Compare and contrast the levels of economic development in the regions of Europe and Africa.
POLI 3043 - Regional Orders - Ian Jackson
Compare and contrast the levels of economic development in the regions of Europe and Africa.
To answer this question, the essay will be broken down into several 'areas'. Firstly an explanation will be provided of what regionalism means for both Europe and Africa. In addition to this a very brief explanation will be provided as to what regionalism is. Obviously both regions are on different stages of Hurrell's typology and this will be explained (for example Africa could be said to be in the stage of 'regional awareness and identity', while Europe can be said to be in the stage of 'regional interstate cooperation') and with reasons as to why will be provided. Also the ways in which Africa can improve themselves as an economy and move up the 'typology' ladder will be discussed. Questions will be raised as to why Europe and Africa are significantly different in their economies and in addition a brief history will be given on both regions and their economies. In addition points will be raised as to how the economy of Europe started out at a 'high level'; but Africa had to start right from the bottom; from this it will be shown what the current status of both economies is. Furthermore, both regions will be looked at in regards to how both economies are run which will show much of a contrast. As the question states; compare and contrast both regions. Thus, both regions will be looked at in regards to their economies and how much influence both regions have on the economy. Without a doubt, Europe has a much bigger influence in the economy with those around them than Africa, which will explained in detail as to why and what significance this has. In addition, ways in which Africa can improve themselves, become stronger and start to have more influence on economies around them will be discussed. In addition, points will be raised as to how Africa can improve its economy to gain more status and influence as that of Europe. The main economic indicators that will be used will mainly be trade/ industry but will however cover briefly areas such as finance and GDP growth. Questions will be pointed as to if Africa can use the 'Europe model' to improve its economy and whether this is the right answer; if not then what is? Also the question of 'what economic lessons can Africa learn from the European regional economic experience' will be put across and addressed. Using this, several outcomes can be gained. Firstly it can be shown in what areas does Africa need to improve itself to become a 'stronger' region and secondly ways to achieve this can be explained. With all this information, an answer to the question 'Compare and contrast the levels of economic development in the regions of Europe and Africa' will have been provided.
Economic regionalism is not a new term, it was instigated in the 19th century but it was not until after World War II that a coherent theory developed alongside an increasing number of regional trade agreements. Economic regionalism usually takes one of two forms.1 A free trade area is where two or more countries agree to allow domestically produced goods to flow freely between each other, but all customs posts are retained and tariff levels on imports from non-members can differ between countries. A deeper form of co-operation is a common market, which involves the free movement of factors of production (labour and capital) as well as goods.2
Accordingly to Hurrell's '5 stages' typology, regions that are not fully developed or that their economy strength is one of a low standard would (according to Andrew Hurrell) be in the category of 'regional awareness and identity' or 'regional interstate co-operation'. Thus it would be safe to assume when looking at the strength of both Europe and Africa in terms of their economic region that Europe would be classified in one of the higher typologies such as 'State-promoted regional integration'. This involves specific policy decisions by governments designed to reduce or remove barriers to mutual exchange of goods, services, capital, and people.3 In addition Africa can be placed in the category of 'Regional awareness and identity'. States at this level are very much at an embryonic stage, however there is enough evidence to suggest new forms of identity occurring or at least new attitudes and perceptions, which bypass but also influence the conscious policies of existing territorially defined states.4
There are many ways of deciding how developed a country is, this divide could be obtained using the percentage of people that are in the primary, secondary and tertiary sector. Primary industry involves the extraction or exploitation of natural resources (farming, fishing, mining and forestry). Secondary industry involves the manufacture of raw materials into saleable products, e.g. refineries, processors and manufacturing. Tertiary industry is the service sector, e.g. transport, sales and anything that offers someone a service. The percentage of people employed in these different sectors can be used to suggest how developed a country is. If a ...
