Ghana Experience in ECOWAS - Assignment Example

TOPIC: GHANA ECOWAS CASE STUDY Integration of markets case study of Ghana experience in ECOWAS Name: Module: Instructor: Date: Ghana experience in ECOWAS Benefits that are enjoyed by the Ghana as one of the ECOWAS member s are many and they are an inclusive of the following though Ghana still is faced by the various challenges. The very exclusive benefits are as follows. Export potential. This is the commercial opportunity of making the internal, markets bigger and than they were before. As a member of the ECOWAS, Ghana has experienced the opening of its market internally to welcome the commercial business entities that have increased it capacity to produce and export some of its home made products. The exporting of these goods earns the country foreign exchange as well as the growth of the economy due to increased money values as a result of the business ventures. ECOWAS membership capability to open room for the commercial business does also create employment opportunities and this could be due to the establishment of business ventures that required both the skilled and unskilled labor. The labor force was recruited from the native and this has once improved the standards of living as well as the lifestyles in general. Employment has led to low crime rates and has natured the entrepreneurial talents of the people of GHANA to an extent that the poverty levels are decreasing on a large scale. The enlargement of the internal market has made Ghana a fast developing nation in the 21st century with wide opportunities in days to come. As a member of ECOWAS, Ghana has seen the classical trade creation effects that are related to the increasing of the customs union size and this could not be easily attained if it were not of their ECOWAS membership and subscription. According to United nations,(2003),the accession countries are of smaller size but they have grown in a very quick rate in the recent past and they still have the potential of growth hence making the long run potential economically of Ghana to be grater than before and its current size. It has been said that if the living standard continue to go up then the potential to make an export of the consumer industries is relative and most likely would be huge in Ghana and the nation would be concentrated into retailing and the banking as well as the hotel industry. All this is due to the preferential trade arrangements because it does work at ensuring that the barriers are lowered amongst the member states and the economic integrations are loosened and the non members do face entry barriers which make the country to be stable. Benefits of economies of scale Another beneficial reason of Ghana being a member of ECOWAS is that it has the promote of enjoying the economies of scale due to the potential of making supplies to larger markets because the members stated would also be encouraged to buy products that are made in Ghana hence making their market to be widened. This exploitation of economies of scale do assist the country to make gains that are likely to lead to the productive efficiency as well as the increment of the returns to scale and on top of this it has facilitated the exploitation of principles that surround the large minimum efficient scale which is relative to majority of the ECOWAS members.(United nations,2003). Foreign investments, incomes and profits Foreign investments and the incomes plus the profits also do accrue to the country due to its ECOWAS membership. The foreign investments into the nation has enabled and provided a net flow of the subsequent profits interest and the dividends that are able to boost the national gross national product as well offering the support that is needed to prop up balance of payments. A foreign investor into the country has enabled the growth of the national GDP and this was not easy if it were not of the national membership to the ECOWAS and their being also assist with the supplementing of domestic capital spending as opposed to reduction of the same in non member states. A transformation of the country is anticipated due to the ECOWAS potentials to make Ghana grow faster than the non member nations. Free trade As member of the ECOWAS, Ghana does enjoy free trade rules. This is in cases where there are potential savings on the cost when the national industries are made to make an importation of the raw materials from the other countries and this does make a better deal of the national entities which enables them to have a stronger positioning terms of the developmental concerns. Free trade does improve the trading terms of the country and other ECOWAS members which facilitate the exchange of ideas and skills towards the increment of production capacity. Diverse labor market A More diverse labor market ,being a member of the ECOWAS does enable Ghana to make imports of the labor or workforce whenever there are shortages of it in any of the regions that is within its boundaries. This long term movement of labor force into Ghana would work to offset the effect of the aging population as well as the delayed growth of the populace that is within the working bracket and this is even widened by the chances that are availed to Ghana concerning the movement of its citizen around ECOWAS member states. Kaytu, (2003), says that a bigger number of jobs are available to the Ghana populace due to its subscription to ECOWAS. It has been estimated that the growth and enlargement of the ECOWAS portfolio could create jobs which will be distributed among its member states and Ghana being one of them has the chance of enjoying these benefits. They are benefits that could not be available to it if it were not a member of ECOWAS and due to this Ghana shall be benefiting in an extensive manner. Higher economic growth Higher economic growth of the ECOWAS members. Experts have managed to give estimation after they did asses the strongest ECOWAS nations of a likely growth in the Gross national product to the most supportive tune and all Ghana growth that is natured by ECOWAS is very positive. Due to this it has been noted that the Ghanaian national GDP would be impacted positively towards sustainability and growth which would not be possible if the country was not one of the members’ nations. The significant potential of economic growth that is found in ECOWAS