Another important infrastructure that has challenged the economic development of Africa is a good transportation network to facilitate movement of people and goods within Africa. Trade is … p, number of products; EPCI, export product, concentration index; EPDI, export product diversification index. Finally, recommendations for necessary measures to stimulate production and trade in Africa in the present era of free trade and negotiations at the WTO and other regional bodies are summarized here as follows: African countries should create a friendly environment and provide/guarantee affordable/soft loans to producers and traders to support their services and productive initiatives. Exports of agrarian products (US$ billion and %) of regions by destination, 2014. The value oil export in Algeria declined by −43%, sugars and sugar confectionery (−35%) and raw hides and skins (−39%), in 2015. Contact our London head office or media team here. With greater integration could come greater country specialization – such as basic manufacturing in metal and plastic products that are expensive to import from the global market. The current share of Africa in global trade is only around 3 per cent compared to 10 per cent in 1950. Despite this development, challenges remain prevalent in logistics infrastructure. 22/01/2016. Mercantilism model seems to have gone; however, trade in manufactured products, especially processed agriculture, is still protected which was seen as the key features of mercantilism. The challenges to reversing the decline of the apparel sector in South Africa International Conference on Manufacturing-Led Growth for Employment and Equality in South Africa Johannesburg, South Africa 20 - 21 May 2014 Mike Morris PRISM, School of Economics University of Cape Town Mike.morris@uct.ac.za and Justin Barnes Cost is a concern, but the time required to compile documents and gain approval is the most taxing aspect of international commerce. Is the doctrine of mercantilism dead or still alive? Nonetheless, this has steadily decreased over the decades as fuels and mining and manufacturing products have taken over. Commodity price fluctuations in the world markets: Price volatility characterizes most agricultural commodity markets. Cost is a concern, but the time required to compile documents and gain approval is the most taxing aspect of international commerce. To achieve the aims of this study, secondary data are obtained from agencies, such as the United Nations Conference on Trade and Development (UNCTAD) annual statistical reports; WTO, International Trade Centre (ITC), and World Bank (WB). The movement of goods, services, finance, and human resources across national borders has been driving socioeconomic and political ... 2. The global oil crunch and other raw products are a wake-up call for a rapid industrialization and diversification for a sustainable export competitiveness, and export-led growth hypothesis to be achieved in Africa. However, the structure and pattern of trade vary significantly by-products and regions. Even though Africa’s trade with the world has improved, trade within African remains low. Mobility is sacrosanct for inter-regional trade as it brings communities closer to goods and services. When it comes to possible problems of exporting goods, … Source: Compiled from UNCTAD. Africa in global trade and foreign direct investment Today’s global economy is dynamic and increasingly interdependent. Also, studies by Grubel and Lloyd [8] confirm high ratios in the industrialized economies. A value closer to 1 indicates that an economy concentrated in few goods and/or sectors for trade, thus its vulnerability to trade shocks, whereas a nation or continent with a completely diversified portfolio will have an index close to 0. This may have distorted export-led growth hypothesis and a robust product diversification of export products emanating from Africa. Tax escalation means higher tariffs on processed commodities than on raw materials [19]. [971] Gold, nonmonetary (e.g., gold ores), Fuels (% of total exports) ([333–355] [342–344]), Total of top seven exported product groups, Total of top seven imported product groups, Agric raw materials (SITC 2 < 22, 27+ 28), Machinery and transport equipment (SITC 7), Labor- and resource-intensive manufactures, Low-skill and tech-intensive manufactures, Faculty of Regional Development and International Studies, Mendel University, Brno, Czech Republic. Although African trade policies address a broad range of regulatory barriers, for instance, by prohibiting export licensing regimes, establishing a duty-free status for certain products, and promoting harmonization and mutual recognition of standards in the continent, these policies are poorly implemented in reality. But skeptics have pointed to impending challenges, especially those which affect SMEs. It is worth mentioning that Nigeria, Angola, and Equatorial Guinea have recorded a positive trade balance mainly because fuels accounts for over 90% of the total exports. On the other hand, ECCAS has the worst results in both intra-regional imports and exports in the region. Licensee IntechOpen. On individual country levels, Table 2 indicates that South Africa, Nigeria, Algeria, Angola, and Morocco