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UNECA- (The United Nations Economic Commission for Africa)
1. Compare and contrast the balance of trade and balance of payment for three nations in the UNECA(The United Nations Economic Commission for Africa).
The three member nations selected are South Africa, Kenya and Egypt. Listed are the balance of trade
and balance of payment for each of these three nations:
South Africa:
The financial account of the balance of payments registered a larger surplus in 2005 than in
2004. A large foreign direct investment transaction in the banking sector contributed significantly towards
this outcome and also helped to stimulate interest in investment in South Africa generally. Portfolio
investment into South Africa also continued in 2005 and mainly involved investment in shares. The
continued surplus on the financial account in respect of the final quarter of 2005 reflected, among other
things, further direct investment activity as well as flows related to the domestic private-banking sector.
During each of the quarters of 2005 the overall balance of payments registered a surplus.
(http://www.reservebank.co.za)
USA always had a negative balance of trade with South Africa in the last few years, i.e., it imports
more as compared to Exports from South Africa.
Egypt:
According to a recent statement of the Central Bank of Egypt (CBE), Egypt's balance of
payments realized, during Fiscal Year (FY) 2005/06, an overall surplus of US$ 3.3 billion (against an
overall surplus of US$ 4.5 billion during FY 2004/05). This resulted in an equivalent rise in the foreign
reserve assets with the CBE. The overall BOP surplus was an outcome of the US$ 1.8 billion surplus on
the current account and the rise in the net inflows of the capital and financial account to US$ 3.5 billion
during FY 2005/06. The current account surplus was ascribed to the services surplus and the increase in
unrequited transfers (net) on the one hand, and the higher trade deficit on the other. The trade deficit
reached US$ 12.0 billion (against US$ 10.4 billion during FY 2004/05) as a result of the increase in
merchandize imports to US$ 30.4 billion (of which imports of investment and intermediate goods
represented 53.6% ; a matter that will have a positive impact on investment and growth in the future).
(http://www.ahkmena.com)
The United States has a positive trade balance with Egypt in the last few years.
Kenya:
The overall balance of payments improved to a surplus of US$ 770 million during the year to
September 2006. This improvement resulted from increased net foreign private financial inflows which
more than offset widening current account deficit. (http://www.centralbank.go.ke)
The United States has a positive trade balance with Kenya in the last three years.
2. Describe the comparative advantage(s) of these selected regional trading blocs.
South Africa:
South Africa is the economic powerhouse of Africa, with a gross domestic product (GDP) four
times that of its southern African neighbors and comprising around 25% of the entire continent's GDP.
The country leads the continent in industrial output (40% of total output) and mineral production (45%)
and generates most of Africa's electricity (over 50%).
Its major strengths include its physical and economic infrastructure, natural mineral and metal
resources, a growing manufacturing sector, and strong growth potential in the tourism, higher valueadded manufacturing and service industries. (http://www.southafrica.info)
South Africa is one of the most sophisticated and promising emerging markets in the world,
offering a unique combination of highly developed first world economic infrastructure with a vibrant
emerging market economy. It is also one of the most advanced and productive economies in Africa.
According to South Africa Business Information web pages here are just some of the reasons for
doing business in South Africa:

