THE GLOBAL ECONOMIC IMBALANCE BY ABBATI BAKO, psc The political economy experts assert that there exists the imbalance of global economy. There are 7 billion human beings on the planet earth, but 70 to 75% do not have viable individual economy; whether as individuals or collectively as nations, especially the southern part of the globe. Are there any laws which insist that the world development and stronger economy has to come from the northern part of the world to southern part of the world? Or is there any gravitational pull that insist development has to come from the northern part to the southern part of the world? For example, 80% of world economies belong to G20 nations with only 58% of the world population and 25% of the world economy belong to EU nations too. Then the rest of the 20% belong to about 200 nations. The estimated capital of $90 trillion or 60 trillion pounds; or $360 trillion “derivatives or repackage securities and other financial assets play an important role in international finance and they have contributed to the complexity and the instability of international finance. It is obvious that international finance has a profound impact on the global economy (R.Gilpin, 2001). It is estimated, for example, that Africa south of the Sahara accounted for only about 1 percent of total world trade in the early 1990s. Although the African Development Bank (ADB) asserts that the African GDP has risen up to 2% this means that the economy is improving in Africa. Second example is the FDI that has been in existence among nations of the world for hundreds of years; but in the early 1990s Singapore benefited more from FDI than the entire African continent. “it should be mention here that the share of FDI flowing into Africa has not been even in all countries. Egypt and Nigeria have received a lion’s share of FDI flowing into the region in term of absolute size. The share has however declined from more than 67% in 1983-87 to 54 percent in 1988-1992 and 38 percent in 1993-1997. Looking into figure for FDI inflow into Africa as a whole it is clear that its global share is by all standards very low. This share needs to be increased given the potential positive roles that FDI can play in the continent’s development” (Tatah Mentan, 2007). The third example is the replica of total amount of daily trade’s world-over. It has been estimated that the sum of $1.08 trillion of shares has been traded every 24 hours globally. But one may ask; how much does the developing nations (especially nations of the southern part of the world) are contributing and benefiting? George Friedman remarked that “Americans constitute about 4 percent of world’s population but produced about 26 percent of all goods and services. In 2007 U.S gross domestic product (GDP) was about $14 trillion, compared to the world’s GDP of $54 trillion-about 26 percent of the world economic activity takes place in the United States. The American economy is so huge that it is larger than the economies of the next four countries combined: Japan, Germany, China and the United Kingdom.” At this point those African leaders and indeed all leaders of south-south world should take measures that will ensure the transfer of technology to the southern part of the world; especially Africa where the economic imbalance is too huge due to lack of manufacturing of sophisticated-scientific and technological products that has the capacity of boosting the economy of the region. On the other hand, the world economic power should re-think about investment in Africa and other south-south nations. I subscribed to the view of political economy Professor of the Oxford University, London, (Paul Collier) on four key issues that restricted African continent to develop: bad governance, conflict, trap resources and land-lock. In view of that the world economic policy makers has to re-consider the economic prescription of south-south nations particularly “Washington Consensus”. I understand that even last many weeks people were queuing in Malawi to buy maize to feed their families; talk-less of technological and scientific advancement or economic viability. The world economic imbalance is the causative agent of terrorism, conflict, war, criminality, corruption and bad leadership. Abbati Bako (psc, bsis, UK) Political Strategy Consultant, International Political Resource Centre, Nigeria.
Posted on: Fri, 09 Aug 2013 20:54:25 +0000
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