Well There Aren't Many Chinese In Africa

In reference to Professor Anderson’s talk, I was intrigued by the same points that Mark was regarding the width of borders and the effect of the percentage of Chinese population on growth. Borders do indeed disrupt markets, as Canada trades between provinces 22 times as much as it trades with the United States. With less distance to trade, there are fewer gaps in prices, creating what Professor Anderson called the “border effect.” I don’t doubt that this effect is evident, but we must account for other variables (which Professor Anderson did, but very briefly). He stated that economic size and free trade are also determinants, but he spent much more time on distance and the presence of borders. In Collier’s The Bottom Billion, he emphasizes the border effect as well, but a border is not the only prime factor that prevents trade.

In developed nations, the presence of borders takes precedent over many other factors, but in developing and third-world areas, even the rise of regional trading wouldn’t do much good. When all economies in surrounding areas are very small none can produce more than raw products (as manufactured products often have an extremely high tax), and many are landlocked, true global trade is needed.

Professor Anderson also claims that the number of people in the world living on $1.25 a day or less has decreased significantly; the poor must be better off. This comment made me pretty uneasy, as it is only a small fraction of the story. I am not an export on the topic in any sense, but I do know that globalization has benefited those in developed countries far more than those in Sub-Saharan Africa and South East Asia. While the number of people living on this amount of money has decreased, those that have jumped above this level have barely done so. However, those in developed countries have drastically increased their wealth by globalization. The most holistic trade agreements exist between developed nations, and we don’t see our trade agreements with Botswana being broadcasted in the upcoming election. Developing countries, if in trade agreements with the global powers, are not in many and there are not always beneficial to developing nations as a whole. This being said, we cannot simply take the fact that less are living on $1.25 a day and call globalization a success. Professor Anderson also emphasized that the informal environment is very important when the formal environment is weak, but developing areas have a much lower chance of success when we rely on their informal environments for much of anything.

While I was shocked the most (at first) by Professor Anderson’s claim that the share of the Chinese population in any country determines trade (although I was convinced by it), the more I thought about it, the more I realized developing nations are often thought of in absolute terms to churn out positive numbers. Then again, the Chinese population in Africa is very low, so maybe this claim can be used in absolute terms to give a correct answer for Africa.