StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Economy - Market structure & Macroeconomy - Essay Example

Cite this document
Summary
The port of Mombasa lies within the oldest major city in Kenya. What once served as a gateway for traders from Saudi, Arabia, India and Asia has become not only the largest East African port, but also a blend of culture, history and industry. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.7% of users find it useful
Economy - Market structure & Macroeconomy
Read Text Preview

Extract of sample "Economy - Market structure & Macroeconomy"

1 Port of Mombasa: Economic Importance Part The port of Mombasa lies within the oldest major in Kenya. What once served as a gateway for traders from Saudi, Arabia, India and Asia has become not only the largest East African port, but also a blend of culture, history and industry. Mombasa has endured rule of many different nations, from the Portuguese in the 12th century to the British more recently, until gaining its independence in 1963. The completion of a railway from Mombasa to Uganda in 1901 serves as the link between the port and the rest of Kenya, as well as surrounding East African countries. While Mombasa is an important shipping port for imports and exports along the East African coast, it is also a popular tourist area, with many hotels to the North and South of the 15 square km island. The population of Mombasa is roughly 900,000. Over one fourth of all workers in Kenya are employed in Mombasa working in the port itself, in manufacturing, and in tourism. Tourism, and particularly that of visiting naval ships, is an important aspect of the economy, accounting for nearly 40% of Mombassa’s revenues. Among its many exports are coffee, flowers, vegetables, textiles and livestock. Problems that the port has encountered since the early 1990s include a declining economy that is said to be the result of price controls, import licensing and foreign exchange controls. Like Nairobi, 2 the largest city in Kenya, the city of Mombassa has experienced an increase in population, though on a much smaller scale. This is a continuing problem across Eastern Africa, and solutions for “secondary cities” (Otiso, 2005, p.117) in which occupants can live and work to sustain themselves is elusive. Increase in Kenya’s Urban Population In 1993 the price controls, import licensing, and exchange controls were removed to encourage more free trade. Around the same time world banks were established in large cities and ports of Kenya. Such measures encourage free trade generally aid in 3 economic growth. Until around 1999 ,this was the case in Mombasa, as well as in Kenya and surrounding countries. Kenya’s participation in COMESA, a regional trade union consisting of 20 Eastern African nations, had also been cited as movement which greatly increased the nation’s GDP. Economist Jacob Wanjala Musila reports that “In 2000, COMESA absorbed about 42 percent of exports, the European Union absorbed about 30 percent, the Far East and Australia absorbed about 12 percent and North America absorbed about 2.7 percent.” Since the initial growth, there has been a decline in the economic growth of all East African countries, as well as increased trade deficit. This is due, in part, to the “flood of South African goods into the country.”(Musila, 2004, p.67). Many of the goods coming from South Africa are those already manufactured in Kenya. South Africa still imposes high import tariffs, which helps to increase the trade deficit between the two regions. Kenya eliminated comparable Protectionist policies in the 1990s to encourage free trade and capitalist competition, in an effort to boost the economy of Kenya and the port of Mombassa. African Economist Shikwate claims that foreign aid and corruption often go hand in hand, and are largely responsible for a slowing economy. He gives an example of an overabundance in corn from the United States and Europe, leaving local and regional farmers with no market in which to sell their crops. He further claims that if there were 4 no aid “Kenyans, would be forced to initiate trade relations with Uganda or Tanzania, and buy their food there. This type of trade is vital for Africa. It would force us to improve our own infrastructure.” Shikwate also claims that often food intended for distribution among nations in Kenya arrives in the Harbor in Mombasa only to be sold on the black market or “directly into the hands of unscrupulous politicians who pass it on to their own tribe to boost election campaigns.” Attitudes toward improvement and revitalization of Mombassa are often negative and based on fear. A common belief is that money spent on renewal will take away from that needed for common infrastructures such as water, electricity, and other essentials. As Geographer Brian Hoyle points out, “clear links are perceived between urban renewal and benefits such as water, housing, tourism, and employment.” Hoyle’s views are similar to those of Shikwate, that development generally improves economic conditions. Such concepts were also theorized by the Scottish economist Adam Smith, that when people help themselves “their efforts serve as an “invisible hand” that helps the economy grow with the production of needed goods and services.” (Nickels, McHugh, McHugh, 2005, p.39). Part 2 The increase in GDP has slowed greatly since 1999, for Mombassa and all of Kenya. Lack of regional development strategies are blamed for the increase in urban poor, and 5 increasing destitution of those living in rural areas. Kefa Otiso believes that development of rural areas will take the strain off Kenya’s urban cities by redistributing the population to areas that will become more profitable to live and work. In turn, the increased productivity will provide more product available for trade, which will then boost the economy of ports such as Mombassa, and surrounding East African nations. Year GDP-Kenyan Shillings in Millions 1980 74,940 1985 143,715 1990 278,502 1995 614,267 2000 967,838 2005 1,449,408 6 Redistribution of wealth in Kenya is difficult as Otisa explains that political policy tends to lack distribution of power and focus on investment in Nairobi. He also states that there is little fiscal responsibility. Redistribution of power, by allowing individual provinces to make financial decisions, is one method for changing the