Developing Nations Trade Amongst Each Other

Nations like India and China have shed new light on south-south co-operation, developing countries sharing resources. As their economies have grown, these nations have increased their investments in parts of Africa and Asia. Currently, China and India account for one fifth of the global economy, and are said to make up one third by 2025.

The United Nations Conference on Trade and Development estimated that, between 1996 and 2006, developing economies provided more than $17bn of foreign investment in Africa and $27bn of investment in Asia. This is not aid money, but rather an investment that the donor country will benefit from.

This mutual growth cannot happen through market forces and private initiatives alone, however. It is important to have policymaking and government action acting in these new economic ties. For example, China and India’s economic successes were achieved through the notion that domestic factors play a crucial role while market integration creates new opportunity for growth.

By building off one another, developing nations have a real chance for economic success.

-Sami Ressler

SOURCE: THE GUARDIAN

WFP Announces Record Food Purchases

Last Friday, the World Food Programme (WFP), the UN agency in charge of fighting hunger, made an encouraging announcement: of the US$ 1.25 billion procured in food commodities, more than 80 percent came from developing countries including Viet Nam, Guatemala and Ethiopia. The food has been used this year to provide nutritional aid for the people affected by the Haiti earthquake, the severe drought in the Sahel region, the Pakistan flooding and the long-lasting situation in Somalia.

WFP is on of the World's largest food buyers. This means that when buying from developing countries, the WFP not only purchases food to be delivered to those who need it the most, but also invests inin the agricultural economies and boosts the economy and trade of developing countries. This has especial importance nowadays with record food prices that, combined with environmental or human-made disasters, are behind severe alimentary crisis, particularly in Africa.

This change in the food suppliers, combined with other improvements and innovations such as growing donor quotas, new purchasing mechanisms and new "hunger tools," allow the WFP to acquire food stocks in bulk with enough anticipation and at lower prices. This saves money, delivery time... and lives.

- David Nebreda

SOURCE: World Food Programme

Sometimes Aid is Just Playing Fair

Today Richard Brooks wrote an article in The Guardian arguing that many corporations use tax loop-holes in order to sell their product in developing nations without paying the requisite taxes. This is old news in the United States, where lawyers are paid millions of dollars to file the proper paperwork to save corporations even more money. However, this is literally a matter of life and death in Africa, where this money is desperately needed for schools, vaccines, and food.

Much of Africa is bound by international trade agreements that were imposed upon them after World War II in exchange for developmental aid, which means they can't get rid of these corporations. Basically, these agreements forced countries to lower their taxes, allow corporate investment, and reduce social programs. This, combined with the tax avoidance schemes of the corporation, allows these corporations to expand their markets at little cost or investment while avoiding the burden of developing the infrastructure for African nations to develop properly.

In essence, these nations are trapped. They can't raise taxes to provide the necessary goods and services for their people, they can't kick the corporations out, and they are forced to rely on international aid rather than a sound and working governmental system.

Brooks believes that corporations should adopt tax regulations as part of their corporate social responsibility mantra, for any corporation that exploits a nation's tax code, particularly a developing nation's tax code, is exploiting the millions of people within that nation. Paying the correct taxes may be seen as international aid, but I prefer to view it as playing fair.

-Corey Cox

SOURCE: The Guardian

UK Pledges $67 Million to Develop South African Transport Infrastructure

As South African President, Jacob Zuma, ended his three-day visit to the UK, he and Prime Minister, Gordon Brown, announced a new memorandum committing the UK to 67 million pounds to assist regional economic communities in developing more efficient transportation infrastructure.

Part of the agreement holds that South Africa commit to creating a one-stop border post between Zimbabwe, the two leaders hope that this measure and others within the agreement will promote increased trade for African nations, helping them simultaneously grow out of poverty.

Additionally, Brown reaffirmed the UK’s support of HIV/AIDs eradication in South Africa, with a new program supporting the pubic health system, totally at UK25 million more in aid.

-Michelle Leung

Source: Africa Good News

The Good News and the Bad News

World trade is suffering its steepest plunge in 80 years, a crisis that will not leave the developing world unscathed. One positive effect has been the increase of the US dollar, which has seen a 13% rise over the last year. Unfortunately, this reflects the dire situation faced by those outside our borders, especially countries struggling with poverty. American investors are avoiding foreign markets, and US debt is an attractive place for foreigners to put their money. This increased flow of cash into the United States, however, results in a decreased flow into developing countries. Usually, a devalued currency benefits developing countries by making their exports cheaper to the world market. Unfortunately, this is not the case as the global recession creates a decrease in demand for their products.
Source: Slate Magazine