nations which are new is likely to lead to big developments and it would be in one way or the other is positive relative to Ghana being one of the members’ states of ECOWAS. Clean environment As a member of the ECOWAS, Ghana does enjoy a cleaner environment due to the fact that the accession nation have in recent times tried all they could and are still doing a greater deal as far as the environmental concerns are put on stake. Huge sums have been engaged to the process and procedures of ensuring that the air and water quality improvements are as per the stipulated ECOWAS standards in that their reducing the beyond borders pollution would lead to some positive externalities. A clean environment that facilitates the absolute care of both the air and water quality is enjoyed by Ghana because it is a member of ECOWAS and could as well claim the responsiveness of the accession countries towards it. Enlargement and growth The anticipated enlargement would pose as the driving force to the economical reforms in ECOWAS and this involves reforms to the labor markets that are most likely going to lead to the increase in low unit cost of labor competition that does come from the so called accession countries and their economic perspectives. Political stability and integration Other benefits that the country could be enjoying due to its membership to the ECOWAS are the political stability and absolute integration that does exist amongst all the member states. As a result of being a member of the ECOWAS, Ghana has the advantage of the stable political climate that does not frustrate it business ventures and performance. A considerable environment does make the country to have a lot of developments that are due to industrialization and commercial entities. Ghana does also enjoy the common market that is due to the abolishment of the stated restrictions that are invisible via the procedures of harmonizing the standards as well as a the practices of trade. Member countries are also advantaged with the trade increment inn the region due to the functioning of the ECOWAS. Increased trade have for the time been related to advantageous goals such as the lower prices as well the grater counts of exports for the national companies with a comparative advantage. As an ECOWAS member the country also does has an increment of the initial internal investments as a result of the significant economical stability and the lower costs of trading in the country plus the harmonization that is inexistence. This is specifically beneficial to Ghana due to the positive multiplier and the greater technical assistance. Macro economic advantages `Macroeconomic benefits that the country does enjoy as a member of the ECOWAS involves the rapid growth of economy which is due to the increased confidence in business as this does encourage the investors to make an expansion of their entities and organizations. Business confidence has positive impacts to the economic development and growth and this is also relative to overall business world. As an ECOWAS member, the country also does enjoy the reduction of the risks as well as a greater mobile work force. Risks are shocking towards business operations and if they are mitigated then the other relative industrial parties are likely to get into the particular market hence making it impact to the economy positively. The creation of the regional hub and gateway has facilitated the easy access of Ghana through an efficient transport and this together with the drive for innovation couple the easier access to financial aids which is in the context of the holistic ECOWAS. For the country’s industries that are fully operational in its area they do enjoy various benefits due to the membership of the nation to the ECOWAS. Such benefits includes the increased accessibility to the funds that are run and managed by ECOWAS as well as the support that is given by it to the small and medial sized enterprises and this is coupled by the transparency that surrounds the taxation as well as the rules of accounting that are in the business area of operation. All companies that are bound into ECOWAS membership have no customs obligations or the quantities restrictions along the ECOWAS members states and they are also governed by some very simplified rules concerning the administrative procedures incases where they are trading with the nations that are not members. (ECOWAS, 1999). Economic union Economic union that exists along the member countries does advantage Ghana because it is one of the ECOWAS member states. ECOWAS has integrations economically with other blocs such as EU and this facilities the common market and common currency such as the Us dollar and this also nature the coordination of the budgetary as well as the policies that surround macroeconomic perspectives. The challenges that face the country are rampart despite being a member of ECOWAS is: Political instability The political instability of the nation does scare away the investors hence making the country industrial base to remain at a stand still although their are supposed to be enjoying the benefits of starting a business in the nation. The political worries that are instilled into the peoples as a well as the potential investors due to lack of a proper governing structure in the country does make the people to keep distance as they associate the instability of the government to poor leadership hence they do not see the sense that does surround them being operational in the area of interest that is not stable. (ECOWAS,1999). Over taxation of ECOWAS non members Over taxation of the nonmember states more that the members of ECOWAS does create the imbalance that is not favorable towards investment and setting up of the business ventures. A good and considerable taxation system should be kept in place to ensure that the external investors are going to be given a cordial treat as opposed to the current frustration impression due to their being not well received and this makes them to stay away. Economic crises From Abdoulahi,( 2005),the economic crises is another thing that is hindering the country development despite being a member of ECOWAS. The global economic crises and the relative inflation rate do influence the kind of business and the level of performance that the entities do engage into. This is due to the depreciation of the