FREE IGNOU MPSE-005 SOLVED ASSIGNMENT 2023-24
7. a) Key Features of African Foreign Trade:
African foreign trade has undergone significant changes over the years, influenced by global economic trends, shifts in commodity prices, and the continent’s efforts to diversify its trade relationships. Several key features characterize African foreign trade:
- Commodity Dependence: Many African countries heavily rely on the export of primary commodities such as minerals, oil, and agricultural products. This dependence can make economies vulnerable to fluctuations in global commodity prices.
- Trade Imbalance: African countries often experience trade imbalances, with higher levels of imports compared to exports. This trade deficit can strain foreign exchange reserves and impact the overall balance of payments.
- Global Market Access: African countries face challenges accessing global markets due to tariff and non-tariff barriers, as well as unequal trade agreements. This can hinder their ability to diversify exports and develop value-added industries.
- Regional Trade: In recent years, efforts have been made to promote regional integration and intra-African trade. Initiatives like the African Continental Free Trade Area (AfCFTA) aim to create a single market, boost trade among African countries, and enhance economic cooperation.
- China’s Role: China has become a significant trading partner for many African countries, particularly in terms of importing commodities and exporting manufactured goods. This has led to concerns about debt accumulation and unequal trade relationships.
- European Union Trade: The European Union (EU) remains a major trading partner for Africa, with trade agreements such as the Economic Partnership Agreements (EPAs) providing preferential access to EU markets for some African products.
- Value Addition and Manufacturing: Efforts to promote value addition and manufacturing are gaining momentum, as African countries seek to move up the global value chain and reduce reliance on raw material exports.
- Informal Trade: Informal cross-border trade plays a significant role in many African economies, often driven by factors like proximity, cultural ties, and limited formal trade infrastructure.
- Trade Financing and Infrastructure: Challenges related to trade financing, inadequate transportation, and trade-related infrastructure can hinder the efficiency and competitiveness of African foreign trade.
