African Economic Outlook 2015/OECD

The financial landscape has changed considerably in Africa since 2000. Private external flows in the form of investment and remittances now drive growth in external finance, according to the African Economic Outlook 2015. Foreign investments are expected to reach US$73.5 billion in 2015, underpinned by increasing greenfield investment from China, India and South Africa.

OECD

Since democracy was restored in 1999, Nigeria has engaged in ambitious reforms towards greater market liberalisation and economic openness. By far the most populous country of the continent–with more than 170 million people Nigeria is home to 18% of Africa’s population–it now claims to be the largest
economy in Africa, with an estimated nominal GDP of US$510 billion. Its GDP growth has never been below 5% since 2003, and since 2009, it has become the preferred destination for foreign direct investment (FDI) in Africa, ahead of South Africa.

Aly Song/Reuters

Investment has been hit hard by the crisis, yet is vital for a sustainable recovery and future well-being. In 2008-14 private investment ran at some 25% below pre-crisis forecasts. From infrastructure and green energy to improving education and health care, all countries depend on investment in physical and human capital.

Mark Rutte, Prime Minister of the Netherlands and Chair of the 2015 Ministerial Council Meeting ©Nia Palli

The timing could not be better. Growth prospects have improved, but there is still a lot of work to be done. Investment has been hit especially hard since the crisis started and has yet to recover. At the same time, the need for investment has never been greater, since we are facing serious challenges on issues like climate, infrastructure, water, the digital economy and human capital. Luckily, the circumstances are quite favourable to investment. We need a common effort from all players, public and private, to unlock investment for sustainable growth and jobs. The OECD Forum, which precedes the ministerial meeting, provides a perfect opportunity to initiate this approach. In advanced economies, private-sector investment has declined by 25% on average compared with pre-crisis forecasts. 

Although the worst is behind us and the global economy is gradually recovering, it is doing so at a much slower pace than in past cycles. Plenty of work and concerted effort will be needed to set us on a robust, inclusive growth path. On the economic front, the hesitant recovery has yet to translate into more and better jobs. There are simply too many people unemployed, on precarious contracts or quitting the workforce. In addition, emerging markets have started to lose steam, dampening world trade and investment. None of this helps prospects in developing countries and makes it harder for all of us to address urgent challenges, such as climate change, rising inequalities, disease and poverty. Low interest rates, cheaper oil prices and more favourable exchange rates may bring some relief, particularly in Europe, but a pickup in the headline numbers should not give room to complacency. People expect more than a temporary fix, and rightly demand a clear path to a brighter future.

A salmon would find it a hardscrabble life in the waterways of the Middle East and North Africa (MENA). Not because of dried riverbeds, overfishing or pollution, but because the region has more dams per cubic metre of water than any other place on earth.

Arab Innovative Teachers Forum, Morocco, April 2008 ©Rafael Marchante/REUTERS

Hana Barqawi realised her dream of opening her own children's furniture store two years ago in the Jordanian capital of Amman. Ms Barqawi is part of a wave of female entrepreneurs that has swept across the Middle East and North Africa area over the past decade or more. 

©Elyyo /Wikicommons

China’s economy is the second largest in the world, but can its currency, renminbi, compete with the US dollar as a global currency?

A little over a year ago the OECD and the World Trade Organization (WTO) launched Trade in Value-Added (TiVA), a new database on trade measured in value-added terms. The evidence that we have unlocked using TiVA has begun to revolutionise our understanding of what is happening in global trade, investment and production. Take global value chains (GVCs), which are a dominant feature of the global economy today. Goods produced in the European Union (EU) and exported to the United States may include raw materials from China and Malaysia, and use services from Japan and India. Goods and services are no longer produced by a firm in one country and sold to consumers in another; production is fragmented around the world, while components cross borders multiple times as value is added to output along the way.

In a recent article in the OECD Observer, Vézina and Melin describe how online platforms lower trade barriers and enable micro to small and medium-sized enterprises (SME) to build multinational operations. The contrast with traditional trade is stark, where exporting is normally confined to the largest corporations. Technology is reshaping the international trading landscape, and the changes are real and quantifiable. This is sharpening the role international trade can play in promoting sustainable development.

Small and medium-sized enterprises refers to firms of up to 250 workers each, but did you know that these so-called SMEs make up some 90% of employment in the OECD area? 

©Francois Lenoir/REUTERS

Talks to free up more trade and investment between the European Union and the United States got under way early in 2013. A good agreement in 2014 would be a positive thing, and not just for the EU and the US. Here is why. 

Click to enlarge

Case studies of specific products, particularly in the electronics industry, show that value creation along a global value chain tends to be unevenly distributed among activities. The highest value creation is found in upstream activities, such as the development of a new concept, research and development (R&D) and the manufacturing of key components. But it is also found in downstream activities, such as marketing, branding and customer service.

Though China has recently been a dominant force in trade and investment on the African continent, India and Korea are fast becoming serious challengers. How can African countries make more of these evolving trends? And what role can the traditional partners in the OECD area play?

©Christian Charisius/Reuters

The world economy has become more complex, with global value chains and myriad interconnections among producers across continents. This has an impact on trade and investment policy, as well as on development, and exposes the shortcomings of the usual way of measuring trade.

Will China’s growth slowdown last and what does it mean for the rest of us?

©UK Government Service

The new OECD/WTO database on trade in value-added is not just about changing the numbers, but policymakers’ approaches too. It gives trade fresh importance, and a place high on the agenda of the UK’s G8 presidency. 

©Charles Platiau/Reuters

Getting information and communications “right” has always been a necessary condition for delivering sound policy advice; today, there are many more possibilities to generate and to share evidence-based policy insights, but there are also many more competing messages and messengers. Here are two examples.

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