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Trade & development: Why many developing countries seem, contrary to what the traditional theories suggest, not benefiting from international trade November 27, 2014

Posted by OromianEconomist in Africa, Africa and debt, Africa Rising, African Poor, Agriculture, Aid to Africa, Colonizing Structure, Corruption in Africa, Economics, Economics: Development Theory and Policy applications, Ethiopia the least competitive in the Global Competitiveness Index, Theory of Development, Trade and Development, Uncategorized.
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” The benefits of trade have been well documented throughout history. The economic case is quite straightforward. Opening up to trade allows countries to shift their patterns of production, exporting goods that they are relatively efficient at producing and importing goods at a lower price that they can’t produce resourcefully at home. This lets resources to be allocated more efficiently allowing a nation’s economy to grow. Fruits of trade can be seen in many countries. In the last 30 years, trade has grown around 7% per year on average (WTO, 2013). During this time period, developing nations have seen their share in world export increase from 34% to 47% (WTO, 2013) which at first glance seem incredible. However if we dig a little deeper, it is quickly apparent that China is the key reason for the majority of the growth and that a bulk of these developing countries aren’t benefiting fully from international trade. Why is this? Many developing countries depend on the export of a few primary products and in some cases a single primary commodity for the majority of their export earnings. In fact, 95 of the 141 developing countries rely of the export of commodities for at least 50% of their export income (Brown, 2008). This is where the problem starts. Prices in the primary good’s market tend to be highly volatile sometimes varying up to 50% in a single year (South Centre, 2005). Often, the fluctuation of these products are out of the hands of the developing countries as they individually have only a small portion of the world supply which is not enough to affect world prices. At the same time, some shocks (ie. Weather) are unpredictable. The unstable commodity price brings uncertainty, instability and often negative economic consequences for the developing countries. This also affects the policymaking in the country as it is hard to implement a sustainable development scheme or a fiscal expansionary policy with uncertain revenue. Positive shocks do increase income in the short run however a study by Dehn (2000) found that there are no permanent effect on the increase on income in the long run. Furthermore, there is often very little scope to growth through primary products as it is very hard to increase volumes of sale. This is due to the demand being inelastic. The over dependence on the export of primary products also causes another problem – a risk of a large trade deficit. Several studies (Olukoshi, 1989, Mundell, 1989) have shown that primary commodity prices are the main cause for the debt problems in many developing countries. In an empirical research done by Swaray (2005), he shows the main reason behind this is the deteriorating terms of trade, developing countries face. Terms of Trade is equal to the value of export over the value of import. Over time there has been a general trend of primary products falling in value. 41 of 46 leading commodities fell in real value over the last 30 years with an average decline of 47% in real prices, according to the World Bank (cited in CFC, 2005). This has occurs due to inelastic demand for commodities and lack of differentiation among producers hence making it a competitive market. The creation of synthetic substitutes has also suppressed prices. At the same time, manufacturing products (which generally developing countries tend to import) see a general rise in prices. Put these trends together, over time, developing countries have seen their terms of trade worsen. A study by CFC (2005), shows that the terms of trade have declined as much as 20% since the 1980s. This, alongside the difficulty to increase volumes of sales has meant many developing countries have a trade deficit. According Bhagwati (1958), it is possible that this decline in the terms of trade could result in diminished welfare. In other words, growth from trade can be negative rather than positive. ”

http://randomrantsandnews.wordpress.com/2014/10/27/why-many-developing-countries-seem-contrary-to-what-the-traditional-theories-suggest-not-benefiting-from-international-trade/

