The global economic crisis has revealed the folly of large U.S. budget and trade deficits, as well as of the strong dollar that makes them possible. If it is serious about recovery, the United States must balance the budget, stimulate private saving, and embrace a declining dollar.
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Re : Africa's Capitalist Revolution
I am glad you have seen to ventilate the positive story. SSA remains the last convergence Trade going and that convergence is set to accelerate via IT and Communications. It was a 'Dark' Continent [I have flown over it so many times] but a light is set to be switched. It started with the Mobile Phone and now the Internet is set to be a catalyst for a surge. To look in the rear view mirror is quite irrelevant because we are at the very cusp of the Inflexion point.
You quite properly averred to the Stock Markets. They exhibited very FAT TAILS in the recent synchronised Global Equity market pull back but that was a function of Fast Money Accounts seeking to exit at simply any price. That process is now complete and Investors need to appreciate this is an outstanding risk adjusted entry point.
Near term we are facing an unprecedented near term landscape. Global economies have slowed sharply and far from being totally uncorrelated some Economies have found themselves severely impacted;
Lower Remittances as Host Countries shed Jobs.
Tourism.
Lower Prices for our Commodities.
To date we have interfaced with the Outside World in a relatively naive and unsophisticated manner. I am certain Nigeria did not lock into higher Crude Prices but remained completely dependent on the Spot Price. I am sure many Countries have sub contracted this to Corporates who have in many ways been Rentiers on the Continent. It is also a fact that
those Countries with Crude and hard commodity assets have witnessed extremely poor trickledown. The Monolithic State has allowed those Few who control the levers of the State to snaffle up an egregious share.
Africa needs to gets its Farming right. Look at Malawi. So many Africans are Small Holders.
You get Agriculture right, your People do not go hungry and you have the most effective trickledown. Given the demographic skew and the numbers of Folk in the Cities, not getting Food right strikes me as a shockingly poor Political trade.
The other extremely interesting dynamic is the Political dynamic. Where Information travelled at a Pedestrian speed today the Phone is ubiquitious. Many Governments have the look of Khamenei's Iran and one is left wondering whether they have any clue as to how to meet the needs of the People in the new c21st. That strikes me as a risk. It will play out well in the medium term but in the near term it might be tricky.
For Economists and Investors, the absolute low base effect is plain compelling. We are entering an age where the most valuable capital is Intellectual Capital and there are 900m Souls here and those who own the connection Pipe are set to reap outstanding rewards.
It will be a c21st Industrial Revolution on steroids.
Aly-Khan Satchu
Twitter alykhansatchu
http://www.rich.co.ke/rctools/wrapup.php
Re : Africa's Capitalist Revolution
I don't see how only free market capitalism will help African countries in the long run. Many of the countries within the continent have numerous resources. Such resources should be used to help people within their respective countries. Obviously, for most, that is not going on at the moment
The notion that some of the war-ridden countries will eventually become stable and allow their population to sustain themselves through the use of resources sounds idealistic, yes, but as the article points out, some measures of democratic and economic reform will help.
Relying only on one system will most likely complicate the situation further, and will allow for the exploitation of resources that could be helping Africans more then western corporations. Capitalism isn't a bad thing when used with other economic models to ensure the fair distribution of resources.
But, however, it is a bad thing when set loose, as this article apparently recommends. I don't see the difference between Neocolonialism and the so called "capitalist revolution".
Africa’s Capitalist Vulnerability
Kapstein celebrates Africa’s greater utilization of capitalism and credits it with generating expanded growth and democratization. He then laments how this capitalism has made Africa vulnerable to the world economic slowdown because Africa has become more integrated with U.S. and E.U. economies which may no longer be able or willing to contribute to Africa’s prosperity. Kapstein details how tenuous Africa’s hold is on its few examples of democracy and entrepreneurial success.
He ignores the obvious conclusion that Africa might want to consider an alternate economic system that would reduce or eliminate its being subject to the whims of the West and might produce a more solid democratic foundation – like for example socialism. Instead, he offers faint hope that Obama, because of his African ancestry, will not turn his back on Africa and will advocate for continued aid and economic engagement.
Africa’s Capitalist Vulnerability
Kapstein celebrates Africa’s greater utilization of capitalism and credits it with generating expanded growth and democratization. He then laments how this capitalism has made Africa vulnerable to the world economic slowdown because Africa has become more integrated with U.S. and E.U. economies which may no longer be able or willing to contribute to Africa’s prosperity. Kapstein details how tenuous Africa’s hold is on its few examples of democracy and entrepreneurial success.
He ignores the obvious conclusion that Africa might want to consider an alternate economic system that would reduce or eliminate its being subject to the whims of the West and might produce a more solid democratic foundation – like for example socialism. Instead, he offers faint hope that Obama, because of his African ancestry, will not turn his back on Africa and will advocate for continued aid and economic engagement.