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There are many ways of deciding how developed a country is, this divide could be obtained using the percentage of people that are in the primary, secondary and tertiary sector. Primary industry involves the extraction or exploitation of natural resources (farming, fishing, mining and forestry). Secondary industry involves the manufacture of raw materials into saleable products, e.g. refineries, processors and manufacturing. Tertiary industry is the service sector, e.g. transport, sales and anything that offers someone a service. The percentage of people employed in these different sectors can be used to suggest how developed a country is. If a continent like Africa has most people in the primary sector then they are likely to be a less developed country. A continent such as Europe has a high percentage of its people in the secondary and tertiary sector, suggesting that they are more of a well developed continent, especially in contrast to Africa.
Europe and Africa go back a long time to the days off colonisation. On the Wikipedia website (http://en.wikipedia.org/wiki/Economy_of_Africa) there is a map showing European claimants to the African continent in 1913. A high majority of Africa was taken by European claimants such as Spain, Portugal and Germany. There has been a great debate over the effect of the Colonisation of Africa. Africa reached its greatest relative wealth in the years just prior to decolonisation. Since then many countries have not yet returned to the levels of wealth they reached in the 1960's. Some see this as evidence that colonialism helped the local economies, while others argue that colonialism left a debilitating mark on African economies.5
The economy of Africa comprises approximately 887 million people as of July 2005 living in 54 different states. Africa is by far the world's poorest inhabitant continent, and it is, on average, poorer than it was 25 years ago. While no African nation could be considered wealthy enough to join the ranks of the developed nations in the Organisation for Economic Co-operation and Development (OECD), the entire continent is not utterly impoverished and there is considerable variation in its wealth. The richest areas are the far north and south of the continent. Arab North Africa has long been closely linked to the economies of Europe and Middle East. In the south, South Africa is by far the continent's wealthiest state, both in GDP per capita and in total GDP, and its neighbours to the north have shared in this wealth.6
Taking a look at the Human Development Index map of Africa, which can be seen on (http://en.wikipedia.org/wiki/Human_Development_Index) on the web; it shows that many of Africa's countries are very underdeveloped.7 One of the obvious reasons for why countries is Africa are underachieving is because of how poor is the strength of their economy compared to others. As it is well known, Africa is very rich in mineral resources as many other states rely upon their, possessing most of the known minerals types of the world. Africa's economy is more reliant on agriculture than that of any other continent, with around 60% of Africans working in the agricultural sector.8 Secondly, the economic development of virtually all African nations has been hindered by inadequate transportation systems. Most countries rely on road networks that are composed largely of dirt roads, which become impassable during the rainy seasons. Road networks tend to link the interior of a country to the coast; few road systems link adjacent countries.9 To show how poor and how bad economy crisis is in Africa, one ought to take a look at their food crisis and the growing volume of food imports. Whereas Africa imported an average volume of 1.96 million metric tons of agricultural products in the years 1961-63, by 1980-82 this figure had risen to 11.2 million metric tons at an annual value of over $6.8 billion (over one-seventh of the total value of Africa's imports in 1982).Owing to foreign exchange constraints, most African countries have had to rely increasingly on food aid to meet their imported food requirements.10
The commercial sectors of most African states rely heavily on one or a few export commodities. The bulk of trade occurs with industrialized nations, which require raw materials and sell industrial and consumer goods. Trade between African states is limited by the competitive, rather than complementary, nature of their products and by trade barriers, such as tariffs, and the diversity of currencies.11
Looking at the economy of Europe, a sharp contrast in strength and influence can visibly be seen. Europe has long been a world leader in economic activities. As the birthplace of modern science and of the Industrial Revolution, Europe acquired technological superiority over the rest of the world, which gave it unquestioned dominance in the 19th Century. An important impetus for growth since the mid-20th Century has been the formation of supranational organisations such as the European Union, the European Free Trade Association, and the Organisation for Economic Cooperation and Development.12