Just a bit of Economics

The benefits of trade have been well documented throughout history. The economic case is quite straightforward. Opening up to trade allows countries to shift their patterns of production, exporting goods that they are relatively efficient at producing and importing goods at a lower price that they can’t produce resourcefully at home. This lets resources to be allocated more efficiently allowing a nation’s economy to grow. Fruits of trade can be seen in many countries. In the last 30 years, trade has grown around 7% per year on average (WTO, 2013). During this time period, developing nations have seen their share in world export increase from 34% to 47% (WTO, 2013) which at first glance seem incredible. However if we dig a little deeper, it is quickly apparent that China is the key reason for the majority of the growth and that a bulk of these developing countries aren’t benefiting fully…

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Ethiopia is one of 10 least connected in the digital world in mobile phone and internet use. #Africa November 27, 2014

Posted by OromianEconomist in 25 killer Websites that make you cleverer, Africa, African Internet Censorship, Ethiopia & World Press Index 2014, Facebook and Africa, Free development vs authoritarian model, Groups at risk of arbitrary arrest in Oromia: Amnesty International Report, The 2014 Ibrahim Index of African Governance, The Colonizing Structure & The Development Problems of Oromia, The Global Innovation Index, The Tyranny of Ethiopia, The Tyranny of TPLF Ethiopia, Tweets and Africa.
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OEthiopiadisconnected

 

Denmark, Korea And Sweden are the world’s most digitally connected countries while Ethiopia is one of 10 least connected

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November 26, 2014 (The Telegraph) — Denmark has been named the world’s “most connected” country based on mobile phone and internet use.

Scandinavia dominated this year’s rankings, with Sweden in third place, followed by Iceland in fourth, Norway sixth and Finland eighth. Britain came fifth.

They were compiled as part of a report by the International Telecommunication Union – theInformation and Communication Technology Development Index (IDI), which rates 166 countries according to their level of access to, use of and skills in using information and communication technology.

Hong Kong was the ninth most connected country, coming in ahead of Japan in 11th place, while Luxembourg completed the top 10.

Other countries in the top 30 included the US (which ranked 14th), Australia, Switzerland, Singapore, Germany, France, New Zealand, Estonia and Macau, as well the principalities of Andorra and Monaco.

The 10 least connected countries were all in Africa, with the Central African Republic being the worst, followed by Niger, Chad, Eritrea and Ethiopia.

All countries were shown to have improved their IDI values in the last year, while the nations with the “most dynamic” improvement in ranking included the United Arab Emirates, Fiji, Cape Verde, Thailand, Oman, Qatar, Belarus, Bosnia & Herzegovina and Georgia. Improvements were said to have been driven mostly by better wireless broadband connection.

Europe proved to be the most connected region, scooping up eight of the top 10 rankings, while Africa had the lowest regional ranking. The continent, however, did show a mobile broadband growth rate of more than 40 per cent in 2014 on last year.

Nearly three billion people globally will be using the internet by the end of this year, up by nearly 40 per cent on last year. But 450 million people still don’t live within reach of a mobile signal, while 4.3 billion people are not connected to the internet – with 90 per cent of those living in developing countries, the report said.

Earlier this year, Telegraph Travel’s technology expert Donald Strachan outlined the “world’s Wi-Fi-friendliest cities”, featuring various countries from the top 40 of this year’s IDI report.

Connecting in the Finnish capital of Helsinki is password-free and easy thanks to a network of hotspots in public buildings, civic squares and even on some buses and trams around the city.

Hong Kong, “one of the world’s most futuristic cities”, was said to be generous with free internet access in public areas. There are several free Wi-Fi networks, the key ones being GovWiFi (at parks, libraries, public buildings, ferry terminals and more) and MTR WiFi, which provides 15 minutes of free Wi-Fi per device up to five times every day at MTR stations.

Taipei offers 30 days of free access to a national, government-backed network of over 5,000 hotpsots. Hundreds of these free iTaiwan hotspots are available throughout the Taiwanese capital.

Macau was noted for its WiFiGo service which offers free internet for visitors every day between 8am and 1am. The network has around 150 hotspots, meaning there’s usually Wi-Fi close by, including at ports, museums and tourist information centres.

