Recently, Rwanda Joined the Commonwealth (Pflanz, 2009). The commonwealth as popularly known is a grouping of all countries that were once colonies of Britain. Members of the commonwealth have always shared social, economic and political ties such that stating that their trade ties were perfect will not be an exaggeration or an understatement. However, the controversy of Rwanda joining the commonwealth aroused the debate on how ethnic ties, old colonial alliances, and shared languages influence international trade. Rwanda, does not fit into the traits of all other commonwealth members since, basically, it was not a colony of Britain. The argument herein is that, though not easily accepted, the aforementioned factors greatly influence the development of international trade ties.
International trade, according to the Global Exchange (2011), involves the exchange of goods and services over the international boundaries that define nations under specific and well spelt out agreements. As in issue of these agreements, all the involved nations must exhibit good relations in order to enforce trust, which is of greatest essence in trade, between them. However, a number of countries have demonstrated mistrust among themselves due to their contrasting ethnic ties, differing stands on the issues related to their colonial past and the lack of a common language of communication among them. In the case of Rwanda, it merged with other commonwealth members in order to show its disloyalty to France, its former colonizer and now turned into a mistrusted international ally.
Language is one of the determinants of successful international trade. It is imperative that during any form of trade, a clear language of communication should be used. When it comes to international trade, the fact that different countries use different languages has not worked towards the bettering of international trade and it should be accepted that this has been an impediment of the development of trade among nations. This is clear especially among the numerous international trade organizations formed. For example, member countries of the Arab League all share the Arabic language whereas member countries of the commonwealth all share the English language. Most countries would prefer joining international trade organizations that use a language that is shared by a majority of member countries. This may explain why China and Japan have resorted into the usage of other international languages in order to fit in the modern global trade.
Felbermayr, Joung and Toubal (2009) indicate that one of the chief determinants of international trade is ethnical networks. They report that, Rauch and Trindade (2002) found out that the Chinese trading activities in South Eastern Asia increased bilateral trade by at least 60%. They attribute this to the Chinese ethnical network that exists in the said region. With immigration rates soaring in the current world, it is possible to predict a new turn of trade relations among countries. For instance, countries that officially agree to work together in trade deals state that free movement of its citizens within their territories should not be denied. The aim of these can be presumed to be a way of diluting the differences in the ethnical backgrounds of the citizens of the involved countries. Factually, stating that countries that have demonstrated successful trade ties share almost a resembling ethnical background cannot be an exaggeration. Reference can be made from the East African Community, where member countries, chiefly Kenya, Uganda and Tanzania have signed pacts to engage in trade activities.
For a successful international trade pact and relationship, these three factors must be at a balance among all the involved nations. It would be unrealistic imagining of a successful international trade deal between nations without balance of the three factors that are language, ethnical ties and colonial ties. For the success of a trading agreement, there should be general consent between the partnering countries to adhere to the set guidelines and conditions set in the guidelines. Without properly ironing out all the factors that might compromise these factors, then the trade agreement is most likely deemed to fail in its objectives.
Question Two Response
Foreign investment highly determines the development in a country. In Africa, where most countries are characterized with high levels of poverty, it is cited that the only remedy to its problems could be direct foreign investment. However, since most of the African nations face a wide array of challenges, investors are shying away from investing in Africa. The result of this has had negative results on the development standards of Africa socially, economically and even politically. In such a case, the livelihoods of citizens of African nations have ended up being chained down in problems that the aid that international donors give cannot help in resolving. Calls for the African governments to change tactics in order to attract foreign investment in their countries have been made and proponents argue that the following measures should be taken.
Security standards should be enhanced. According to the United Nations High Commissioner for Refugees, UNHCR, (2012), the security situation in most African countries is very precarious. With everyday a new security threat arising, most western governments and American government are discouraging its citizens from investing in Africa. Realistically, no investor would be willing to risk their funds, effort and resources in investing in a situation where one is not guaranteed the well-being of their investment. The kind of foreign investment that has tangible effects in any external economy must be very expensive to establish. Therefore, in the case that a foreign investor investing in Africa loses their investment due to insecurity, the losses in terms of capital, effort and resources that will be incurred can be incomparable and its effects to the investor will be very demotivating. Since investing in Africa has proved to be a very tricky gamble, most investors will most likely avoid it. If in any case the foreign investment is to be realized, African governments must strive to attain and maintain high levels of security standards.
Improved infrastructural network becomes another very important area of concern when it comes to the topic of investment. The whole issue of foreign investment can never be attained if African governments do not develop their infrastructural networks. According to the nationsonline.com (2012), most countries in Africa lie in the third world and their economies cannot fully support the funding of infrastructural development projects and therefore they heavily rely on loans, grants and other types of funding from the international community. Due to the severed links of most African governments to those in the west, these types of donations rarely come by. All in all, what really matters to the foreign investors is how infrastructural development has evolved in a nation before any thought of investing there. This is a challenge that the African governments must strive to overcome in order to lure foreign investment.
The integrity threshold of the leading class in Africa is also one of the reasons that hinder foreign investment in the continent. According to the African Development Bank (2012), the levels of integrity cases especially those related to corruption are very rampant in Africa. With the continuity of such cases, the hope of attracting foreign investors yields dwindling results. The reason behind this is that, foreign investors would most likely avoid circumstances that would see them invest where dealings in terms of procurement procedures are not done openly and freely. Results show that in countries that have a developed anti-corruption strategy, foreign investment has increased. The result of this has been a generally improved livelihood of the citizens of the involved country. It is imperative that African governments take up the fight against corruption to higher levels if they are in any case going to lure foreign investment into Africa.
Generally, Africa is considered on of the most unpredictable investment destinations in the world. However, it is at the same time cited to be one of the places that has many investment opportunities. If the African governments took up the necessary steps to overcome the challenges that Africa faces, and clear the threading path of foreign investors, then the full potential of Africa will be realized. Yes, Africa has challenges, but there surely is a way of containing them and if this way is realized, automatically the plight of luring foreign investment and therefore development in Africa will easily be met.