Question

Evaluate the reasons why the economic growth of Nigeria vs. the Democratic Republic of the Congo (Civility vs. Chaos) varied. Discuss how international trade influenced the strength of each economy. Discuss the role of value chains and value-added production.

Answer 1

There is a significant disparity in the economic growth between Nigeria and the Democratic Republic of the Congo. Nigeria is Africa's largest economy and one of the world's fastest-growing economies. Nigeria's GDP has grown significantly since 2000. Nigeria's economic structure has changed substantially. Its economy has shifted away from agriculture and toward industry and services. Manufacturing and services currently account for over 52 percent of Nigeria's GDP. Due to mechanization and rural-urban migration, the number of persons engaged in agriculture has decreased (Vincent, 2021). Nigeria's manufacturing and service industries have expanded as a result of the country's improved political stability. China, the United States, and South Africa have invested significantly in Nigeria. On the other hand, the Democratic Republic of Congo has been facing economic failure for many years. The most important effect of the global financial crisis on the DRC economy is a reduction in total economic growth, expected to reach 6% in 2009.

The scenario is expected to worsen as the crisis continues. The crisis has already significantly impacted two critical industries slated to fuel DRC growth in 2009, namely infrastructure and mining. The problem stems from a drop in world pricing for major DRC commodity exports (mainly copper, which fell by half in a matter of weeks). As a result, several mining firms are reducing their operations until commodities prices return to normal. This is also a significant danger to jobs. The Chinese agreement "Infrastructure against Mining" is projected to finance most infrastructure projects in the following years. Infrastructure investment of this magnitude is no longer possible or will have to be postponed due to the significant drop in mineral prices (Kuwonu, 2016). International reserves are also projected to plummet, and debt servicing payments are expected to be postponed. There is a danger of bank deposits and credit decreasing in the domestic financial system. Foreign aid is also likely to be affected.

A value chain is a business model that outlines the process of creating a product or service. The processes involved in taking a product from conception to distribution and everything in between—such as sourcing raw materials, manufacturing operations, and marketing activities—make up a value chain for firms that create things (Madudová, 2017). The value-chain analysis examines the precise procedures involved in each phase of a company's operations. Value-chain analysis is used to improve manufacturing efficiency so that a firm may offer the most value for the least amount of money. Value-added explains why businesses may sell their products or services for more than they cost to make. Adding value to products and services is critical since it encourages customers to buy, resulting in increased revenue and profits.

There is a significant disparity in the economic growth between Nigeria and the Democratic Republic of the Congo.