current development policies. Each region in Kenya has different natural resources, populations, cultural traditions and beliefs, and different geography. Some areas are rich in minerals and ores, so mining should be controlled by the municipalities in which those resources are plentiful. In other areas livestock and farming should remain the focus. COMESA and other trade unions should continue, while including many more regions in East Africa, including the smaller, less populated areas. It seems as though East Africans have resources to assist each other as COMESA is successful. Renewal strategies, though costly, can incorporate the assistance of global corporations that are willing to invest, but not to the point of making a profit at the expense of East African citizens. Governmental restructure must take place to ensure that all Kenyans benefit, not just those in control, deciding where and what to distribute. Shikwate does bring up a valid point, that aid is often a hindrance to improving the lives of the very citizens for which it was intended. This is the main reason why the United States and many European countries are becoming more hesitant 7 in their aid. Multinational corporations, and foreign manufacturers can bring many more jobs, tourists and in general give the economy of East Africa a boost. Mombassa remains an active port with about 200 cargo ships leaving on a weekly basis. Redevelopment of the port will allow for faster shipping of exports. Development of more railways from surrounding countries will also speed up the process of moving export crops from the point of origin to their global destinations. In general, development of processes that move exports more quickly make them more desirable to trading partners, and therefore more profitable, according to the law of supply and demand. In Kenya, the Monopolies and Prices Commission, a department of the Treasury, has been appointed to govern the new free trade policies. Muchoki Njoroge outlines the many responsibilities of the Commission during a Malawi Government delegation meeting.1 He stresses the importance of free trade, and the necessity of the Commission to take measures in enforcing the new trade laws. He goes as far as to suggest that government officials should swiftly administer punishment to those who ignore or disobey the laws. He fails to address how to deal with corrupt officials who may also ignore or hold themselves above the laws. One of his suggestions for improved economic conditions within those regions that fall under the trade laws is for improved educational opportunities and requirements. Knowledge in his view, allows those affected to better understand the law and the right of entrepreneurs to enter competitive markets. Muchoki addresses the need for more trained medical personnel from within 8 the free trade zones, as opposed to bringing in foreign health workers, or training a few specialists abroad. Though ridding government of corruption seems a daunting task, those with more education can often make choices that include refusal to trade with or work for those who are involved in corrupt practices. Muchoki’s belief in education as a means of uplifting and improving economic conditions is true in theory. However, even those who are highly educated are often powerless in making decisions that will benefit themselves and their communities. “Unlike their counterparts in Western industrialized economies, marketing practitioners in developing countries often are not free to make decisions based on market conditions. Thus the traditional marketing-mix framework may be of little help to marketing managers because the government determines distribution channels and prices.” (Dadzie, Johnston, Yoo and Brashear, 2002, p. 430) While he has some well thought out proposals and interpretations of Monopolies and Price Commission laws, Muchoki fails to address the unfair trade practices embraced by increasingly powerful South African monopolies. Trade embargos seem drastic, however, and often have adverse consequences. At this point the port of Mombassa, and the rest of Kenya’s regions will experience much less economic expansion if the situation is not addressed. Another option is to rescind or revise the 9 guidelines of the Monopolies and Prices Commission to state that Nations who enforce high tariffs in their ports will be charged similar high tariffs in the port of Mombassa and in the other Kenyan ports. The last option is a combination of restructuring governmental power, educating managers and marketing professionals, and identifying new or alternative markets for exports. Bibliography Dadzie, Kofi Q, Johnston, Wesley J, Yoo, Boonghee, Brashear, Thomas G 2002, “Measurement Equivalence and Applicability of Core Marketing Concepts Across Nigerian, Kenyan, Japanese, and US Firms, “ The Journal of Business and Industrial Marketing. Vol 17, Iss 6, p. 430 , Santa Barbara Hoyle, Brian 2001, ”Urban Renewal in East African Port Cities: Mombasa’a Old Town Waterfront, Geo Journal, ABI/INFORM Global, Vol 2, Iss 53, p.183 Muchoki Njoroge, “ A Vision of Competition Policy: Experience and Lessons for Developing and Less Developed Countries- The Case of Kenya,” Presented to The Malawi Governmental Delegation Musila, Jacob W 2004, “The Common Market for Eastern and Southern Africa and Kenya’s Export Trade,” International Journal of Social Economics, Vol 13, Iss 1/2, p. 67, Bradford Nickels, William G, McHugh, James M, McHugh, Susan M 2005, Understanding Business, “ 7th Edn, McGraw Hill, New York, p 39 Otiso, Kefa M, 2005, “Kenya’s Secondary Cities Growth Strategy at a Crossroads: Which Way Forward, “ Geo Journal, Iss 62, p. 117 Thielke, Thilo 2005, Interview With African Economics Expert, James Shikwati, Spiegel, English Site, Online, Visited 14 August, 2006, < http://service.spiegel.de/cache/international/> Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Economy - Market structure & Macroeconomy Essay”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1537468-economy-market-structure-macroeconomy
(Economy - Market Structure & Macroeconomy Essay)
https://studentshare.org/macro-microeconomics/1537468-economy-market-structure-macroeconomy.
“Economy - Market Structure & Macroeconomy Essay”, n.d. https://studentshare.org/macro-microeconomics/1537468-economy-market-structure-macroeconomy.
  • Cited: 0 times

