?The African continent has the potential to lead and direct global investments and take it rightful position in the global economy. Africa is one of the fastest growing economies in the world, with some individual countries in Sub-Saharan experiencing double growth rate digits. Whiles the world?s average growth for 2013 is estimated around 2.5%, Africa is estimated to grow at an average of 6% at the same time. This is really an opportunity for the continent to transform this economic growth to economic transformation.? Africa, just as any emerging markets is sought by investors for the prospect of high returns, as they often experience faster economic growth measured by GDP.

 

PAULThe African continent is increasingly becoming the global common hub for doing business. A continent which not long ago was described as a ?hopeless continent? has risen above all odds to actually show the potential that it posses. Not only is Africa attracting the world and depicting that it is capable to contain them, but increasingly from operators in Africa itself.? Africa?s economic structural reforms have shown a strong resilient following the global economic crisis in 2008 by rebounding back very quickly since the last decade and going forward, looking more boisterous.

 

The economic fundamentals are clearly in favour of Africa and just what exactly do I mean by that?…I am talking about the potential, the capacity; the zeal and the robust economic posture of continental Africa. The numbers are clearly in favour of Africa with steadier exchange rates, robust commodity prices, increased private capital flows and modest inflation. Africa has got a very good fiscal story with debt to GDP ratios at the sovereign level which are no where near the burden of what is seen in Europe, United States and other parts of the world. Africa’s trade with the rest of the world has increased by more than 200 percent and foreign direct investment grew by 27 percent in 2011 alone. These fundamentals have made Africa more importantly needed now globally than ever before. Africa is increasingly becoming more relevant in global political and economic prosperity.

 

Ideally, globalization is the process of international integration, required due to the increasing connectivity and interdependence of the world?s markets and business.

 

According to Anthony Giddens, a British sociologist, ?globalization can thus be said to be ?intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa?.

 

Globalization has taken many trends in our world; most importantly is the integration of nation?s economies to promote an increase in world?s output. In today?s world, no nations exist in isolation. Just as no human is an island, so are the economies of the world?s nations. The wind of economic integration is blowing around for nations to embrace. Nations economic integration covers aspects such as movement of labour, businesses, investments, technology and goods and services, as well as other sectors such as its service sector, industries, levels of income and employment; and living standards etc.

 

Through rapid globalization, in the past 60 years, the world?s market economies have become increasingly integrated. Exports and imports as a share of national output have risen for most industrial nations, while foreign investment and international lending have expanded. Integration of economies of different nations breeds mutual advantages. It breeds advantages for the trading partners. It helps nations to take advantage of specialization and efficiencies of large scale of production through absolute or comparative cost advantage, just what Africa is needed and capable of presenting to the global market.

 

Globalization have led to social, political and economic integration whereby things happening in a local and long distance areas are linked to the happenings of economies of many miles away. Accordingly, globalization is not something that will concern and threaten us in the future; globalization will not jeopardize our economy, businesses and investment; but rather is something that is taking place in the present to help achieve increasing output and harmonious co-existence in the future.

 

Globalization in terms of peoples? daily lives means that the residents of one country are more likely now than they were 50 years ago to consume the products of another country; to invest in another country; to earn income from other countries; to talk on the telephone to people in other countries; to visit other countries; to know that they are being affected by the economic developments in other countries; and to know about developments in other countries.

 

These factors have affected the potential of globalization one way or the other

 

Technology

The first and perhaps the most powerful factor which makes globalization more effective is technological change. More recently, rapid developments in computer information and communications technology have helped to shrink the influence of time and geography on the capacity of individuals and businesses to interact and transact around the world. Through the improvements in technology, there has been a tremendous extension in the scope of what can be produced and where it can be produced, and advances in transport technology have continued to bring people and businesses closer together. The boundaries of tradable goods and services have been greatly extended due to the emergence and improvements in technology.

 

 

Fallen transportation cost:

The effects of transportation and communication in modern day transportation cannot be overlooked. People are able to move from one part of the world to another much easier than at any previous times in history due to the quick access to transportation. Moreover, communication is faster and more reliable than ever before. Satellites transmit images and voices instantaneously across far distances and the internet allows people to communicate regularly and extensively.

 

Liberalization of trade

Continuing liberalization of trade and investment has occurred as the result of multilateral trade negotiations. Trade restriction measures such as tariffs, quotas have come down from high double digits to about low single digits. Thus, many barriers towards international trade have been removed during the turn of the 20th century.

 

Leveraging on globalization

Globalization leads to specialization which eventually leads to increase in world output. Through globalization, individuals, firms and nations specializes in the production of goods and services they do well in and use the earnings from these activities to purchase from others? items in which they have little advantage in producing. Globalization then breeds competition. Through the comparative cost advantage concept, international trade leads to competition which is a requisite for effectiveness and efficiency. Competition leads to innovativeness. Competition helps keep domestic producers on their toes and provides them with a strong incentive to improve the quality of their products.

 

Reference:
International Economics: Robert J. Carbough, Professor of Economics, Central Eashington University

 

 

ABOUT THE AUTHOR

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Paul Frimpong is an Associate Chartered Economic Policy Analyst (ACCE-Global) who writes on the macroeconomy and global affairs. He is also an African Affairs Analyst

Tel: +233 -241 229 548

Email: [email protected]

Please kindly send all feedback, queries and comments to [email protected]

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