Sound economic policies

Favorable legal and business environment

World-class infrastructure

Access to markets

Gateway to Africa

Trade reform, free trade agreements

Cost of doing business in South Africa

Ease of doing business in South Africa

Industrial capability, cutting-edge technology

Competitiveness (http://www.southafrica.info)
Egypt:
Since the beginning of 2005, Egypt’s economy has improved considerably due mainly to
a reformist government that was appointed in the summer of 2004. The reformers have successfully
taken several steps including floatation of the Egyptian pound, elimination of the foreign exchange
shortages along with the black market, reduction in tariffs and simplification of the tariff structure by
cutting the number of rates and categories, and the reduction of the amount of red tape necessary to
conduct business, etc. The economy grew at a 5.1% rate in 2005 and the new measures have inspired a
wave of enthusiasm in the business community.
Egypt has an advantage over European, and even other Arab countries, in terms of manpower
and the cost of land, which encourages investors to establish a manufacturing presence in the country.
Egypt also has the advantage of being a signatory to two regional trade agreements; the Arab Free Trade
Area Agreement (AFTAA), and the Common Market for Eastern and Southern Africa (COMESA), placing
it in an ideal position to reap the benefits of both initiatives. (http://www.bilaterals.org)
Kenya:
Kenya’s notable competitive advantages include the efficiency of its corporate boards, the quality
of its air transport infrastructure, the quality of its education system, as well as its scientific research
institutions, and the volume of foreign direct investment. (http://www.afrika.no)
Regional trade growth within COMESA and East Africa has benefited Kenya in particular, and
has enabled the more agile and competitive in the manufacturing sector to take advantage. It has also
resulted in a continued thinning-out process in manufacturing. (http://allafrica.com)
3. Identify barriers to trade in these selected regional trading blocs.
South Africa:
A recent report says that Report says South Africa’s “gross inequalities, high unemployment,
major skill shortages and a striking dichotomy between first and third world characteristics” were some of
the factors that reduced the country’s competitiveness. The Report found that an inadequately educated
workforce, restrictive labor regulations and crime were the top three factors affecting business in South
Africa. (http://www.afrika.no)
Egypt:
Although the reformers have developed considerable momentum, red tape remains a business
impediment in Egypt, including a multiplicity of regulations and regulatory agencies, delays in clearing
goods through customs, arbitrary decision-making, high market entry transaction costs, and a generally
unresponsive commercial court system.
Also, the route-to-market into Egypt for foreign vendors’ products remains significantly constricted
due to import trade tariffs that are among the highest in the Middle East.
As a result of these tariffs, some vendors have had to adjust their strategies for dealing with the
country. (http://www.bilaterals.org)
Kenya:
They key disadvantages or barriers to trade in Kenya are corruption, followed by inadequate
supply of infrastructure, access to financing and tax rates. (http://www.afrika.no)
4. Identify the major currencies in these selected regional trading blocs.

South Africa: Rand

Kenya: Kenyan Shilling

Egypt: Egyptian Pound
CARICOM- (The Caribbean Community and Common Market)
1. Compare and contrast the balance of trade and balance of payment for three nations in CARICOM(The Caribbean Community and Common Market).
The three member nations selected are Haiti, Trinidad and Tobago, and Guyana. Listed are the
balance of trade and balance of payment for each of these three nations.
Haiti:
Haiti's economy has been quite weak as compared to other nations in the CARICOM. It has
continuously suffered from negative balance of trade. USA has a positive balance of trade with Haiti, i.e.,
USA's exports to Haiti exceed its imports from Haiti.
Trinidad & Tobago:
In 2004, Trinidad and Tobago recorded a trade surplus of US$1,517 million. In the first quarter of
2005 it was US$875 million, due mainly to a 56.4% increase in exports of mineral products. Overall, trade
balance has been fairly positive in the recent years. (http://trinidad.usembassy.gov)
USA has a negative balance of trade with Trinidad & Tobago in the last few years.
Guyana:
Guyana's Balance of Trade improved significantly in 2004 as compared to 2003.
The United States has a positive balance of trade with Guyana in the last three years.
Out of these three countries, Trinidad & Tobago seems to have the strongest balance of
payments position.
2. Describe the comparative advantage(s) of these selected regional trading blocs.
Haiti:
The Haitian Government is committed to a free-market system. It guarantees to all persons and
corporations involved in business in the country the following rights and privileges:

Free disposal of their properties;

Freedom to hire and fire in accordance with the provisions of the Labor Code;

Freedom to engage in commercial and industrial activities within the limitations of the
Constitution and the Commercial Regulations Code;

Protection of trademarks, patents, labels, and all other forms of intellectual property rights;

Minimal intervention by the State in the market: Government regulated prices are reduced for
five products and services including: oil, energy, telecommunications, transportation, and the
minimum wage.
Furthermore, Haiti has signed treaties and conventions with many industrialized countries, in
order to reciprocally protect foreign investments: with the United States in 1953 and 1983; France in 1973
and 1984; Germany in 1975, and Canada in 1980. Products originating from Haiti have preferential
access on most markets in the industrialized countries. (http://www.haiti.org)
Trinidad & Tobago:
Although all significant barriers have been removed in the country, some of the sensitive areas for
conducting business are considered problematic and include:

crime and theft;

inefficient government bureaucracy;

poor work ethic in the national work force;

inadequate infrastructure and corruption (http://cbser.com)
In the past, there has tended to be a bureaucratic approach in the public sector which sees its
role as procedural rather than facilitative. A lack of transparency in its operations can sometimes make it
difficult to determine the criteria adopted in the decision making process. However the present
Government is actively seeking to sensitize the public service to the need to be more service-oriented.
Withholding tax is imposed on the profits of branches of non-resident companies (after making deductions
for corporation tax) which are not re-invested (other than in re-placement of fixed assets) to the
satisfaction of the Revenue. Stamp duties on property transfers and charges to secure loans are very
substantial. (http://www.amchamtt.com)
Trinidad & Tobago's natural resources, English-language workforce, good investment climate,
stable democratic political system and strategic location off the coast of South America are of interest to
investors. Rule of law and respect for contracts are a major part of business transactions. Although the
Trinidad & Tobago market is small, it has strong political, economic and cultural ties with the United
States that give U.S. goods and service a competitive advantage, allowing some of them to dominate the
market. (http://trinidad.usembassy.gov)
Guyana:
Guyana provides a number of advantages to companies interested in establishing or expanding
manufacturing operations:

Competitive cost of labor – Guyana has one of the lowest manufacturing wage rates in the
Caribbean and Central America. The workforce is highly literate and trainable.

