Barriers to International Trade and Economic Development in Africa

With the advent of globalization, many African countries are opting for free trade to enable them to participate effectively in the international market and therefore boost their growth. There are, however, certain barriers that these countries face, which limit them from actively participating in international trade.Advertising We will write a custom essay sample on Barriers to International Trade and Economic Development in Africa specifically for you for only $16.05 $11/page Learn More This state of affairs has contributed to the slow pace of development in these countries. The common barriers to international trade in most of African countries include tariffs, quotas and other non-tariff barriers such as domestic content requirement and import licenses. Discussion A tariff refers to a tax that is imposed on imports by the federal government of a country so that it can manage to raise the price of the imported goods to the final consumer. Tariffs are aimed at limiting imports and raising the revenues of a nation. A Quota, on the other hand, refers to a limit on the amount of a commodity that is being imported into a country (Koo Kennedy, 2005). The effect that Tariffs and Quotas have in common is that they have the capacity to regulate imports and in the protection of domestic companies from foreign competition. A tariff, for example, has the effect of raising the price of foreign goods beyond levels that the local consumer would be willing to pay, thereby decreasing the demand for the product. This then limits the supply of the foreign good to the local market. However, while many African countries raise the price of imported capital goods and regulate the amount of imported capital goods, most of them fail to understand that they require capital goods to stimulate their development agendas. With the high tariffs therefore, what is evident is that the prices of capital goods are also high thereby forcing many African countries to invest heavily in the purchase of capital goods. This then limits the availability of funds that the countries can use for other development goals ( Koo Kennedy, 2005). In addition, when African countries raise their tariffs to levels that exporters cannot afford, many exporters withdraw from the African markets thereby limiting the amount of revenue that the governments of these countries earn. This in return slows the investment levels of these countries thereby leading to low rates of economic growth. Domestic content requirement has also been a practice that many African countries engage in as a barrier to international trade (Summer Smith, n.d). The intention here is to stimulate the growth of the local industries. This regulation specifies the percentage of a product that should be produced domestically so that the product can be sold in the local market. Most of the African countries have imposed this requirement in order to foster textile and agricultural production.Ad vertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More They impose a policy of import substitution whereby imports are replaced by domestic production. However, most of these countries are incapable of producing goods that meet the needs of the local customers, and the customers are therefore forced to result to imports because of their high quality and reliability. Import licenses are observed to be very effective in terms of regulating and restricting imports in African countries (Summer Smith, n.d). There are those countries which require imports of a specific commodity so as to obtain a license for any shipment that they import into a country. There are also certain countries, which restrict licenses by limiting licenses to specified importers. This thereby limits their participation in the international market. To actively participate in the international market therefore, many African countr ies should regulate their barriers to levels that encourage active participation of foreign investors. References Koo, W. W., Kennedy, P. L. (2005). International Trade and Agriculture. New York: John Wiley Sons. Summer, D. A., Smith, V. H. (n.d). Tariff and Non-Tariff Barriers to Trade. Retrieved from https://www.farmfoundation.org/ This essay on Barriers to International Trade and Economic Development in Africa was written and submitted by user Josue Vega to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.