Unlike Africa, Europe has highly developed transport systems, which are densest in the central part of the continent. Many countries in Europe use well maintained transportation systems to transport important goods such as water transport which plays a major role in the European economy. Almost all European countries maintain national airlines, and several, such as Air France, British Airways, Swissair, Germany, and Netherlands are major worldwide carriers.13 Looking at both economies and trade, it is unquestionably obvious that Europe conducts substantial international trade compared to Africa. For Europe, much of its trade is intra-continental, especially among members of the European Union, but also engages in large-scale trade with countries of other continents. Germany, France, Great Britain, Italy and the Netherlands are among the world's greatest trading nations. A large portion of European inter-continental trade involves the exporting of manufactured goods and the importing of raw materials.14
Europe's agricultural sector is generally highly developed, especially in Western Europe. The agricultural sector in Europe is helped by the Common Agricultural Policy, which provides farmers with a minimal price for their products and subsidized their exports, which increases competitiveness for their products. This policy is highly controversial as it hampers free trade worldwide (protectionism sparks protectionism from other countries and trade blocs: the concept of trade wars) and is violating the concept of 'fair trade'.15 Africa's economy is more reliant on primary products (i.e, agricultural and mineral) than that of any other continent, with around 60% of Africans working in the agricultural sector. About three fifths of African farmers are subsistence farmers tilling small pots of land to feed their families, with only a minimal surplus that can be sold for other goods.16 However, there are significant number of large farms that grow cash crop such as coffee, cotton, cocoa, and rubber; these farms, normally operated by large corporations, cover tens of square kilometres and employ large number of labourers.17
Africa's geography is unsuited to trade and thus hampers its economy. The centre of the continent, at least on the western side, is an almost impenetrable rainforest that greatly impedes the transit of people of goods. Some of the wealthiest parts of South Africa are blocked from the rest of Africa by the Kalahari Desert, while the Sahara creates an obvious barrier to trade. While Africa has a number of great river systems such as those of the Nile, Niger, Congo, and Zambezi, it is not nearly as well-linked rivers as are other areas such as Europe. Moreover, many of the rivers are blocked by rapids and cataracts that require vast development projects if they are to be bypassed. The wetness of the roads and tracks makes transport difficult and hazardous. In addition Africa is cut off from the sea to a greater extent than any other continent. To enforce even more problems to Africa; there is an increasing amount of desertification occurring in Africa where the deserts, especially the Sahara are becoming larger, enveloping area around them, leaving less space for land. This process is partly due to the deforestation of areas of forest; with no roots to hold soil in place, it blows away leaving an infertile desert.18
Europe has a well developed financial sector. Many European cities are financial centres with the City of London being the largest.19 The European financial sector is helped by the introduction of the euro as common currency. This has made it easier for European households and firms to invest in companies and deposit on banks in other European countries as exchange rate fluctuations are now non-existent in Europe. As mentioned above, Europe's economy is superior to that of Africa, so what can Africa do to improve it's economy or perhaps what can it take from the Europe economy as a model. Professor J A. van Ginkel held a conference on the 'Knowledge and Development in Africa'; here he talked about ways to improve Africa's economy however not only by getting the economic policies right.20 Prof van Ginkel mentions that there is now substantial evidence that institutional weakness in many African countries is a critical obstacle to economic performance.21 From the surveys he conducted on the obstacles to business in Africa it highlights the damage caused by: the unpredictability of changes in laws and policies, the unreliability of law enforcement, and the impact of corrupt bureaucracies.22 Unless governments eliminate these kinds of obstacles then it is unlikely that the economy whether it is just locally in certain parts of Africa or on a national front will flourish.