Low ‘time to market’ / lead-time – Guyana’s close proximity to the U.S. market gives it a
shorter time-to-market vis-à-vis countries such as China and India. This lead-time advantage
is useful for companies wishing to find suppliers to meet their just-in-time delivery
requirements.

Access to local inputs – Guyana’s natural resources provide manufacturers in specific sectors
with an abundance of locally available and affordable inputs for the food processing, valueadded forest products and construction materials sectors.

Availability of industrial parks – In an effort to attract manufacturing investments, the
Government of Guyana has invested in a number of industrial parks with installed
infrastructure and investment concessions for materials, vehicles, plant and machinery.
Guyana’s incentive regime also provides a number of advantages. This includes a tax rebate on
profits from exports, no duties on imported inputs and no complex duty-drawback scheme, and a waiver
of consumption tax for locally manufactured goods in the local market. (http://www.goinvest.gov.gy)
3. Identify barriers to trade in these selected regional trading blocs.
Haiti:
Haiti’s economy remains the least developed in the western hemisphere. The potential for
economic growth is stymied by political instability, lack of infrastructure, and severe deforestation and soil
erosion. Income distribution is highly skewed, and poverty is widespread (about 80 percent of the
population lives below the poverty line). Job opportunities are extremely limited. Only one in fifty Haitians
has a steady wage-earning job. Rising poverty in Haiti is directly linked to long periods of economic
stagnation. Additionally, the country has had the highest rate of inflation among all Caribbean countries.
Lack of a stable and trustworthy banking system has impeded Haiti’s economic development.
Banks in Haiti have collapsed on a regular basis. In addition to high unemployment, Haiti also lacks the
skilled labor necessary to expand its economy. A brain drain has occurred, and many of the country’s
skilled workers leave Haiti for better economic opportunities abroad.
Corruption is a major problem and a serious impediment to doing business in Haiti. Haiti is widely
perceived as one of the most corrupt countries in the world. (http://lcweb2.loc.gov)
Guyana:
Despite ongoing progress, Guyana faces problems common in many developing countries. The
country’s economic infrastructure—transport, energy, telecommunications and access to finance—is still
developing, and this impacts profitability. The emigration of professionals often reduces the availability of
management and technical skills critical for a competitive economy. Limited institutional capacity affects
the implementation of legislation, policies and administrative procedures. Levels of crime, though
comparable to those in other countries in the region, periodically cause concern.
(http://www.goinvest.gov.gy)
4. Identify the major currencies in these selected regional trading blocs.

Haiti: Gourde

Trinidad & Tobago: Trinidad and Tobago Dollar

Guyana: Guyana Dollar
Resources
Internet Citation:
http://www.reservebank.co.za/SADC/SADC.nsf/LADV/8BA210E465681920422571E00044E482/$
File/South+Africa.pdf.
Internet Citation: http://www.ahkmena.com/details_front.asp?News=1197
Internet Citation: http://www.centralbank.go.ke/downloads/publications/mer/specifics/bop.pdf.
Internet Citation: http://www.southafrica.info/doing_business/economy/econoverview.htm
Internet Citation: http://www.bilaterals.org/article.php3?id_article=4877
Internet Citation: www.buyusa.gov/egypt/en/egypt_country_commercial_guide.pdf
Internet Citation: http://www.afrika.no/Detailed/13219.html
Internet Citation: http://allafrica.com/stories/200701100828.html
Internet Citation:
http://trinidad.usembassy.gov/uploads/images/bLR3mH7MwdrEvCke0jB6Tw/CCG2006.pdf
Internet Citation: http://www.haiti.org/business&opportunity/bus_guide_investing.htm
Internet Citation: http://cbser.com/articles/2006/caribbean_manufacturing.htm
Internet Citation: http://www.amchamtt.com/investguide/placetoinvest.htm
Internet Citation: http://www.goinvest.gov.gy/manufacturing.html
Internet Citation: http://lcweb2.loc.gov/frd/cs/profiles/Haiti.pdf.
Internet Citation: http://www.state.gov/e/eb/ifd/2005/42043.htm
Internet Citation: http://www.goinvest.gov.gy/investment_guide.html