Other major cities with free public Wi-Fi access include New York, Paris and Perth, Australia, as well as Florence and Tel Aviv, which has eighty hotspots dotted around its centre.

Access to free Wi-Fi has been an increasingly important factor for travellers around the world, especially when booking a hotel. Britain’s hotels were found to be among the worst in Europe for free Wi-Fi access, while the two best performing cities were both Swedish – Malmö and Gothenburg, where 98 per cent and 96 per cent of hotels were found to offer free Wi-Fi, a survey by the travel search engine KAYAK earlier this year revealed.

A new website aiming to help travellers in the search for free and fast wireless internet access was introduced earlier this year.Hotewifitest.com lets hotel guests test the speed of their internet connection, and then stores the results for others to view. It also records whether the Wi-Fi is free or comes at a price.

Several airports around the world also offer free Wi-Fi services, with Dallas-Forth Worth in Texas being among the best, providing free Wi-Fi in all five of its terminals since 2012. Since upgrading its former paid network, the number of daily Wi-Fi connections has risen from 2,000 to 55,000. Helsinki Airport, Singapore’s Changi Airport, Seoul’s Incheon Airport and Amsterdam Schiphol complete the world’s top five for airport Wi-Fi quality.

Earlier this year, Britain’s biggest airports have been criticised for failing to provide passengers with unlimited Wi-Fi access.

None of Britain’s six busiest airports – Heathrow, Gatwick, Manchester, Stansted, Edinburgh and Luton – offer unlimited free internet access, according to a study by Skyscanner, the flight comparison website.

Source: The Telegraph

http://www.traveller.com.au/denmark-korea-sweden-the-worlds-most-connected-country-11uwmr

 

 

 

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SMALL WORKS BETTER: THE CASE OF FAMILY FARMING November 27, 2014

Posted by OromianEconomist in Africa, Africa Rising, African Poor, Agriculture, Ethiopia's Colonizing Structure and the Development Problems of People of Oromia, Afar, Ogaden, Sidama, Southern Ethiopia and the Omo Valley, Land Grabs in Africa, Land Grabs in Oromia.
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The paradox, however, and one of the reasons why despite having so little land, small producers are feeding the planet, is that small farms are often more productive than large ones. If the yields achieved by Kenya’s small farmers were matched by the country’s large-scale operations, the country’s agricultural output would double. In Central America, the region’s food production would triple. If Russia’s big farms were as productive as its small ones, output would increase by a factor of six. Another reason why small farms are the feeding the planet is because they prioritise food production. They tend to focus on local and national markets and their own families. In fact, much of what they produce doesn’t enter into trade statistics – but it does reach those who need it most: the rural and urban poor. If the current processes of land concentration continue, then no matter how hard-working, efficient and productive they are, small farmers will simply not be able to carry on. The data show that the  concentration of farmland in fewer and fewer hands is directly related to the increasing number of people going hungry every day. – http://www.grain.org/article/entries/5072-telling-family-farming-fairy-tales

 

 

 

Telling family farming fairly tales

An opinion piece by GRAIN published by Reuters.

The United Nations declared 2014 as the International Year of Family Farming. As part of the celebrations, the U.N. Food and Agriculture Organisation (FAO) released its annual “State of Food and Agriculture”, which this year is dedicated to family farming. Family farmers, FAO say, manage 70-80 percent of the world’s farmland and produce 80 percent of the world’s food.

But on the ground – whether in Kenya, Brazil, China or Spain – rural people are being marginalised and threatened, displaced, beaten and even killed by a variety of powerful actors who want their land.

Farmer Djeneba Diarra on her farm in Heremakono, Mali (Photo: Joe Penney/Reuters)Farmer Djeneba Diarra on her farm in Heremakono, Mali (Photo: Joe Penney/Reuters)

A recent comprehensive survey by GRAIN, examining data from around the world, finds that while small farmers feed the world, they are doing so with just 24 percent of the world’s farmland – or 17 percent if you leave out China and India. GRAIN’s report also shows that this meagre share is shrinking fast.How, then, can FAO claim that family farms occupy 70 to 80 percent of the world’s farmland? In the same report, FAO claims that only 1 percent of all farms in the world are larger than 50 hectares, and that these few farms control 65 percent of the world’s farmland, a figure much more in line with GRAIN’s findings.