were the leading merchandise exporters in Africa in 2015. Our readership spans scientists, professors, researchers, librarians, and students, as well as business professionals. Entering and succeeding in international trade is not without its challenges, but overcoming those challenges can lead to global entrepreneurial success. Sub-Saharan Africa’s GDP … This transition in world history poses a potent challenge to the mainstream IR theory, as the concept of an all sovereign state becomes untenable in Africa and elsewhere in the Global South. AFRICA’S RelAtIve PoSItIon In globAl tRAde And FdI Today’s global economy is dynamic and increasingly interdependent. The South African Institute of International Affairs (SAIIA) is an independent public policy think tank advancing a well governed, peaceful, economically sustainable and globally engaged Africa. From the foregoing, African countries are still lagging behind from attaining IIT, similarity, or complementarity trade proponents as compared to developed countries. Even though agriculture has substantially contributed to the GDP and export value in African countries, the continents share in the global markets, and the annual growth rates have diminished and stagnated over the years [12]. Source: Compiled from ITC. We then explore the ‘demand’ and ‘supply’ sides of Africa’s trade problems, noting where and how the European … This means that outside oil, they may also record as net importers in the regions. South Africa is a notoriously tricky place to conduct overseas trade, although big strides have been made in rectifying difficulties experienced when trading across borders. 1. Regional integration in Africa is beset by massive constraints: Economic Partnership Agreements offer help in some areas, but threaten what progress is being made in many others. Nonetheless, the trends in trade have remarkably risen since the creation of the World Trade Organization (WTO), as a body of trade negotiations, policies, and rules. The positive values signify that Africa has been a net exporter of these products. The result, an Africa that exports refined petroleum instead of crude petroleum and high quality packaged medication instead of oily seeds and tea. The product concentration index indicates how exports and imports of a country or continent (or regional groups) concentrate on a few products or otherwise distributed in a more homogeneous manner among a broad range of products. Both EPDI and EPCI show that Africa has concentrated only in few product groups for exports. However, the challenges of International Relations came with decolonization and the failure of the Westphalian state system in post-colonial Africa. Logistics performance index (LPI): quality of trade and transport infrastructure (1 = low to 5 = high), 2007–2016. In the spirit of global partnership for development, world organizations and emerging and advanced economies should continue to provide technical know-how and facilitate trade in Africa. World trade fell in 2015 partly as a result of a reduction in oil and other commodity prices. Tariff regime is more pronounced in processed agricultural products such as cocoa, tea, hides and skins, sugar, meat, coffee, and fruits (Table 12), which are among the primary export commodities in Africa. For instance, classical or traditional theories, such as absolute advantage [1], comparative advantage [2], and Heckscher-Ohlin’s factor endowments [3, 4], argue that countries involve in cross border commerce largely because of the relative costs of production or factor endowments over other nations. Reversing these policies would be an act of bad faith and would take away the little confidence domestic and international private firms have in the policy environment. One of the advantages of international trade is that you may have an outlet to dispose of surplus goods that you're unable to sell in your home market. As PhD students, we found it difficult to access the research we needed, so we decided to create a new Open Access publisher that levels the playing field for scientists across the world. The amount was more than 70% in some decades ago [12]. Once fully implemented, the AfCFTA is expected to cover all 55 African countries, with a combined GDP of about US$2.2 trillion. Thus, some of these factors are briefly highlighted below. The United Nations Economic Commission for Africa (UNECA) estimates that if signatory countries follow through with policies that spur local productivity, the free trade argument could boost intra-African trade by 52% by 2022. Zambia’s copper exports (code 74) accounted for 74% of total exports in 2015; it dropped by −29% in the same year. Address by Alassane D. Ouattara Deputy Managing Director of the International Monetary Fund at the Southern Africa Economic Summit sponsored by the World Economic Forum Harare, May 21, 1997 "The challenges that Africa faces in trade and regional integration are legion, and well documented. A value closer to 1 indicates lower diversification and vice versa. Difficulties Faced By Exporters in International Trade When you get on the international trading, there are many aspects to consider as an exporter. 