The Economic Bloc Editorial

The world’s largest economy, by conventional wisdom standards, is the United States. Sitting astride an annual Gross Domestic Product of over US$ 15 trillion, the Americans are the people to be reckoned with. Their currency, the dollar, is the one everything is pegged to; the world’s largest financial markets and the requisite products are largely traded either in New York or Chicago; California is actually ranked as a world economy on its own and basically, the Texas or Massachusetts economies can, effectively be juxtaposed to those of either Spain or Turkey. Taken for what it is, the U.S. could be termed as an economic and political union. But in reality, another entity – built along amazingly similar lines – is greater than the world’s reigning hegemony: Made up of 27 European states that operate in a hybrid of supranational institutions and negotiated agreements, the European Union has over 500 million people – the US has a little over 300 – and by 2010 had an economy of over US$ 16 trillion; about 20% of global GDP in purchasing power parity.

This little civics lesson is meant to prepare you to look at other economic blocs such as the East African Cooperation [EAC]; the Caribbean Community [CARICOM], Common Market of East and Southern Africa [COMESA] and Economic Cooperation of West African States [ECOWAS]. For each of these, there’s no doubt that their founders meant to mirror the success of the former European Economic Commission and now, the European Union with the potential of acceding to the example of a U.S. like union [in Africa’s case, the recently deceased Muammar Qaddafi was pushing for the Africa Union]. In simple terms, there is power in numbers. Just like having access to 500 million people is better than entrée to 300 million; the population of Haiti, for example, is nothing compared to the over 15 million people of CARICOM.

In relative terms, although Uganda has one of the world’s fastest growing populations, the country benefits even more from cheaper goods and more variety of products and services if entrepreneurs from around the world can have access to the markets of Burundi, Rwanda, Uganda, Kenya and Tanzania. One would manufacture and market goods to a region with about 100 million people [still less than those in Nigeria] and if there are not too many complications in converting currencies – like the Ugandan shilling into the Burundi or Rwanda franc – then business could be brisk, with all things held constant. A common market or even a customs union is more beneficial on the ground than it even appears on paper. Having a common language, a common currency and the capacity to generate profit in areas where one finds need is the center of America’s capitalist system. South Dakota, for instance, could be like Burundi. It may not have too many skilled laborers and that is why a businessman would install the factor in Illinois [which in this case would be Rwanda]. By producing goods that he could supply to Burundi, Rwanda, Uganda, Kenya and Tanzania, that enterprise will be doing exactly what Johnson and Johnson does in marketing across the United States. It is what a German company like Siemens does. If those mobile phones it produces can find their way into the British, American or even African markets, then that is all well and good.

But if one wants to see the benefits of economic blocs, they should not look further than the Association of South East Asian Nations. To find out the power of these countries, you just need to open up the back of a computer. The components are either made in China or assembled in Thailand or vice versa. Even Burma, the Philippines and Vietnam are getting in on the action. Malaysia and Singapore are roaring just like China and India are – and former superpowers like Russia have no choice but to stand on the side and envy the level of economic activity.

Why can’t CARICOM or ECOWAS do this? It does not make sense, for example, for a carton of milk to cost more than a dollar in Bermuda. Those who have been there on holiday will attest to how expensive things are there. Yes … We understand that tourism is the bread and butter of the islands – but why should this be so? Is this their unique selling proposition or is this an aspect of falling into a comfort zone? This editorial believes that, just like the case of African economic blocs, there is more to the islands than meets the eye. Not enough has been done to try and squeeze as much out of these markets. Trade should be booming between Angola and Zambia. The problems in Zimbabwe should not be as debilitating as the they are for business between Mozambique and Lesotho. There should be a bigger interest in ensuring that there is infrastructure to extract resources and also to distribute them. The poorer countries ought to learn from their former colonial masters. If these people could forge roads to go get the raw materials they wanted – to heights of devastating efficiency – surely poor countries can ensure inroads to take advantage of bigger markets. It cannot be that hard to see the benefit. Size does, after all, matter.

Dennis Matanda
Editor