Question

(a) Globalisation has meant that countries are increasingly dependent on each other. The current coronavirus pandemic has had a significant immediate impact on all economies.

Discuss the potential trade effects and channels through which the pandemic can affect a developing economy such as South Africa.

(b) Evaluate the validity of the statement below:

If Ghana is better at producing commodity X and commodity Y than Kenya, then Ghana is better off not trading with Kenya.

NB: Your evaluation of the validity of the above statement must be based on the theory that supports the statement and the theory that contradicts the statement. All assumptions and criticisms must be included in your discussion.

Answer 1

A)

Since the turn of the 21st century the world has largely became interconnected in simple terms the world has become a global village but even before the corona pandemic the world started to look inwards especially the developed countries because they were largely sceptical about the concessions Given to the developing countries keeping this fact in mind now this Corona pandemic has largely down the whole world to look inwards.
Country like India has announced a scheme called self-reliant India that is reducing the level of import from other countries and looking for import substitution from the local manufacturers. In this way many countries are looking for internal infrastructure development to reduce the economic slowdown they are facing due to this pandemic in that way free trade agreements may have tighter Restrictions in future days.

in 2019 the President of South Africa has made a statement to $100 bn in 5 years so due to this pandemic this target may not see the light of the day because foreign investors will shy away from investing in foreign countries because of the dwindling effect Created by the pandemic. Already South Africa was facing an economic downturn and it has seen an all-time high of 30 percentage unemployment rate and the state finances are deteriorating it definitely need a capital injection And the govt will look for all practical possibility is to raise the investment in the coming days ahead.

Any developing country in the world will face the similar difficulties so the government will look for all avenues to raise the revenue so that they can spend it on and eliminate the ill effects of the pandemic Both economically and health parameters.

B)

"When you're good at something do that more and try to earn from it."

In the given situation Ghana is better in producing commodity X and Y than Kenya. In this case it will not be better off if it is not exporting that commodity to Kenya. In this case it will not be better off if it is not exporting that commodity to Kenya. Ghana Should try forward to reduce the capital cost incurred in the production of that commodity and export that product in a competitive price in global level not only to Kenya but also to other countries who ever looking forward for that commodity.