Thursday, August 2, 2012

Next decade goes to Africa?

I have earlier blogged about Africa being the next hub of international trade and manufacturing, going the China way hereThese interviews provide an excellent overview of the Africa-China trade relationship where the conclusion is that China is accessing Africa mainly for its raw materials while it exports its finished consumer and manufactured goods to Africa. I have also blogged about Africa, in all its diversity, and its role in the multilateral trading system here and here.

An interesting opinion on whether Africa would be the next manufacturing hub of the world replacing China is found in CNN here.
"To be sure, Africa has a number of manufacturing advantages that it has yet to realize. Besides low labor costs and abundant resources, these include duty-free and quota-free access to U.S. and EU markets for light manufactures under the Africa Growth and Opportunity Act and the Cotonou Agreement.

Is this enough to offset Sub-Saharan Africa's generally low labor productivity relative to that of its Asian competitors?

Yes, if Africa can implement appropriate supportive policies to leverage its opportunities soon. This is the finding from a recent book by a team of World Bank economists. China dominates the global export market in light manufacturing, and its competitive edge far exceeds that of low income exporters that recently entered the global market.

But steeply rising costs of land, regulatory compliance, and especially labor in China's coastal export manufacturing centers have begun to erode the latter's cost advantage, a trend likely to accelerate in the coming years.

The ongoing redistribution of cost advantages in labor-intensive manufacturing presents an opportunity for Sub-Saharan Africa to start producing many light manufactures, enhance private investment and create millions of jobs."
The book referred to above titled "Light Manufacturing in Africa: Targeted Policies to enhance Private Investment and Create Jobs" gives an overview of the measures needed to be undertaken to overcome constraints in the African context and promote "light manufacturing" sector in order to boost growth and jobs.

Will African continent be the next big player in the globalisation game? Will it be able to use the multilateral trading system to pursue its developmental agenda? The diversity and interests of African countries are varied and complex. Clubbing them into one monolithic entity of the "African" interest may not be ideal in the context of international trade. After all international trade is largely guided by strong, national business interests and how a country interprets global trade rules to pursue one's agenda legitimately. Can the African countries build capacity and expertise to engage with the multilateral system?

I have come across two splendid blogs on the African perspective on international trade. One is by Lynette Gytonga and the other by Henri Joel Nkuepo. Will the next decade be Africa's decade?

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