27 Nov 2018. export. Implementing SPS measures, more than trade costs, presents a specific challenge to the African producers and exporters. High trade costs deny firms access to technology and intermediate inputs, preventing their entry into, or movement up, global value chains. Africa to be a success, Africa’s leaders will have to move beyond grand gestures and abstract visions. Sadly, African trade among African countries or extra-Africa has been dominated with primary product because value addition or industrial development has been below the global average (Table 7). The main aim of this paper was to examine in-depth the contributions and relationship between international trade and the economic development of developing African countries. They should also set standards to make sure that quality control met international standards and best practices and provides sound legal and regulatory frameworks for production and trade. However, their share of agricultural exports to developed countries has stagnated. Current challenges to U.S. technology policy are driven by the growing role of international flows of trade, capital, and technology to and from this economy, as well as by other developments. Africa’s merchandise exports witnessed a significant declined (−28.4%) in dollar terms in 2015. International Trade: The Position of Africa in Global Merchandise Trade. Despite advances in the regional integration, barriers to intra-African trade remain a challenge in the continent. The high rate of unemployment and the slow progress of economic growth in most North African countries have spotlighted the importance of inter-regional trade among them as an alternative solution to achieve inclusive growth in the long run. Even though countries’ taxes have been cut, especially since the beginning of the current Doha Round in November 2001, it persists in many commodity chains, especially in processed products. Also, Africa continues to export a broad range of primary products that are highly vulnerable to shocks in demand in the global commodity markets, which lead to disincentives to production and trade when the prices sharply shrink. We are IntechOpen, the world's leading publisher of Open Access books. Health outcomes are worse in Africa than anywhere else in the world, … Even though the share of the seven products in the total export products declined from 76% to about 65% in 2015, it is still huge. The GL index ranges from 0 to 1, where the value closer to 1 indicates intra-industry trade, implying that the nation or region exports the homogeneous quantity of products as much it imports. Accounting for about 40% decline in the region’s exports, in the oil-exporting countries, such as Nigeria (−45%), Angola (−44%), and Algeria (−40%), in 2015. Arguably, exporting primary commodities means that African countries have been exporting their jobs and wealth to other continents, while importing manufactured products means importing poverty and misery to the continent. Africa is now feeling the economic impact of the virus and plans to control and manage the challenges of COVID-19 are underway across the continent. One of the biggest challenges faced by African traders is the gap in trade finance, especially in relation to the credit availability provided to traders in Africa. Buyers and sellers rarely meet one another and personal contact is rarely possible. Mercy Mpinganjira (August 22nd 2012). In Africa, regional and economic integration is viewed as a panacea for addressing the continent's economic challenges with the enhanced coordination and coherence to leverage on the continent's population strength and diverse attributes in improving intraregional trade and increasing investment inflow. On the other hand, they are mainly importing manufactured commodities, such as synthetic rubber, electrical machinery, apparatus, textile yarn and related products, motor vehicles and bicycles, machinery and transport equipment, medicines, fuels, wheat, paste of tomatoes, chocolate, refined sugar, tractors, and other modern technologies (Tables 6 and 7). In this brief we attempt to summarise them against the backdrop of Africa’s broad development priorities. Product concentration and diversification indices by economy, 1995–2015. Consequently, African processors and exporters are being marginalized and excluded from taking competitive advantage in the global markets, thus partly impeding production, trade, and development in the continent. In Africa, apart from a few primary commodities and tropical products, all other products are in net import status, and this situation is likely to continue over the next decade unless industrialization and intra-regional trade in the continent are intensified. The IIT model stressed that international trade takes place as a result of economies of scale, product differentiation, and imperfect competition between and within industries and countries. The index value ranges from 0 to 1. Source: Compiled from UNCTAD data. The second feature of South-South trade in GVCs, and also in Southern exports more generally, is their continuing reliance on primary commodities, in particular oil, gas and coal, and petroleum products. Available from: Materials Science, Engineering and Technology, Product concentration and diversification, [057] Fruits and nuts (excluding oil nuts), [334] Petroleum oils, bituminous >70% oil, [343] Natural gas, whether or not liquefied, [522] Inorganic chemical element, oxides & hal. Congo’s oil exports decreased by −47%; mineral fuels accounted for 73.5% of total exports in 2015. 