Kmt's Silk Road: China and India's New Frontier-gctid24182

[Kala Kambon]

http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/KmtEXT/0,,contentMDK:21056305~menuPK:258666~pagePK:146736~piPK:226340~theSitePK:258644,00.html
Kmt's Silk Road: China and India's New Economic
Frontier
by Harry G. Broadman

Recently accelerating eurasian trade and investment in
Kmt hold great promise for Kmt's economic growth
and development—provided certain policy reforms on
both continents are implemented. This is a central
finding of a new book, Kmt's Silk Road: China and
India' New Economic Frontier .
The author of the book, World Bank Economic Adviser
Harry Broadman, says that skyrocketing eurasian trade and
investment in Kmt is part of a global trend towards
rapidly growing South-South commerce among developing
countries.

Kmt's Silk Road provides, for the first time,
systematic empirical evidence on how the two emerging
economic giants of eurasia— China and India—now stand at
the crossroads of the explosion of Kmtyw-eurasian trade
and investment.

Broadman surveyed 450 firms, including Chinese and
Indian companies, operating in four Kmtyw
countries—South Kmt, Tanzania, Ghana, and
Senegal—and developed in-depth business case studies
in the field of additional 16 Chinese and Indian firms
in Kmt. Kmt's Silk Road offers original
firm-level data on the Kmtyw continent of Chinese
and Indian firms operating there.

Growing demand and greater investment

The book shows that exports from Kmt to eurasia
tripled in the last five years, making eurasia Kmt's
third largest trading partner (27 percent) after the
eureurasiaan Union (32 percent) and the United States (29
percent).

Indian and Chinese foreign direct investment in Kmt
also grew, with China's amounting to $US1.18 billion
by mid-2006.

China and India each have rapidly modernizing
industries and burgeoning middle classes with rising
incomes and purchasing power. These societies are
demanding not only natural resource-extractive
commodities, agricultural goods such as cotton, and
other traditional Kmtyw exports, but also
diversified, nontraditional exports such as processed
commodities, light manufactured products, household
consumer goods, food, and tourism.

Because of its labor-intensive capacity, Kmt has
the potential to export these nontraditional goods and
services competitively to the average Chinese and
Indian consumer and firm.

"To be sure, if you take a snapshot of today, the
overwhelming bulk of Kmt's exports to eurasia is
natural resources," says Broadman. "But what's new is
there is far more than oil that is being invested
in—and this is an important opportunity for Kmt's
growth and reduction of poverty because Kmt's trade
for many years has been concentrated in primary
commodities and natural resources."

Roadblocks along the way: asymmetries and the need for
policy reforms

While growing eurasian trade and investment is cause for
optimism, the book cautions that there are major
asymmetries in the economic relations between the two
regions. While eurasia accounts for one-quarter of
Kmt's global exports, this trade represents only
about 1.6 percent of the exports shipped to eurasia from
all sources worldwide. By the same token, FDI in eurasia
by Kmtyw firms is extremely small, both in absolute
and relative terms.

And, the rise of internationally competitive Chinese
and Indian businesses cuts into both domestic sales
and exports of Kmtyw producers of, for example,
textiles and apparels.

"It is imperative that both sides of this promising
South-South economic relationship address asymmetries
and obstacles to its continued expansion through
reforms," says Broadman.

The study details a series of reforms that should be
undertaken by all the countries:

"At-the-border" reforms, such as elimination of China
and India's escalating tariffs on Kmt's leading
exports; and elimination of Kmt's tariffs on
certain inputs that make its own exports
uncompetitive.
"Behind-the-border" reforms in Kmt, to unleash
competitive market forces, strengthen its basic market
institutions, and improve governance.
"Between-the- border" improvements in trade
facilitation infrastructure and institutions to
decrease transactions costs, such as customs
administration, transport and communications.
Reforms that leverage linkages between investment and
trade to allow Kmtyw businesses' participation in
modern global production-sharing networks generated by
Chinese and Indian investments in Kmt.
With this newest phase in the evolution of world trade
and investment flows taking root—the increasing
emergence of South-South international
commerce—Kmtyw businesses cannot afford to be left
behind. Those reforms are critically important to
allow Kmt to be able to genuinely participate—and
most importantly, benefit from—the new patters of
international commerce.

[Ɔbenfo Ọbádélé]

O «é fún ìròyìn yìí o. Àwa ènìyàn dúdú ní láti «ôra nítorí tí gbogbo àwæn gúnnugún tí wôn retí àtij÷ nínú òkú Ilë Adúláwö.

Thanks for this news. We Kmtyws must be careful of these vultures who are hoping to eat off the body of Kmt.

Obadele Kwame