money value in other areas where they could market and sell their product the mode of operations and aims are not easily attainable due to the high costs that are related to it. Price level and per capita income The comparative price level is biased still as compared to the per capita income. This is till depicted by the regression analysis which is able to show the interdependence between the comparative price and the level of income per capita and these basis of their comparison is used to enhance the evaluation of joining the consumer market and then the likely benefits as a result of it. Exchange rates The risks that are associated with the exchange rates and the transactions costs also do challenge the national GDP though it is operating under ECOWAS membership. There should be a mechanism that does curb the loss of the monetary policy which is independent as well as a system of exchange that is adjustable. The common currency that do define ECOWAS need to be well regulated as well to ensure that the national stake to the overall dealing is at an advantage. (Abdullah, 2005).The Maastricht dilemma which involves the fulfillment of two objectives which are the stability of the price and the exchange price and rate votality. The country needs a nominal convergence force that does have the power to make an appropriate policy concerning the monetary and fiscal issues. For any of the European nation that is wiling to come into the country and make investments, I would be very ready to advice them to get into it with passion and willingness to do business as they are likely to start enjoying the company benefits that are available to the European nations. Benefit such as the free market will be significant to boost the operational as well as the profit targets of the facility. Other benefits that the investor may be enjoying include the accessibility of the funding and the transparency of accounting rules and taxation plus the lack of customs which may be bidding to the due to their elimination in the countries that are bound by ECOWAS. Beyond this any entity from Europe that shall be in need of investing in the country shall be encouraged to venture into the area due to the simplified administrative process of making business with the other ECOWAS member states. These and many more are the very relative advantages that are likely to attract any other nation from Europe that would be aiming at getting into the market of the nations consumers. The economic stability of the nation which is due to the common currency does facilitate trading and business transaction amongst all the parties that are within the confines of the union. This is a very positive thing as far as the money market and making of company sales is concerned because the fluctuations of the currency would not be anticipated which would turn down the returns that are anticipated from the sale of a particular count of goods. The stronger the currency the better it is to run business in the area and this is related to the value for money. I would also encourage any of the investor to get into the country and establish investment due to the quick availability of labor from the accession countries that will be readily available to substitute the aging workforce before the younger generation gets ready to engage themselves into business and employments. Their is a chain that is there to interconnect the labor force as one goes by because a substitution is readily available hence proving that the operational concerns of the entity shall not be threatened in one way or the other. Due to such advantages I would be very positive if I do advice the European country that wants to come into the country to make investment to move on without fear and worry. A nation that has a positive growth of the Gross domestic and national product would be vey supportive to any relative business venture and due to this I am very much positive when advising any of the potential European country that wants to get into it and make a try in business and investment. References Abdoulahi, M. 2005. Progress Report on Regional Integration in Africa towards the promotion of Inter-African Trade, ECA/ ATPC No. 30 U.S government.(2007).2007 Country Profile and Guide to Gambia (the Gambia) - National Travel Guidebook and Handbook - ECOWAS (Economic Community of West African States), Energy in Africa. Progressive Management.Canada. U.s. Government.(2007). 2008 Country Profile and Guide to Sierra Leone - National Travel Guidebook and Handbook - Conflict Diamonds, Civil War, Energy in Africa, ECOWAS. Progressive Management.NY. Adepoju, A. 2002. ‘Fostering Free Movement of Persons in West Africa: Achievements, Constraints, and Prospects for Intraregional Migration.’ International Migration 40(2): 4–28. ECOWAS .1999. ECOWAS Treaty (www.ecowas.int) ECOWAS Commission. (n.d.). Basis for ECOWAS Common Investment Market. Retrieved April 24, 2010 from Agyei, J and Clottey, E. (n.d).Operationalizing ECOWAS Protocol on Free Movement of People among the Member States: Issues of Convergence, Divergence and Prospects for Sub- Regional Integration. Retrieved April 24, 2010 from Kaytu, K. A. (2003). Ghana's Efforts in ECOWAS Sub-Region and the Threat to Growth. Retrieved April 24, 2010 from United Nations (2004), World Economic and Social Survey, 2004. Western Africa. 2003. Regional Integration: Theory and reality in West Africa. SIA Civil Society, Consultation Workshop Dakar, Brief no. 8 4 & 5 Nov. 2003. Gnadois, H. (2009). From ploughshare to sword: regionalism in Africa: The emergence of regional security organizations in Africa. A comparative study on ECOWAS and SADC. LAP Lambert Academic.Ny. John, N.k.(2008). Africa Conflict Prevention: Early Warning and Early Response: A Critical Analysis of ECOWAS, IGAD and SADC Systems. VDM Verlag.Miami. Lawrence, M.A.(2007). Investment Attraction and Trade Promotion In Economic Development: A Study of Ghana Within the Economic Community of West African States – ECOWAS. Trafford Publishing. Sydney. US Government.(2007). 2008 Country Profile and Guide to Cape Verde - National Travel Guidebook and Handbook - USAID, Energy in Africa, Agriculture, ECOWAS. Progressive Management.NY. Paul, R.M & Catherine.(2001). Monetary Union in West Africa (Ecowas): Is It Desirable and How Could It Be Achieved?. International Monetary Fund. Geneva. Read More