2 However, the trade performance of sub-Sahara African countries … Also, Middle, Western, and Eastern African regions poorly performed in the trade compositions during the period under scrutiny (Table 8). A value closer to 1 may indicate ideal trading partners as they stand to benefit from increased trade, while a value closer to 0 suggests that no nation or continent traded merchandise products. Africa: tax escalation (average applied MFN tariffs) in main importing partners. African products are prohibited partly because of producers and exporters in the continent’s poor awareness and understanding of the applicable global standards and best practices. The International Chamber of Commerce (ICC) has estimated the trade finance gap in Africa at US$110 billion to US$120 billion, which is approximately 25% of total … Globally, nations or firms spread their risks by diversifying in many baskets of markets or products as much as possible. Op-Ed The Middle East and North Africa in 2018: Challenges, threats, and opportunities Noha Aboueldahab, Tarik M. Yousef, Luiz Pinto, Nader Kabbani, Adel Abdel Ghafar, Mia … This partly explains why African countries largely export primary commodities and import processed or manufactured goods. 3- Trade Facilitation in Africa: Challenges Africa’s trade performance has been weak. by Cosmopolitalians.eu. The OECD is a major international organisation, with a mission to build better policies for better lives. The continent also lacks clearly defined mandates, insufficient testing capacity, and catapulting in uncoordinated and overlapping technical regulations and other activities, which lead to confusion, delays, and duplicating costs. Available from: This is a wide-ranging discussion covering World Trade Organisation negotiating dynamics, official development assistance, trade facilitation, standards, infrastructure and so on. Merchandise exports from African countries and other least developed countries (LDCs) have been marginally affected by sharp falls in the prices of crude oil, mining, and other primary agricultural products. Arguably, African countries have been left in the cold as they struggle to compete with advanced economies. International trade Arguably, advanced economies’ hidden agenda might be to ensure that developing countries, especially Africa, remain suppliers of primary products to their well-established manufacturing industries and, in return, import manufactured or processed commodities as postulated by the dependency theories. for understanding Africa challenges in trade and regional integration, and Europe’s roles therein. This is partly due to inconsistency in trade policies and administrative bottlenecks in countries. Nigeria’s oil exports accounted 94.5% of total exports of the country, and the value of the products exported dropped by −44% in 2015. This paper investigates challenges facing intra-regional trade for the North African … This delay partly leads to high costs of trade, which hinders small-scale exporters to trade across national borders. Trade officials and experts from Commonwealth African countries gathered in the Seychelles this week to discuss regional and global trade issues affecting their growth and development. To date our community has made over 100 million downloads. Intra-African trade is the least compared to other regions, averaging about 10- 12 per cent, not only lowest but also stagnant. Intra-trade and extra-trade in economies, 1995–2015. The WTO has to ensure that defensive trade remedies, such as SPS, should not be the next frontier of protectionism as these measure to some extent curtail trade from Africa and other LDCs. The International Trade Centre (ITC) is the joint agency of the World Trade Organization and the United ... Chapter 2: Challenges to international e-commerce in Africa 9 SME readiness 9 Connectivity 10 Our team is growing all the time, so we’re always on the lookout for smart people who want to help us reshape the world of scientific publishing. Arguably, the doctrine of encouraging local production for exports and discouraging imports as postulated by mercantilism is still alive in agriculture [16] and other commodities that African countries have an advantage for exports, albeit in different forms. It is worth reiterating that Africa needs to increase production and the level of industrialization to process or manufacture most of the products it consumes. Even though Africa has performed above Oceanic, as its index improved from 0.41 in 1995 to 0.47 in 2013, it was still below developing countries, South America and South Asia’s averages. Also, the developing countries’ share in agricultural exports to other developing countries has also increased, albeit not as manufactured products. Gaining political independence in the continent ’ s oil exports decreased by −47 % ; mineral fuels accounted for %... Billion or 40 % of total exports in 2015 their risks by diversifying in many of... 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