Asian Drivers of Global Change: Implications for the Developing World - Essay Example

Asian Drivers of Global Change: Implications for the Developing World Student’s Name: ID Number: Lecturer: Date: “The Growing Importance of Asian Drivers in the Global Market is Impeding Growth and Development in Economies of Sub-Saharan Africa and Parts of Latin America” Asian economies are becoming increasing influential in most developing countries particularly in Sub- Saharan Africa as well as parts of Latin America. Initially, Sub-Saharan Africa depended mainly on European countries and United States of America for development partnership and other socio-political issues (McDonald, 2013). Western powers influenced social, economic and political progress in Sub-Saharan Africa especially during post-colonial era. Most colonial masters initiated development projects in these economies and financed most activities (Bayne, & Woolcock, 2011). As a result, this trend developed dependence syndrome whereby these countries had absolute dependence on donation from western economies. Such influence had both positive and negative effects on economic and social development of these economies. In the recent past, rise of Asian drivers mainly China and India is causing drastic shift of focus from the west. Although Western influence remains in some parts of Sub- Saharan Africa and Latin America, most countries in the region are now engaging Asians in development issues (McDonald, 2013). China is taking full advantage of its growing influence to engage Africa in most socio-economic issues. Most Sub- Saharan African economies see China and India as the ideal partner in development (Bayne, & Woolcock, 2011). Some of them interpret western influence as neo-colonialism aspect hence needs to shift the attention. Increasing rate of Asian influence in affairs of developing economies is however raising sharp debate among Western powers (David, Dorn, & Hanson, 2012). America and Europe are engaging economists and political experts in evaluating Asian influence in developing economies. On the other hand, political leaders in Sub-Saharan Africa have different interpretation of this growing western interest (McDonald, 2013). Note that Western countries usually have harsh conditions on developing nations especially when giving financial support. Asian drivers particularly China has friendly terms compared to Europe thus attracting economic ties with developing economies (Kaplinsky, McCormick, & Morris, 2010). However, economists are casting doubt on sustainability of these economic ties and their effects on future development. Due to growing importance of Asian drivers in the global market, this essay provides critical evaluation of Asian involvement in affairs of developing economies. Asian drivers have become essential players in the global market hence raising competition for economic and political influence. China is a good example whose investment in developing economies is slowly replacing dominant powers. As fully industrialized economy, China requires strong economic ties with other counties especially in Sub- Saharan Africa and parts of Latin America (Farooki, & Kaplinsky, 2013). These economies provide reliable ready market for industrial products from China and India. Note that population in these countries is rapidly growing hence increasing demand for products and services. Asian giants view this as an advantage since the market is constantly expanding (Bayne, & Woolcock, 2011). Chinese government continues to enhance its ties with these economies as well as expanding its influence in other countries with an aim of finding new market. Besides availability of market for their products, developing economies are essential source of raw material for Asian drivers. There is a rising concern on the issue of excessive exploitation of natural resources from developing countries by China and India. As they seek supplies for their ever growing industries, they rely on Sub-Saharan African countries for these materials (Kim, Lee, & Park, 2011). Raw industrial materials from developing countries provide good economic value for Asian giants. They get them at relatively low price compared with other sources hence lowering the cost of production (Kaplinsky, et al 2010). Such aspect is one of the factors that have significant contribution towards rapid economic growth in China and India. Sub- Saharan Africa on the other hand reaps several benefits from economic ties with Asian drivers. As China gets natural resources from developing countries, it also gives back in terms of cheap commodities (Bayne, & Woolcock, 2011). Most of Sub-Saharan African nations and other developing economies in Latin America get most commodities from China and India (Nica, 2013). China for example has significant technological influence on these countries. They get their computers and other technological supplies from this particular country in large quantities and at lower rates. Initially, western economies such as USA and Europe dominated this market although their products are more expensive. Institutions and individuals can now access products at affordable rate. How does this relationship affect the development of these economies? Experts in economics especially from western countries raise several concerns over this issue. Does growing importance of China and India in global market impede growth of developing economies? Besides looking at the benefits of economic ties between Asian drivers and these countries, it is important to analyse negative effects as well. According to economic analysts, current relationship between Asian drivers and developing economies provides no sustainable benefits to them (Kaplinsky, et al 2010). Although most governments in these regions can realize tangible advantages, the ties hamper internal development in different ways. First, Asian drivers, mainly China and India get most of their industrial materials from developing countries. Although this provides external market for their goods, it promotes degradation of environment (Morrissey, & Zgovu, 2011). It encourages deforestation since they get their timber from forests hence affecting environment negatively. In addition, developing countries extract other natural resources and sell to China and India. Comparing this degradation and other benefits such relations bring to countries, the reality is that they are not sustainable (Bayne, & Woolcock, 2011). Environmental degradation has direct and indirect effects to local economy as well as irreversible impacts. Industrialization in China and India constitutes significant percentage of carbon emission in the air. Due to financial incapacity, most developing economies are not in position to develop mitigating measures of carbon emission (Morrissey, & Zgovu, 2011). Consequently, it is the local population which suffers from such emission hence becoming a challenge even to the government. It costs more to fight and control ailments from carbon emission than what countries get from economic ties. Furthermore, forests which help in cleansing the air are already destroyed (Sepúlveda, et al 2010). No meaningful development can take place in such situation. Growing influence of Asian drivers in the global market is therefore hindering economic progress of developing nations especially in Sub – Saharan Africa and parts of Latin America (Pao, & Tsai, 2011). Another issue of concern is the quality of products Asian drivers supply to developing markets. China and India are main suppliers of products currently used in Africa and other developing countries (Morrissey, & Zgovu, 2011). Although they provide these products at low prices, there is need to consider durability aspect. Most of these products are of low quality and users end up not getting value for their money. Furthermore, most counterfeit products in the market especially in developing economies come from China. Most of these economies have weak legal frameworks which control quality of products in the market (Bayne, & Woolcock, 2011). Asian drivers take advantage of this loophole and make these economies a dumping site for their low-quality products. Note that this aspect has direct connection with economic growth for these economies. Asian drivers especially China is becoming influential in developing economies due to high foreign direct investments. It controls significant percentage of projects and programs in Sub-Saharan Africa and most parts of Latin America (Kolstad, & Wiig, 2012). FDI’s have essential impact on economic development of host countries. They provide employment to local population as well as revenue for the government through taxation. Consequently, they improve living standards in these countries hence positive impact on development (Pao, & Tsai, 2011). Such factor gives a different perspective of the impact of Asian drivers on developing economies. They have huge investments which generate income for the people and the government hence increasing purchasing power (Amendolagine, Boly, Coniglio, Prota, & Seric, 2013). Basically, no one would view such influence as having impeding effect on economic progress. Instead, it is a healthy influence which contributes directly to economic development. Besides numerous FDIs in these economies, China is also playing a leading role in financing government development initiatives. Kenya is one of economies in Sub-Saharan Africa that rely on Asian drivers for economic partnership. Such partnership is essential for economic survival since most of these countries may not have sufficient revenue to fund development projects fully (Khanna, 2013). They usually borrow from partners and Asian drivers have become a better alternative to these governments (Amendolagine, et al 2013). Financing role attracts interests for private sector engagement with China and India. There is increasing rate of trade between private traders of developing economies and Asian drivers (Morrissey, & Zgovu, 2011). Consequently, this has facilitated opening of trade routes between the South and Eastern economic powers especially China and India. There is sharp criticism against increasing trade among Asian drivers and Sub-Saharan Africa and parts of Latin America. As China becomes generous in providing funds for development projects in developing economies, little emphasis is put on economic implication on these countries. Little is known on interest these financing is likely to attract and ability of these countries to pay back appropriately. Accruing rate of interest on these loans may hamper future growth in developing economies in various ways (Pao, & Tsai, 2011). It is likely that countries spend huge percentage of revenue in servicing these loans. Due to this situation, experts express fears that borrowing trend may derail economic progress in the South hence affecting global economy (Morrissey, & Zgovu, 2011). It is therefore important to look at the broader picture when dealing engaging these giants especially in financing development projects. Also, future sustainability is an essential aspect to consider. Looking at growing influence of China and India in global market, some developing economies in Sub-Saharan Africa stands to benefit while others may end up losing. It depends mainly on extent of engagement with these Asian drivers. Some economies are actually taking advantage of opportunities they provide to set sustainable structures (Khanna, 2013). On the other hand, there are others who just rush into economic engagement without clear cost-benefit analysis. Due to this unfortunate circumstance, such economies may not realize long-run benefits (Gilpin, 2011). Such engagement is likely to turn into challenges especially when paying back these loans and grants. It is therefore important to make cost-benefit analysis before engaging any donor. Excess importation of products and services from China and India has negative impact on economic progress of developing countries. The governments are likely to develop reliance on such imports which endangers industrialization in these countries (Bayne, & Woolcock, 2011). It discourages local investors from engaging in setting up industries. In addition, existing industries are likely to collapse due to lack of market for their products. Usually, most imports from China and India are cheap hence providing unbearable competition to local factories (Gilpin, 2011). As a result, economy of China and that of India continues to flourish as developing economies diminish. It affects GDP growth in these countries due to unfavourable terms of trade. Increasing influence of Asian drivers in global market is also raising political concerns. Western powers have dominated the market for long hence may not like losing its influence in developing economies (Gilpin, 2011). Although there is an element of abuse of influence by Asian drivers, it is not virtually true to state that it impedes economic growth in developing nations. To most governments in Sub-Saharan Africa, they are taking this as an opportunity to determine what suits them better (Kim, et al 2011). The issue of relying on one economic partner is dangerous since it turns to political influence. Some donors tend to interfere with domestic political matters in developing economies due to over-reliance on foreign aids from these donors. To avoid such situation, change of focus is recommendable. It facilitates freedom of choice hence creating independence when making internal governance policies. It is however important for the governments of developing nations to ensure they utilise opportunities provided by China and India. They should also be keen to avoid any form of manipulation and abuse in the name of economic partnership. Sustainability of development progress should form the basis of any engagement with foreign economic powers. Reference Amendolagine, V., Boly, A., Coniglio, N. D., Prota, F., & Seric, A. (2013). FDI and local linkages in developing countries: Evidence from Sub-Saharan Africa. World Development, 50, 41-56. Bayne, N., & Woolcock, S. (Eds.). (2011). The new economic diplomacy: decision-making and negotiation in international economic relations. 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