b) Why is the pattern of growth across sectors important for poverty reduction? (8 Marks)
c) Identify any 3 trade policy instruments used by government in Africa. Discuss how each of these policy instruments affects trade (9 Marks)
a) Discuss the recent trends in agricultural trade (8 Marks)
b) What are the drivers of such trends? (7 Marks)
c) What can governments in Africa do to encourage development of agricultural global value chains? (10 Marks)
a) The Africa continent is home to Forty -Seven (47) Regional Trading Arrangements. In which ways can these trading arrangements contribute to development of African countries? (10 Marks)
b) What are factors that have contributed to increased trade in services recently? (6 Marks)
c) Discuss the role of services in global value chains for manufacturing sector (9 Marks)
Expert Answer
This solution was written by a subject matter expert. It’s designed to help students like you learn core concepts.
a) Pathways through which trade policy can contribute to development
Trade policy can contribute to development in a number of ways, including:
Increased export earnings: Trade policy can help to increase export earnings by promoting exports of goods and services. This can lead to increased economic activity and job creation.
Improved access to foreign technology and investment: Trade policy can also help to improve access to foreign technology and investment. This can help to improve productivity and competitiveness, and lead to higher economic growth.
Reduced poverty and inequality: Increased trade can lead to lower prices for consumers, which can help to reduce poverty and inequality. Additionally, trade can create new job opportunities for low-skilled workers.
b) Why is the pattern of growth across sectors important for poverty reduction?
The pattern of growth across sectors is important for poverty reduction because different sectors have different impacts on poverty. For example, the agricultural sector is often a major employer of the poor, so growth in the agricultural sector can be particularly effective at reducing poverty.
Additionally, growth in some sectors can lead to increased demand for goods and services from other sectors. This can create a multiplier effect, leading to growth throughout the economy.
c) Trade policy instruments used by government in Africa
Three trade policy instruments used by governments in Africa include:
Tariffs: Tariffs are taxes that are imposed on imported goods. Tariffs can be used to protect domestic industries from foreign competition.
Subsidies: Subsidies are payments that are made to domestic producers. Subsidies can be used to make domestic products more competitive in the global market.
Non-tariff barriers: Non-tariff barriers are trade barriers that are not tariffs. Examples of non-tariff barriers include quotas, licensing requirements, and technical standards.
How each of these policy instruments affects trade
Tariffs increase the price of imported goods, which makes domestic goods more competitive. This can lead to an increase in domestic production and employment. However, tariffs can also lead to higher prices for consumers and reduced efficiency.
Subsidies reduce the cost of production for domestic producers, which makes them more competitive in the global market. This can lead to an increase in exports and job creation. However, subsidies can also be costly to the government and can lead to market distortions.
Non-tariff barriers can make it more difficult and expensive for foreign firms to import their goods into a country. This can protect domestic industries from foreign competition. However, non-tariff barriers can also reduce consumer choice and lead to higher prices.
a)Recent trends in agricultural trade
Recent trends in agricultural trade include:
Growth in the volume of agricultural trade: The volume of agricultural trade has grown significantly in recent decades. This is due to a number of factors, including population growth, rising incomes, and improved transportation and logistics.
Increased concentration of agricultural trade in a few countries: A small number of countries account for a large share of global agricultural trade. This is due to the fact that these countries have a comparative advantage in the production of certain agricultural products.
Increased trade in processed agricultural products: Trade in processed agricultural products has grown faster than trade in raw agricultural products in recent years. This is due to the fact that consumers are increasingly demanding processed and convenience foods.
b)Drivers of agricultural trade trends
The drivers of agricultural trade trends include:
Population growth: Population growth is one of the main drivers of agricultural trade. As the world’s population grows, demand for agricultural products is increasing.
Rising incomes: Rising incomes in developing countries are also driving agricultural trade. As people’s incomes rise, they are able to afford to buy more food and other agricultural products.
Improved transportation and logistics: Improved transportation and logistics have made it easier and cheaper to trade agricultural products. This has led to an increase in the volume and value of agricultural trade.
c)What can governments in Africa do to encourage development of agricultural global value chains?
