Trade blocs are usually created through trade agreements by the governments of member countries. This has been the quest for Africa. To a greater extent, trade will enhance economic development and improve livelihoods in Africa. However, the aspect of trade which impacts every state in Africa requires a regional trading agreement. The fundamental rule of a regional trade agreement is the liberalisation of the domestic market. Market liberalisation may ultimately incorporate some global perspectives, which would imbibe a multilateral dimension as espoused by globalisation. Trading in Africa has been too secretive since the colonial era. This was underpinned by the behaviour of Europeans who believed in exporting their loot to their mother countries rather than trading within Africa for the benefit of Africans. As a resultantly, Africa continued to suffer under development with all the vast resources found in the continent. To embrace a communal African trading behaviour, indeed there is a need for trade liberalisation which clearly articulates intra-regional trade within the African continent. There has been a lack of clear information regarding the trade components of Intra-regional trade within the African continent. To a greater extent, that is an adverse effect of the colonial damage perpetrated by colonialism to impede development in Africa. The lack of clear information regarding African trade is because a few of the countries pay little attention to the competitive advantage of neighbouring countries in the production of certain products or the offer of certain services. By implication, quite a substantial part of imports into Africa can very easily be sourced from close-by neighbours, and sometimes at far cheaper rates. For example, Kenya imports raw hides from New Zealand, whereas Burundi and Botswana export same product to other continents at much lower prices (Olayiwola, 2020). There is low demand for products manufactured in Africa by other African countries, not because they also manufacture similar goods, but because they consider those products inferior and thus inadmissible to their markets. This paper seeks to assess the impact of the United Nations Economic Commission in Africa (UNECA) in shaping the African continental free trade area, (AfCFTA). The assessment will encompass presenting both backgrounds and of links between UNECA and Afcfta. This will enhance the thrust of the paper towards locating the impact desired from UNECA.
Table of Contents
1. Introduction
2. Theoretical Framework
2.1 Theory of absolute advantage
2.2 New Trade Theory
3. Methodology
4. Findings and Discussion
Research Objectives and Themes
The primary objective of this study is to assess the impact of the United Nations Economic Commission for Africa (UNECA) in shaping the African Continental Free Trade Area (AfCFTA), while investigating how this initiative contributes to the broader economic development of the African continent.
- Analysis of theoretical frameworks including the theory of absolute advantage and new trade theory.
- Examination of the role of UNECA as a catalyst for continental trade and regional integration.
- Evaluation of the AfCFTA’s operational objectives and its impact on trade liberalization.
- Discussion on challenges such as transitional costs, infrastructure, and intracontinental conflict.
- Exploration of potential economic growth through service sector development and tariff removal.
Excerpt from the Book
Theory of absolute advantage
The theory of absolute advantage was propounded by Adam Smith. Adam Smith’s theory of absolute advantage began a new era of trade from its formative stages. The theory states that countries must manufacture the products they produce more efficiently compared to other countries, (Shenkar & Luo, 2008). Adam Smith opined that the primary gain from trade was not to augment a country’s silver and gold stocks, but rather, in a practical sense, a country should manufacture a product more efficiently than other countries. In so doing, that country could enlarge its market overseas and therefore specialise in manufacturing products in terms of quality and cost. From the thrust of this paper countries will enlarge their markets in the African continent through free trade. This is a bit different from the assumption by Adam Smith who zeroed in on overseas market. In the Theory of absolute advantage the importing country could make notable gains from trading because it would be more expensive for them to manufacture that same product compared to the less expensive one rendered them by the exporter. Adam Smith believed that a country’s wealth is founded on its productive capability. He explained that if a foreign nation could offer cheaper products compared to those manufactured by the home country, it would be better for the home country to purchase products from that foreign country and utilise the comparative advantage from specialisation to its maximum advantage. This conception is founded on the notion that
Summary of Chapters
1. Introduction: This chapter outlines the historical context of trade in Africa, the need for intra-regional liberalization, and the research objective to analyze UNECA's role in the AfCFTA.
2. Theoretical Framework: This section establishes the analytical foundation of the study by applying the theory of absolute advantage and the new trade theory to the context of African regional integration.
3. Methodology: This chapter describes the research design, specifying that the study utilizes qualitative desk research and systematic text-based analysis of existing literature.
4. Findings and Discussion: This section examines the operational impact of UNECA on AfCFTA, evaluates the potential for economic growth through tariff reduction, and addresses inherent challenges like conflicts and service sector liberalization.
Keywords
AfCFTA, UNECA, Africa, Trade Liberalization, Economic Development, Absolute Advantage, Intra-regional Trade, Regional Integration, Services Sector, Tariff Removal, Globalization, Continental Free Trade Area, Socioeconomic Transformation, Market Liberalization, Sustainability.
Frequently Asked Questions
What is the core focus of this research paper?
The paper primarily focuses on evaluating the influence of the United Nations Economic Commission for Africa (UNECA) in the formation and development of the African Continental Free Trade Area (AfCFTA).
What are the central thematic areas discussed?
Key themes include trade liberalization, regional economic integration, the role of institutional frameworks, and policies aimed at fostering socioeconomic growth within the African continent.
What is the primary objective or research question of the study?
The study aims to determine how UNECA has shaped the AfCFTA and in what ways this free trade agreement can act as a catalyst for economic development and industrial transformation across Africa.
Which scientific methodology does the author employ?
The research methodology is based on a qualitative research paradigm, specifically utilizing text-based desk research to synthesize and interpret data from published academic and organizational literature.
What topics are covered in the main body of the work?
The main body covers the theoretical underpinnings (absolute advantage and new trade theory), the institutional role of UNECA, the operational objectives of AfCFTA, and an analysis of challenges such as regulatory barriers and conflict.
Which key terms characterize this research?
The work is characterized by terms such as AfCFTA, regional integration, trade liberalization, economic development, and African intra-trade.
How does the theory of absolute advantage apply to the African context addressed here?
The author adapts the theory to suggest that African nations could optimize their economic welfare by specializing in products they produce most efficiently and trading these within the continent, rather than focusing solely on overseas markets.
What role does UNECA specifically play in the AfCFTA process?
UNECA functions as a strategic coordinator, providing technical assistance, advocacy, and a platform for member states to define their cooperation and harmonize regulatory frameworks.
How is the issue of intracontinental conflict addressed in relation to trade?
The author notes that internal and regional conflicts serve as significant barriers to effective trade, arguing that economic integration initiatives like AfCFTA may struggle unless these political and security hurdles are adequately addressed.
What future recommendations does the paper suggest for AfCFTA?
The paper recommends that AfCFTA transition from a platform for diplomatic meetings to a more vigorous, practical organization that establishes clear benchmarks and exercises effective oversight to achieve rapid economic progress.
- Quote paper
- Byron Maforo (Author), 2022, Impact of the United Nations Economic Commission for Africa (UNECA) in shaping the African Continental Free Trade Area (AfCFTA), Munich, GRIN Verlag, https://www.grin.com/document/1584428
