Archive for the ‘trade’ Category

Sitting in a dank room lit only by a single candle a few nights ago, an acquaintance of mine explained a thought of his about Africa. As we sipped our homemade banana beer (which I believe was responsible for an unpleasant trip to the toilet a few hours later), he talked of how both literal and metaphorical darkness is such a salient element of the Africa experience.

In a continent of little electricity and black skin, literal darkness subsumes detail and nuance. Faces become floating eyes and teeth, potholes and washouts in dirt roads become shadowy rivulets of an unknown depth. Metaphorical darkness manifests itself in the disconnectedness caused by lack of trade, routes, education. Candles of knowledge are rare; rarely are they lit; rarer still can they be used to light other candles.

Images make the point best. Bill Easterly just posted three good ones on his blog (click on the images for larger sizes and/or the source):

The first is of seafaring routes from a World Bank report:

The second is a map of IP addresses and thus internet connectivity:

The third is of airline routes:

The last two are ones I’ve found in the past. Here’s country size based on GDP:

And a more famous one again showing Africa’s disappearance:

Some economists are now using light data as a proxy for economic growth.

Darkness can be illuminating.

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An Economist leader this week criticizes Germany’s exportlust:

Yet Germany’s muscle-bound economy is also a victim of its exporters’ success. Global markets are volatile: the country’s current-account surplus has fallen by more than half from a mighty 8% of GDP in just a year. As the hard-earned surpluses piled up, they were invested in lower-quality foreign assets. Just ask the German banks that gave their money to those sharks on Wall Street, or the firms that splashed out on big acquisitions, like Chrysler. Germany seemed to forget that the point of exports is ultimately to pay for imports (see article).

That last bit contains a nice nugget of wisdom that seems obvious from an individual standpoint but is often lost when aggregated into national statistics. To a person, an export is something sold and an import is something bought; selling (exporting) is done to pay for stuff one is buying (importing). I for instance sell my labor to a small company, and the proceeds therefrom allow me to buy shelter, food, a new iPod, and so on; I produce in order to consume.

Yet when it comes to national economies,  production often becomes the champion.  What a country sells is deemed far more important than what it buys, and indeed, the more a country sells relative to what it buys (called a trade surplus) is a point of pride. On an individual basis however, this attitude could see one being vilified as a miser.

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