Export, FDI flow key to growth
(China Daily)Updated: 2007-05-16 07:05
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Africa is the spotlight of the 2007 China Overseas Tourism and Trade Market held in Beijing from May 14 until today. Left: Delicate Egyptian sculptures on display at the tourism event. Right: An African exhibitor in ethnic garments promotes her country's tourist attractions. Wu Changqing |
These capital flows are underpinned by expectations of sustained high rates of economic growth from China and India and the robust performance of their manufacturing sectors, fueling continued growth of export earnings and handsome trade surpluses.
Thus, in recent years, China has built up an impressive stock of $1 trillion in foreign exchange reserves.
On the other hand, while African economies have continued to strengthen over recent years, many countries still fall short of the continent's target of 7 to 8 percent real average annual growth rate, which is considered necessary to halve the incidence of poverty between 2000 and 2015.
Essential factors for achieving sustained poverty reduction and high rates of economic growth across Africa include continued and rapid expansion of exports, particularly that of manufactured goods and value-added services, and inward flow of foreign direct investment, accompanied by a massive infusion of modern production technology and newer, more efficient production and business management techniques.
However, the fact is that over recent decades, Africa's share in the world's manufacturing of value-added products has shrunk to a mere 0.75 percent and the share of its exports in world trade has dwindled to 2.5 percent, in sharp contrast to the continent's 13 percent share of the world's population.
Similarly, the continent's share of global aggregate FDI inward flows is just 2.5 percent, indicating a rough correlation between performance on inward FDI and export flows.
These facts indicate that a reinvigorated strategy to accelerate African countries' progress towards attaining the Millennium Development Goals must target not only a substantial scaling up of ODA (Official Development Assistance), but also the equally crucial injection of a dramatic new growth momentum into their export earnings and FDI inward flows.
The highly pragmatic relationship that has taken shape in recent years between African nations and Asia emphasizes the exchange of trade and investment flows.
Moreover, some African countries have benefited from ODAs from Asian donors - notably China, India, and the Republic of Korea, in addition to the substantial ODA provided by Japan over the years.
However, there is still considerable scope for further growth in all the dimensions of bilateral, multilateral, and private trade and capital flow between Asia and Africa.
Delegates of the African Development Bank Annual Meetings expect to explore ways of strengthening trade between Africa and Asia, as well as assess opportunities for Africa to tap the huge Asian savings in the form of FDI.
In addition, delegates of the meetings also expect to assess forms of preferential trading arrangement to assist Africa to move up the value chain in the composition of its exports.
China Daily-AfDB
(China Daily 05/16/2007 page27)
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