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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