An aspect of the Europe model that Africa can learn from is the aspect of knowledge. No commodity is more expensive than "knowledge". An Africa without a sustainable, strong knowledge sector of its own will always remain in a dangerously dependent position. Research and training institutions on the continent can make a critical contribution in at least three ways: by making the most of existing indigenous knowledge; by accessing the vast reservoir of existing global knowledge, as well as the ongoing advances in understanding, and adapting them to suit specific local conditions; and by helping to find innovative solutions to seemingly intractable problems.23 In terms of human resources, it was highlighted in the 'Seminars of Anticipation' that African developments suffers from a tragic paradox: on the one hand, elites trained in Western world are too many (and most of them stay in the US or in the EU because they cannot find well-paid qualified positions in Africa, or because their skills do not correspond to African needs); while on the other hand the well-trained intermediate executives required to manage a modern economy are cruelly missing in Africa (higher technical experts, management executives, civil administrators...).24
To conclude, this essay has looked the economies of both Europe and Africa and compared and contrast both of them. It has also provided information about both economies in terms of trade and finance. A brief history was provided which looked at the relationship between Europe and Africa and to the days of 'colonisation'. Reasons as to why both regions are on different levels economically were provided to show how dominant and rich Europe was and how poor and underdeveloped Africa was. The Africa food crisis was mentioned to give an account of how poor Africa was against other regions. In addition ways that Africa can improve their economy thus bringing it more power and strength so that it can compete with other regions was provided, for example making sure Africa had the aqeduate education so that it learn. Many Africans move to the west so that they can have higher education which is not available in Africa and tend to stay there once they have completed their studies. This is detrimental to Africa's development and thus a solution to the problem would be to support the creation of a complete curriculum. This would lead to a massive contribution to the development of vocational and technical education in Africa thus improving Africa's economy. So as it can seen, the economies for both Europe and Africa are at this present time in contrast to each other but there is hope for Africa to become more dominant and influential in world affairs if the correct adjustments and policies are introduced to improve them.
References
Fawcett, L., & Hurrell, A., Regionalism in World Politics, Oxford, Oxford University Press, 1995, pg 43
Ravenhill. J, Africa in economic crisis, Basingstoke, Macmillan, 1986, pg 9
http://www.mega.nu/ampp/PEGB/chap12.htm
www.ciaonet.org/isa/rajo
http://en.wikipedia.org/wiki/Economy_of_Africa
http://en.wikipedia.org/wiki/Human_Development_Index
http://uk.encarta.msn.com/encyclopedia_761572628_5/Africa.html
http://uk/encarta.msn.com/encyclopedia_761570768_4/Europe.html
http://en.wikipedia.org/wiki/Economy_of_Europe
http://www.eia.doe.gov/emeu/cabs/archives/africa/africa.html
http://www.unu.edu/africa/rector-ticad2.html
http://www.cityoflondon.gov.uk/Corporation/media_centre/keyfacts.htm
http://www.ieei.pt/images/articles/218/BackgroundDocument_EN.pdf
http://www.mega.nu/ampp/PEGB/chap12.htm
2 http://www.mega.nu/ampp/PEGB/chap12.htm
3 Fawcett, L., & Hurrell, A., Regionalism in World Politics, Oxford, Oxford University Press, 1995, pg 43
4 www.ciaonet.org/isa/rajo/
5 http://en.wikipedia.org/wiki/Economy_of_Africa
6 http://en.wikipedia.org/wiki/Economy_of_Africa
7 http://en.wikipedia.org/wiki/Human_Development_Index
8 http://en.wikipedia.org/wiki/Economy_of_Africa
9 http://uk.encarta.msn.com/encyclopedia_761572628_5/Africa.html
0 Ravenhill. J, Africa in economic crisis, Basingstoke, Macmillan, 1986, pg 9
1 http://uk.encarta.msn.com/encyclopedia_761572628_5/Africa.html
2 http://uk/encarta.msn.com/encyclopedia_761570768_4/Europe.html
3 http://uk/encarta.msn.com/encyclopedia_761570768_4/Europe.html
4 http://uk/encarta.msn.com/encyclopedia_761570768_4/Europe.html
5 http://en.wikipedia.org/wiki/Economy_of_Europe
6 http://www.eia.doe.gov/emeu/cabs/archives/africa/chapter 6.html
7 http://www.eia.doe.gov/emeu/cabs/archives/africa/africa.html
8 http://en.wikipedia.org/wiki/Economy_of_Africa
9 http://www.cityoflondon.gov.uk/Corporation/media_centre/keyfacts.htm
20 http://www.unu.edu/africa/rector-ticad2.html
21 http://www.unu.edu/africa/rector-ticad2.html
22 http://www.unu.edu/africa/rector-ticad2.html
23 http://www.unu.edu/africa/rector-ticad2.html
24 www.europe2020.org/en/anticipation/global/GlobalEurope4_draft.htm
