of AIDS by supplying life-saving medicines to over 14 million people.

Foreign Aid Helps with National Security

One of the non-negotiable benefits the U.S. reaps from its giving of foreign aid to developing countries is an improvement in national security. To prevent a third world war, the U.S. created what is now the modern development assistance program to avoid further instability in Europe.

Stability in developing countries is key in preventing future political issues from unfolding. The U.S. has defense agreements with 131 out of the 135 countries that it provides foreign aid to.

The importance of international aid lies in economic benefits, such as trading proliferations, as much as health and national security. As evidenced above, it is clear that there is truth in the fact that foreign aid helps the U.S. just as much as it helps other nations.

– Roberto Carlos Ventura
Photo: Flickr

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The Massive Potential of Biotrade in Peru for Economic Growth

biotrade in Peru
Peru’s economy saw a significant boom between 2004 and 2014. However, this growth was achieved in rather unsustainable ways. The U.N. has noted this and has been helping Peru establish more sustainable progress, particularly through what is known as biotrading. Biotrading consists of economic activities such as the collection, production, transformation and commercialization of goods and services from native biodiversity, all while preserving or improving environmental, social and economic sustainability.

The idea behind establishing a green economy in Peru arose in 2012 when four United Nations agencies formed the Partnership for Action on Green Economy (PAGE). PAGE’s mission is to redirect investments and policies toward sustainability, which focus on clean technologies, resource efficient infrastructure, functional ecosystems, good governance and green skilled labor.

Biotrade in Action

According to the United Nations Environment Programme, the implementation of biotrade will develop a green economy in which human well-being, social equity and the protection and health of the environment will all be improved alongside the economy. In fact, over the last five years, biotrade in Peru has resulted in an average annual growth of 20 percent following an almost 200 percent growth from 2009 to 2010, amounting to $320 million.

An example of the poverty reduction biotrade has offered lies with the Peruvian indigenous plants of tara and quihuicha, as well as the animal called cochineal. In the region of Arequipa, the growing area of quihuicha increased from 150 to 578 hectares within three years, tara production expanded more than 400 hectares and planted cochineal reached 4,400 hectares.

The awareness of the direct link between the success and profitability of biotrade in Peru with the health of ecosystems and biodiversity has led to several initiatives. A major focus is on diminishing deforestation, illegal logging, pollution and soil erosion, in conjunction with commercializing non-timber forest products like Brazil nuts and cat’s claw. There are also efforts to increase genetic diversity in crops as well as decreasing the use of pesticides.

As consumers are increasingly seeking products that provide greater health benefits and quality, companies’ socially responsible and environmentally friendly standards, energy-efficient manufacturing and fair labor and trading practices, biotrade in Peru is becoming a more lucrative endeavor. Consumers are still attracted to such bioproducts despite their 30 percent difference in price compared to conventional products.

The Potential of Biotrade in Peru

Projections state the following about the impact of biotrade in Peru from 2010 to 2020:

  1. The growth of sales exports will increase anywhere from about 519 percent to 2,379 percent.
  2. GDP from biotrade will increase from almost $110 million to $2.7 billion.
  3. Employment growth will increase anywhere from 10,000 new job openings to 271,689 openings, from a 619 percent to 2,717 percent increase.
  4. Carbon sequestration impact increased from 2,592 to 5,184 hectares, where 1 hectare is equivalent to 300 tons of carbon emissions.

Improving the Impact of Biotrade in Peru

Peru has significantly benefitted from biotrade, which has stimulated its transition into a green economy while maintaining its economic growth. However, to further progress biotrade in Peru, achieve the sustainability goals of the U.N. and set a pivotal example for other countries in regard to sustainable growth, Peru must now address the following in the years to come:

  1. Provide greater availability of finance for producers and small and medium-sized enterprises
  2. Increase resources for public policies
  3. Support more research and development
  4. Enhance awareness of bioproducts
  5. Improve capacity building
  6. Facilitate the process of achieving quality and sustainability standards
  7. Address market power for products and producers

With a green economy in mind, Peru, with the help of PAGE, has focused policies and investments on sustainability. Now, Peru experiences economic growth as biotrade exponentially grows annually, new green jobs are created, poverty and inequality are reduced and environmental sustainability is protected and even incentivized. Fruitful results are reached when the health of an economy is interdependent with that of nature.

– Roberto Carlos Ventura
Photo: Flickr

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Jump-Starting Regional Trade in East Africa

Jump-Starting Regional Trade in East Africa
East Africa has some of the fastest-growing economies in the world. Besides being the source of some of the world’s best coffee, East Africa has growing industries in agriculture, financial services, medicine, textiles and apparel. Despite the region’s wealth of natural resources, USAID reports that more than 27 million East Africans go to bed hungry and 46 million live in poverty. This is partially due to the lack of regional trade in East Africa.

Three Things to Know About Regional Trade in East Africa

  1. East Africa’s trade infrastructure was built toward exporting natural resources abroad rather than moving goods within the region. Similar to the rest of Africa, East Africa was colonized, primarily by the British, for a long time. Colonization was partially driven by European countries’ scramble for power, but Europeans were also fighting for resources and trading posts. Most of the countries in the region gained independence in the 1960s, but intercontinental trade was already well established and took precedence over regional trade.
  2. Regional trade in East Africa makes up only 13 percent of the region’s total trade. This means that 87 percent of East Africa’s tradeable resources and products are exported out of the region. In other continents, the percentage of regional trade is much higher. For example, 60 percent of trade in the European Union and 40 percent of trade in Asia is regional.
  3. National policies in East African countries substantially slow trade across East African borders and prohibitively increase costs. Most goods traded within the region cost about 40 percent more than retail because the cost of simply getting the goods to East African consumers is so high.

How Can Regional Trade Be Increased?

The best way to increase regional trade is to boost trade and investment opportunities within East Africa and make regional trade freer and fairer. USAID’s East Africa Trade and Investment Hub (also known as The Hub) works to do just that. The Hub also works to make East African agricultural value chains more competitive, particularly the grain trade.

The Hub’s regulatory reform activities have increased regional trade in East Africa by 39 percent over the past two years. USAID reports that The Hub has facilitated $59.3 million in private sector investments since its founding in 2014. As of 2018, The Hub has already helped create 38,682 jobs and had given 1,402 firms capacity building assistance. The Hub has also supported 829 food security producers and organizations and has contributed to the food security of more than 14.9 million East Africans.

USAID works with and in Burundi, Kenya, Rwanda, Tanzania, Uganda, Ethiopia, Madagascar and Mauritius. The Hub partners with these countries’ governments as well as civil societies and private regional institutions to remove trade barriers in East Africa. Certain regional institutions include the Common Market for East and Southern Africa, TradeMark East Africa, the East Africa Grain Council and the East African Community (EAC).

The EAC promotes the Common Market, a regional integration milestone that accelerates economic growth and development in East Africa. The EAC maintains a liberal stance toward the economic market and specifically works to ensure five freedoms of movement in East Africa:

  • Free movement of goods
  • Free movement of persons
  • Free movement of labor/workers
  • Free movement of services
  • Free movement of capital

East Africa grows enough food to feed its entire population. Freeing trade in the region and making it fairer will help East Africans keep the food they grow and get it to those in need. Free-flowing goods will reduce East Africa’s need for food and financial aid and make the region more self-reliant.

– Kathryn Quelle
Photo: Flickr