THEME: “LOOKING AHEAD: IMPLICATIONS OF THE GLOBAL ECONOMIC CRISIS ON THE TRADE ACTIVITY PATH FOR DEVELOPING COUNTRIES”
The Fourth trapca Annual Conference will be held from the 26th to the 27th November 2009 in Arusha, Tanzania. The Conference is coming at a time when the world is experiencing the worst financial and economic crisis since the recession of the 1930s. Under the theme: “Looking Ahead: Implications of the Global Financial/Economic Crisis on the Trade Activity Path for Developing Countries” the Conference examines the global financial/economic crisis with a view to propose how the crisis should be approached by policy makers in developing countries, especially African and Least Developed Countries (LDCs).
The financial crisis engulfed the world economy in levels unprecedented in recent history. Much as it is currently more pronounced in the developed world, low income and least developing countries are already feeling the adverse effects. The global economic meltdown triggered by the financial crisis poses wide reaching consequences on the already fragile economics of most of the developing countries, and in particular Sub-Saharan Africa. The ability of these countries to harness the trade opportunities and gains hitherto made on trade and development is seriously threatened. The economy wide implications and particularly the ability of the low income and LDCs to cope and realize their expectations in the global trading regime are less obvious and require the full attention of policy makers. The poorest countries for example need substantial help if they are to take on new WTO commitments. Critical among these resources are appropriate technical assistance and capacity building aid. The current crisis implies a likely contraction of these critical resources as the developed countries redirect their limited resources to the recession generated domestic problems.
The 2009 Conference re-examines the global economic crisis with a view to bring out their relationships with developing country financial markets, commodity markets and productive capacity and to propose how the crisis should be approached by policy makers in African and LDCs.
In the medium to long run, it can be expected that foreign investment in Africa will reduce as the credit squeeze takes hold. Furthermore, foreign aid, which is important for a number of African countries, is likely to decline with gloomy implications for attainment of the Millennium Development Goals. This is likely to trigger increasing pressure for debt repayment as the crisis gets deeper and the international institutions and western banks that have lent money to Africa need to shore up their reserves. This could cause further cuts in social services such as health and education, which have already been affected due to crises and policies from previous eras.
The degree of dependence on international trade by developing countries has been greatly on the rise. Dependence on international trade appears to be highly correlated with exposure to international markets and therefore exposure to the financial/economic crisis. Developing countries in general and SSA in particular are highly dependent on commodity exports for their foreign exchange earnings. This is largely supplemented by Foreign Direct Investment inflows and donor aid. The current economic crisis poses significant threats to all these channels of foreign exchange earnings. These threats in turn translate into rising unemployment, falling family incomes and adverse social outcomes.
The main concerns arising from these phenomena include declining international demand, falling commodity prices and demand driven drops in exports of developing countries. This will be exacerbated by declining remittances, deficit of credit and trade finance, capital outflows and contracting investment. It is imperative to assess the effects of the crisis on merchandise trade flows, goods sectors affected, effects on bilateral and regional trade flows, impact on trade finance, effects on commodity prices, effects on services trade and service sectors, and impact on FDI flows. Critical analysis of the implications of these issues is important to inform policy makers of the gravity of the concerns particularly for SSA countries.
From a policy perspective, the assessment of the transmission effects through the main trade channels highlighted above to employment, family incomes, health outcomes and capacity building initiatives that have significant donor support is important.
The impact of the global economic crisis is one aspect of the concern. The other aspect is the implications of the responses of developed countries to the crisis. The policy responses of the developed countries exhibit an inherent heightened protection threat. There is an increasing implementation of measures to safeguard domestic industries and employment, reduction of imports, increasing the tariffs within the bindings, providing WTO allowed subsidies, applying non-tariff measures such as restrictive health, safety and standards. These responses are likely to alter the competition environment to the disadvantage of developing countries.
Analytical discussions are critically needed that cover options for mitigating impending protectionism as countries generate responses to the crisis, support options for resuscitating the drying trade finance, options for equilibrating international supply and demand in the commodity market at both national and multilateral levels. Policymakers are also yearning for options for public investment programmes that facilitate inward foreign investment in the face of diminishing FDI flows. Likewise, options for enhancing south-south cooperation to mitigate the declining developed country market demand are imperative. In addition, options that focus on sustaining trade performance through improved productivity and competitiveness at the national level, and options that focus on long-term opportunities should constitute key discussion issues.
It is in the context of the above highlights that the fourth annual trapca conference is organized.
Objectives & Key Issues
Against the above background and context, the objectives of the Fourth trapca Annual Conference will be to:
Enhance, through presentations and interaction, the understanding among trade practitioners and policy makers, of the nature and extent of the global financial/economic crisis and its implications to developing countries, particularly those in Sub-Saharan Africa.
Examine the models and options for mitigating the adverse effects of the global financial/economic crisis on trade and development performance of developing countries, especially those in Sub-Saharan Africa.Suggest the trade activity pathways available to developing countries (particularly those in Sub-Saharan Africa), in light of the global financial/economic crisis.
Examining the nature, extent and ramifications of the global financial/economic crisis in the context of trade.
Identification of the effects of the global financial/economic downturn on the economies of the developing countries, especially those in Sub-Saharan Africa.
Establishing the trade-related effects of the global financial/economic crisis.
Methods, tools and policy options for mitigating the adverse effects of the global financial/economic crisis on the developing countries, particularly those in Sub-Saharan Africa.