Economic Commission For Afric A Perspective Of Foreign Direct Investment ( Fdi ) Inflows And Intra Trade Relations
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Economic commission for Africa: A perspective of foreign direct investment (FDI) inflows and intra-trade relations
Abraham Rukevwe Idogho
Summary of EC mandate
Primarily, the Economic commission for Africa (EC) pursue an “integrated economic agenda”, which calls for free trade and custom union agreements among the various trading blocs in Africa, and it also provides platforms for global demand for African exports, attract inflows of foreign direct investments (FDI), and negotiate favourable trade agreements with foreign equals. However, like most institutions, the EC responds to internal and external forces that can positively or negatively affect its operations. This paper attempts to present some of these…show more content… These events are highlighted below, and are discussed in the analysis and synopsis sections of the following sub heading.
a) FDI outflows from developing Asia
b) Rising operational cost in China
c) Latin America and Caribbean becoming “hot spots”
FDI outflows from developing Asia
With globalization and technological advancements comes offshoring – the movement of services or manufacturing to another country in an attempt to take advantage of favorable business conditions in that country. As a result of offshoring, the last decade saw significant amount of capital flight to developing Asia. Skilled work force, availability of labour, low-wages, and easy access to supplies, were some of the factors influencing the move of FDI to the region. Although recent economic data suggest that developing Asia holds 52% of global FDI (UNCTAD 2014), the region’s FDI inflow has been declining since 2011 (UN 2014). A significant cause of this FDI decline is from West Asia with -20% from 2012 (Asia top the world in FDI 2014). So, the economic ill of developing Asia is whose gain?
Rising operational cost in china: That said, recent reports suggest that China, the biggest economy with 1/3rd of total FDI to developing Asia is facing an era of “outward capital flight”, as major companies are moving their manufacturing and service operations out of the country (economist 2014). Multinationals have seen their profits suffer as a result of high