Africans Economic Performance - Example

Globalization Economics In this research paper I am pleased to discuss with you about the global economic situations especially the African’s economic performance and the role of China and other countries for the improvement of the whole global economy. The economic progression is encouraging in a large number of African countries because they are implementing the sound economic policies united with a constant movement toward rules-based institutions and participatory forms of government that promote agreements between the state and civil society. We give a look to present African’s economic situation which is not satisfactory, still economic progression rate is not so high that they can overcome pervasive poverty. African still needs to enhance the human resources, build up the economic structure and raise the growth rate and to create an environment which can support the private sector development. At the same time, globalization has raised the risks for all countries, especially those in Africa, offering greater opportunities for faster economic growth but also considerably raising the risk of marginalization for those that fail to incorporation with the global economy. On the other hand the current Asian economy is falling day by day so that it is very essential to develop well established and supervised financial system, transplanted macroeconomic policies and faster economical growth rate to combat with the globalization market. Recently the economic situation in the Africa is encouraging as compare to the last two decades. In the past two decades the GDP rates were declining and stagnant but in the last few years we can see the 4 to 5% increases in the GDP rates which is encouraging. This improvement is because of many factors like investment ratio, important structural reforms, removal of domestic price control, privatization of public enterprises, labor legalization and liberalization of exchange and trading system. In the past many Saharan African countries were supported by the World Bank and Funds. Many countries have also carried out large improvement of their agricultural marketing systems, often allowing higher prices to be paid to producers and thus directly raising rural incomes. Now there main concern is to achieve high quality growth with lasting employment, poverty reduction with great quality of income and environment protection. A large number of funds are spending for the people to improve the health care, education and the basic social requirements. This technique is common among many countries to improve the education and employment rates and many have achieved a notable improvement in the GDP. It is fact that recent economical trend are encouraging then why the improvements and changes are not enough to for the high economical growth. In my opinion there are two main factors must consider for accelerating the economical growth rate. One factor is that growth must increase at that level where you can reduce the poverty rate e.g. the population of the Africa is raising about 2.8% per year so that the real GDP rates must increase double which is about 7 to 8 percent per year to reduce the poverty and catch up the developed countries economy. In other words you need to fulfill the requirements of the rapidly increasing the labor force and their living conditions. So that your real GDP must increase up to 7 to 8% per anum to sustain your economy. The growth rate seem very high as compare to the past few years but many African countries reveal that they are not out of reach as compare to the past few years. Other factor is required to enhance the growth rate is the investment and savings. Investment rate of Africa is higher about 17 to 18% as compare to the past two decades but still it is low as compare to the other developing countries. Private sectors require the appropriate policies related to the macroeconomics, regulator frame structure and the security from the governments. Private companies can be very useful to support the African economics but there is always need of good governess which can set up rules for the foreign investors. There must be a clear and protected environment for the investors to promote more sustainable economic growth. The regulator frame work of the mostly African countries is still weak and need to build a legal frame work so that investors feel comfortable for the investment. A key element of the reorganized agenda must be a change of the legal and regulatory framework and its management, with a view to creating financial protection and strengthening confidence. Government should take a strict action against all the unfair means like corruption, cronyism and nepotism. You would be surprise to hear that many African countries still have no infrastructure and economical policies. Almost all the African countries should make effort to strengthen their educations system, health care and human resource base if they want to reduce the poverty and uncertain economical situation. The trade liberalization has be launched in the African region but the trading rules are still very complex and easy to follow as compare to the other countries of the world. The traffic rates are very much high and dispersed and I think so there must be very low traffic rates. A faster rate of trade liberalization would improve the efficiency and competitiveness of domestic producers and promotes strengthening of trade links, helping Africa to integrate with the world economy and better exploit the opportunities of globalization.Trade liberalization can surely helpful to enhance the economic growth rate. In Africa there is still need to build a strong financial structure because most of the countries still lack of banking system, autonomy and weak financial sectors. If there is difficult to open new banks or any other financial supporting system the there is need of rehabilitation of the weak banks. Other financial institutions especially the Stock exchange must be develop to improve the financial structure. There must be a well developed macro and microeconomic system which should facilitate the common people with loans. The loaning system must be under the rules and regulation by the government. Government should encourage the private enterprises and should promote them. The main hindrance for the implementation of the new management polices are the poor economic management capacity and awkward administrative and bureaucratic structures. In different parts of the continent, African governments are trying their best to develop economic collaboration and coordinating policies in the context of regional organizations. These trends are important and need to be consistent especially in those cases where they are well-matched with the process of trade liberalization. Regional integration will be very helpful to make a strong connection between those countries invest their economy in your country. . Regional integration would also provide a strong framework for African countries to collaborate in developing a common economic infrastructure especially in transport and telecommunications, as well as banking and insurance services, better equipping them to take part in the global economy. Regional integration can help Africa to reorganize their financial structure, harmonization of investment incentives, tax systems and tariff reduction. No doubt the African current better situation is due to the own home growth efforts but there is an important role of IMF to support the African’ economy. Now the industrial countries can also participate to strengthen the African economy by opening their markets and can get huge benefits. IMF is always working for the all African countries to enhance the economical growth rate through appropriate policies and financial assistance. IMF took a great step for the African economy was the loaning facility. IMF offer loan on a very small interest rate which is about 0.5% for this region. About 23 African countries are implemented under the ESAF