The confusion stems from the way FAO deal with the concept of family farming, which they roughly define as any farm managed by an individual or a household. (They admit there is no precise definition. Various countries, like Mali, have their own.)

Thus, a huge industrial soya bean farm in rural Argentina, whose family owners live in Buenos Aires, is included in FAO’s count of “family farms”. What about sprawling Hacienda Luisita, owned by the powerful Cojuanco family in the Philippines and epicentre of the country’s battle for agrarian reform since decades. Is that a family farm?

Looking at ownership to determine what is and is not a family farm masks all the inequities, injustices and struggles that peasants and other small scale food producers across the world are mired in.

It allows FAO to paint a rosy picture and conveniently ignore perhaps the most crucial factor affecting the capacity of small farmers to produce food: lack of access to land. Instead, the FAO focuses its message on how family farmers should innovate and be more productive.

Small food producers’ access to land is shrinking due a range of forces. One is that because of population pressure, farms are getting divided up amongst family members. Another is the vertiginous expansion of monoculture plantations.

In the last 50 years, a staggering 140 million hectares – the size of almost all the farmland in India — has been taken over by four industrial crops: soya bean, oil palm, rapeseed and sugar cane. And this trend is accelerating.

In the next few decades, experts predict that the global area planted to oil palm willdouble, while the soybean area will grow by a third.These crops don’t feed people. They are grown to feed the agroindustrial complex.

Other pressures pushing small food producers off their land include the runaway plague of large-scale land grabs by corporate interests. In the last few years alone, according to the World Bank, some 60 million hectares of fertile farmland have been leased, on a long-term basis, to foreign investors and local elites, mostly in the global South.

While some of this is for energy production, a big part of it is to produce food commodities for the global market, instead of family farming.

SMALL WORKS BETTER

The paradox, however, and one of the reasons why despite having so little land, small producers are feeding the planet, is that small farms are often more productive than large ones.

If the yields achieved by Kenya’s small farmers were matched by the country’s large-scale operations, the country’s agricultural output would double. In Central America, the region’s food production would triple. If Russia’s big farms were as productive as its small ones, output would increase by a factor of six.

Another reason why small farms are the feeding the planet is because they prioritise food production. They tend to focus on local and national markets and their own families. In fact, much of what they produce doesn’t enter into trade statistics – but it does reach those who need it most: the rural and urban poor.

If the current processes of land concentration continue, then no matter how hard-working, efficient and productive they are, small farmers will simply not be able to carry on. The data show that the concentration of farmland in fewer and fewer hands is directly related to the increasing number of people going hungry every day.

According to one U.N. study, active policies supporting small producers and agro-ecological farming methods could double global food production in a decade and enable small farmers to continue to produce and utilise biodiversity, maintain ecosystems and local economies, while multiplying and strengthening meaningful work opportunities and social cohesion in rural areas.

Agrarian reforms can and should be the springboard to moving in this direction.

Experts and development agencies are constantly saying that we need to double food production in the coming decades. To achieve that, they usually recommend a combination of trade and investment liberalisation plus new technologies.

But this will only empower corporate interests and create more inequality. The real solution is to turn control and resources over to small producers themselves and enact agricultural policies to support them.

The message is clear. We need to urgently put land back in the hands of small farmers and make the struggle for genuine and comprehensive agrarian reform central to the fight for better food systems worldwide.

FAO’s lip service to family farming just confuses the matter and avoids putting the real issues on the table.

Read more @ http://www.grain.org/article/entries/5072-telling-family-farming-fairy-tales