The Imbalance Of Global Economy And The Impact Of COVID-19

BY

ABBATI BAKO

The political economy experts assert that there exists an imbalance of global economy. There are 7.8 billion human beings on the planet earth, but 80% do not have viable economy; whether as individuals or collectively as nations, especially the southern part of the globe. There has been a huge difference (economically) between the Northern part of the world that of Southern part of the world. Economy is the live wire of human life. Human family must look for economy to sustain life. Food, clothing, shelter, health care, education, security and so on. Had it been that African nations possess standard health care system the issue of Covid-19 pandemic would have been easier to handle.

The question that has been in the mind of political economy experts whether are there any laws which insist that the world development and stronger economy has to come from the northern part of
the world to southern part of the world? Or is there any gravitational pull that insist that development has to come from the northern part to the southern part of the world? For example, experts remarked that 80% of world economies belong to G20 (USA, CHINA, JAPAN, GERMANY, FRANCE,BRAZIL, BRITAIN,
RUSSIA, CANADA, ITALY, TURKEY, MEXICO, ARGENTINA, AUSTRALIA, SAUDI ARABIA, SOUTH KOREA, SOUTH AFRICA, INDIA, INDONESIA AND EU). nations with only 58% of the world population and 25%
of the world economy belong to EU (27) nations too. Then the rest of the 20% belong to about 200 nations or more. The gap is too huge and global leaders must look into the issue critically.

The estimated world capital of $90 trillion (according to Friedman $57t)
or 60 trillion pounds or $360 billion “derivatives or repackage securities and other financial assets play an important role in international finance and they have contributed to the complexity and the instability of international finance (RGilpin) It is obvious that international finance has a profound impact on the
global economy (R.Gilpin, 2001).

It is estimated, for example, that Africa south of the Sahara accounted for only about 1 percent of total world trade in the early 1990s. Second example is the FDI that has been in existence among nations of the world for hundreds of years; but in the early 1990s Singapore benefited more from FDI than the entire African continent.

“It should be mention here that the share of FDI flowing into Africa has not been even in all countries. Egypt and Nigeria have received a lion’s share of FDI flowing into
the region in term of absolute size. The share has however declined from more than 67% in 1983-87 to 54 percent in 1988-1992 and 38 percent in 1993-1997.

Looking into figure for FDI inflow into Africa as a whole it is clear that its global share is by all standards very low.This share needs to be increased given the potential positive roles that FDI can play in the continent’s development” (Tatah Mentan, 2007). The third example is
the replica of total amount of daily trade’s world-over. It has been estimated that the sum of $1.08 trillion (Belis/Owen, 2008 of shares has been traded every 24 hours
globally (but now maybe around $9t).

But one may ask; how much does the developing nations (especially
nations of the southern part of the world) are contributing and benefiting?
George Friedman remarked that “Americans constitute about 4 percent of world’s
population but produced about 26 percent of all goods and services. In 2007 U.S gross domestic product was about $14 trillion, compared to the world’s GDP of
$57 trillion-about 26 percent of the world economic activity takes place in the United States. The American economy is so huge that it is larger than the economies of the next four countries combined: Japan, Germany, China and the
United Kingdom.”

At this point those African leaders and indeed all leaders of
south-south world should take measures that will ensure the transfer of technology to the southern part of the world; especially Africa where the economic imbalance is too huge due to lack of manufacturing and sophisticated-scientific and technological products that has the capacity of boosting the economy of the region. At this juncture, one may need to ask; whether 54 African nations’ GDP can reach as huge as 1 trillion Dollars? South Africa is the greatest economy in Africa then followed by Nigeria and Egypt.

The total annual budget of South Africa is about $110 billion and Nigeria’s own between $30- 35 billion annually; compared to USA’s about $5 trillion annual budget. This writing doubt that if the annual GDP and budget of the whole 54 African nations will be as huge as $1 trillion; despite the huge resources own by African nations.

This writing subscribed to the opinion of Paul Collier of the Oxford
University, UK that four key issues restricted African societies to develop; bad governance, trapped resources, conflicts and land-lock. In this regard one may referred to Nuhu Ribado’s report on NNPC that no one knows the exact how
many barrel of oil are being explore daily in Nigeria? What of other resources in other African continent? And again, it has been assert that 80% of uranium uses by Germany for its nuclear electricity energy are source from Niger Republic. But Germany will abandon the use of nuclear capacity to generate electricity rather wind and other sources.

In view of that the world economic policy makers has to re-consider the economic prescription of
south-south nations particularly “Washington Consensus”.

This writing understand that even last five years people were queuing in Malawi to buy maize to feed their
families; talk-less of technological and scientific advancement or economic viability. The world economic imbalance is the causative agent of terrorism, conflict, war, criminality, corruption and bad leadership.

Abbati Bako, Political Strategy Consultant International Political Resource Center, IPRC, NIGERIA

Covid 19 update by the Spectacle

423 new cases in Nigeria

11th August, 2020

Lagos-117

FCT-40

Ondo-35

Rivers-28

Osun-24

Benue-21

Abia-19

Ogun-19

Ebonyi-18

Delta-17

Kwara-17

Kaduna-15

Anambra-14

Ekiti-11

Kano-9

Imo-6

Gombe-4

Oyo-3

Taraba-3

Bauchi-1

Edo-1

Nasarawa-1

47,290 confirmed

33,609 discharged

956 deaths

A breakdown of cases by state can be found via NCDC

Nigeria Covid-19 updates