program and financially supported and continuously aided by the World Bank to support and strengthen their economy. On the other hand together with the World Bank, IMF moving rapidly to implement the debt Initiative for the Heavily Indebted Poor Countries (the HIPC Initiative), the majority of which are in Africa. Just after the 18 months since the launching of the HIPC Initiative, six countries, including four in Africa (Burkina Faso, Côte d’Ivoire, Mozambique, and Uganda) have received assurance of assistance from all creditors totaling about US$6 billion and the funds has already been paid to them. The training activities of the IMF institutions are still running to strengthening their technical assistance programs in banking, public finance, and statistics. But you can see as the global economy will be strengthened the African economy will also lead to the betterment and there will be more chance of growth and strengthening of the African economy. As you know World Bank and the IMF is supporting and working for the betterment of the African countries but most of the people do not agree with this statement and highly criticize the activities of the World Bank and IMF in the Africa. Form the 1970s both are making policies for the African countries and are responsible for the current poverty and the economical situation of African region. According to the World Bank their main goal was to accelerate the development and economy but the facts are disastrous. The main cause was to help the African countries from the debt crisis and to accommodate the notably sharp fluctuations in commodity prices and skyrocketing interest rates. But their policies and structural management program achieved the opposite and worsen the all economical and social crisis. In 1980, at the start of their involvement, the ratios of debt to gross domestic product (GDP) and exports of goods and services were respectively 23.4% and 65.2%.In 1990, they had worsen to respectively 63.0% and 210.0%. In 2000, the debt to GDP ratio stood at 71.0% while the ratio of debt to exports of goods and services had enhanced somewhat, at 80.2%, according to the World Bank's Global Development Finance. The decline in the debt ratio shows the incapability of many African countries to tune-up their external debts. In1980 to 2000, Sub-Saharan African countries had paid more than $240 billion as debt service which is about four times greater the amount of their debt in 1980. The Nigerian case is a good example of Africa's debt crisis and of the power unevenness that characterize world economic and financial associations. It is this general perspective that allowed the IMF and World Bank to increase their influence in African countries. Financial liberalization, expected at attracting more foreign investments to compensate for losses in export revenues, instead promoted more insecurity, due to the instability of exchange rates resulting from approximate short-term resources flows. This united with higher interest rates crowded out both public and private investments. Because of this reason the GDP fell average about 23% in the year 1975,18% in the 1985 to 1989 and some what recovered in the 1990 but till 1997 were 18.2% according to the World Bank. According to the IMF and World Bank, one of the reasons of the Africa's crisis is its narrow trade system. In place of this system World Bank and IMF propose an open and liberal trading system in which tariff and non tariff barriers are kept to a minimum or even reduced. They think that such a system, shared with an export led growth plan, would put Africa on a firm path to economic improvement. But one of the most negative impacts of trade liberalization has been the down fall of many domestic industries which were unable to keep up competition from powerful and strong competitors from different industrialized countries. Actually the Africa's industrial sector has a dire need of structural adjustment. In several annual and special reports, the International Labor Organization (ILO) has illustrate the destructive impact of SAPs on employment and pay and the African Union seems to have come to clutch with that devastation. Only 25% of the African people are employed in the formal sectors and the rest of 75% are working in informal sectors or agriculture development. African countries are strongly need for the new job opportunities and there is need to plan for creation of new jobs but such a plans will only be credible if African countries are ready to move away from IMF and World Bank instructions, which were severely criticized. While dismantling or weakening the economic and social roles of the State, the IMF and World Bank have required building or making stronger the functions most useful to the accomplishment of neoliberal policies and the support of private sector development. Another fact is the institution building agenda promoted by the IMF and the World Bank has nothing to do with promoting democracy and protecting human rights. As a result the World Bank and IMF is completely failed to reduce poverty and to promote the development in Africa. From the last two decades the economic growth rate and the Chinese economic reforms giving diplomacy for the overseas. This is because of the strong economical position regionally and globally. A large number of Chinese enterprises are distributing their products globally and many companies are merged with international companies which is a true internationalize development strategy. Most of the Chinese investment is in the Asian countries there must be reason because of geographical feasibility but the second options are the North American and Africa. Chinese investment is increasing in the Africa which is about 175UDS. China is funding for the Africa for manufacturing goods, transportation and agriculture. China is also taking a keen interest to increase the education rate as well as health care. China is not only funding the Africa but also providing their labor for constructing different institutions, health care centers as well as gift centers. China taking a great interest to support the African economy and you can say the resources present in this region is attracting to the China. It is hopes that during this century the strong relationships will be build among the china and Africa. Africa and China will cooperate with one another because of some factors which are the political field, economic situation, health, education, resources, agriculture, financial management, tourism and economical cooperation. We give a look to another aspect of China and Africa trading agreement. System. China is one of the main country whoes economy is getting strong day by day but the chinese rules for the trading are still very complex and avoiding many countries to trade with them.The answer of this question is that China has to face a lot of pressure from inside and outside to combate with the internationa trading system.Now the China’s commitment with WTO is effecting its economy. In the past china was enjoying the strong economy and direct foreign investors. Now during the 208 we are facing the most critiacl situation that economical and finacial bubble that was flourshing the past has burst. The intensity of this problem has been so severe that some of the world’s largest financial institutions have distorted. The remaining showing their competition at low prices and in other cases, the governments of the wealthiest nations in the world have reformed rescue packages for the remaining large banks and financial institutions. The small business holders and the poor people can save their economy. Many large banks are now the sign of crisis and are facing the financial problem. The World Trade Organization, (WTO), is the main international body to help encourage free trade, by illustrating the rules of international trade. However, it has been delayed in argument and seen to be stop by rich country interests consequently worsening the lot of the poor and alluring objection and intense criticism. Read More