Governments in Africa can encourage the development of agricultural global value chains by:
Investing in infrastructure: Governments can invest in infrastructure, such as roads and ports, to make it easier and cheaper to transport agricultural products.
Reducing trade barriers: Governments can reduce trade barriers, such as tariffs and quotas, to make it easier for African farmers to export their products.
Providing financial support to farmers: Governments can provide financial support to farmers to help them invest in new technologies and improve their productivity.
Educating farmers about global value chains: Governments can educate farmers about global value chains and how to participate in them.
a)How Africa’s regional trading arrangements can contribute to development
Africa’s regional trading arrangements (RTAs) can contribute to development in a number of ways, including:
Increased trade among African countries: RTAs can help to increase trade among African countries by reducing or eliminating tariffs and other trade barriers. This can lead to increased economic activity and job creation in all participating countries.
Improved access to markets: RTAs can help African countries to gain access to larger markets. This can help to boost exports and attract foreign investment.
Economies of scale: RTAs can help African countries to achieve economies of scale by creating larger markets for their goods and services. This can lead to lower costs and higher productivity.
Improved competitiveness: RTAs can help African countries to improve their competitiveness by exposing them to greater competition from other African countries. This can lead to innovation and improved product quality.
Reduced poverty and inequality: Increased trade and economic growth can lead to reduced poverty and inequality in Africa.
Some specific examples of how RTAs have contributed to development in Africa include:
The Economic Community of West African States (ECOWAS) has helped to reduce tariffs and other trade barriers among its member countries. This has led to a significant increase in trade within ECOWAS, and has helped to boost economic growth and job creation in the region.
The Common Market for Eastern and Southern Africa (COMESA) has helped to create a single market for goods and services among its member countries. This has made it easier for businesses to operate in the region and has attracted foreign investment.
The East African Community (EAC) has implemented a number of initiatives to promote regional integration, such as a common passport and a single customs territory. These initiatives have made it easier for people and goods to move around the region, and have boosted trade and investment.
B)Factors that have contributed to increased trade in services recently
The factors that have contributed to increased trade in services recently include:
Technological advancements: Technological advancements have made it easier and cheaper to deliver services across borders. This has led to an increase in the trade of services such as telecommunications, financial services, and business services.
Globalization: Globalization has led to increased demand for services from all over the world. This is due to the fact that businesses are increasingly operating on a global scale and consumers are increasingly demanding services from other countries.
Liberalization of trade in services: Governments around the world have been liberalizing trade in services in recent years. This has made it easier for foreign service providers to operate in domestic markets and has boosted trade in services.
C)Role of services in global value chains for manufacturing sector
Services play an important role in global value chains for the manufacturing sector. Services such as transportation, logistics, and finance are essential for the production and distribution of manufactured goods. Additionally, services such as marketing and design can help to add value to manufactured goods.
For example, a company that manufactures clothing may outsource some of its services, such as transportation and logistics, to other companies. This can help the company to reduce costs and focus on its core competencies. Additionally, the company may work with design companies to develop new products and marketing companies to promote its products.
Overall, services play an important role in global value chains for the manufacturing sector. By providing essential inputs and adding value to manufactured goods, services help to make the manufacturing sector more efficient and competitive.
Trade policy can contribute to development by increasing export earnings, improving access to foreign technology and investment, and reducing poverty.
The pattern of growth across sectors is important for poverty reduction because different sectors have different impacts on poverty.
Three trade policy instruments used by governments in Africa are tariffs, subsidies, and non-tariff barriers.
Recent trends in agricultural trade include growth in the volume of agricultural trade, increased concentration of agricultural trade in a few countries, and increased trade in processed agricultural products.
Drivers of agricultural trade trends include population growth, rising incomes, and improved transportation and logistics.
Governments in Africa can encourage development of agricultural global value chains by investing in infrastructure, reducing trade barriers, providing financial support to farmers, and educating farmers about global value chains.
Africa’s regional trading arrangements can contribute to development by increasing trade among African countries, improving access to markets, enabling economies of scale, improving competitiveness, and reducing poverty and inequality.
Factors that have contributed to increased trade in services recently include technological advancements, globalization, and liberalization of trade in services.
Services play an important role in global value chains for the manufacturing sector by providing essential inputs and adding value to manufactured goods.