CHECK THESE SAMPLES OF Economy - Market structure & Macroeconomy

European Business Environment

Name Tutor Course Date European Business Environment Introduction The Eurozone's unfolding crisis can be elucidated by the interaction of policy features and the institutional structure.... This paper shall discuss how the institutional structure of the Eurozone got agreed, in such a way that it became unprepared, to meet the challenges posed by the recession since 2008.... The Euro has caused considerably indefensible macroeconomic inequalities within the states, and the Eurozone lacks an organizational structure to undertake the crisis situation (Arestis & Sawyer 2011, p....
3 Pages (750 words) Essay

Macroeconomic Objectives and their Importance to UK Economy

The rise of the European market and globalization impacted the long term objectives of the government.... After the consumption boom, the domestic market created a strong demand that caused the UK exports not to grow as fast as expected.... Balancing is payment equilibrium affects the holding of foreign exchange with affects the local economy.... The government is developing a grand macroeconomic policy framework that defines the roles of the major economy sector and how they can strengthen the competitiveness of the UK economy....
10 Pages (2500 words) Essay

Theoretical relationships between market structure and bank performance

The market structure is normally very sensitive for any institution to sell its services to the publics.... In order a bank to know the relation that exists between market structure and their performance it should employ or investigate the effects that are caused by changes in the structure or formation of the market.... There are two theories that are used to explain how a bank can determine its profitability and understand better its relation with the market structure....
3 Pages (750 words) Essay

Impact of Oil Prices On American Economy

We will examine the oil market and its effect on the US economy from a supply-demand balanced viewpoint.... The assignment "Impact of Oil Prices On American economy" analyses the global economy's rising at a very fast pace at the moment and any corrective action by central banks is not likely to have a perceptible effect.... Again there has been a sharp rise in the prices of oil and it is necessary to understand what effects this can have on the economy and take corrective action where possible and required....
8 Pages (2000 words) Assignment

Economy and the Capitalist Society

This is because although each individual might have a preference or choice, the ultimate decision and final outcome of a capitalist economy are based on the interaction of market forces.... hellip;  This, therefore, implies that although individuals and their preferences play a major role in a capitalist economy, the final outcome of each option or course of decision making rests fully on the aggregate decisions and the decisions of other stakeholders which collectively determines affairs in the society....
9 Pages (2250 words) Essay

Industrial Structure of Banking

This follows the general economic definition of market structure, which puts emphasis on the number of companies engaged in the production of the… (2005).... Very often, the expectation has been that the market structure should influence competition, which in turn should influence the way the banks should engage in the support of local businesses with financial intermediary services, and thus leading to financial development....
8 Pages (2000 words) Essay

Financial and Macroeconomic Stability

Economists are of the view that… Monetary policy makers have been more accurate in their decision making and have imposed regulations which have helped in stabilizing the economy.... Monetary policy which gets transmitted to the real economy and thereby impacts the lending policies of the bank requires to be altered as they hinder growth.... The deposit insurance system is also identified as a crucial factor in the financial regulatory system which affects the economy....
7 Pages (1750 words) Research Paper

How Oil and Gas Could Affect the Economy

This research will begin with the statement that different resources that are in the economy continue to change the growth and decline of various regions of the world.... nbsp;… The present research has identified that the production of oil and gas as well as the consumption that is used by different individuals continue to affect the economy and leads to fluctuations within various areas of the world.... This paper tells that the use of oil and gas may continue to change and affect the economy, dependent on how it is used within various regions of the world....
8 Pages (2000 words) Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us