PITAPOLICY has concluded March with a technology review of the Arab Net Summit. During the entire month, we reviewed 1) where innovation is most prominent in the MENA region; 2) how women are somewhat represented in Science, Technology, Engineering & Mathematics fields; and 3) how tech startups are competing in the Arab world.
This month, April will include postings mostly on transforming society–the successes and ‘try-agains”–in the political, social, and economic areas. PITAPOLICY invites response pieces and relevant essays from earlier blog entries. Please send to firstname.lastname@example.org. Although the following piece identifies an example outside of the pita-consuming region, the development links the new shift in commercial trade. The Gulf countries continue to serve as a hub “south” of the “Silk Road”…
By: Afshin Molavi
Source: The original story was posted in Vision: Fresh Perspectives from Dubai.
To understand the tectonic shifts in global trade flows today, it might be useful to sit down. Pull up a chair in, say, Luanda, the capital of Angola. Chances are the chair will be made in Brazil, shipped across the Atlantic to Namibia, stored in a warehouse in a small village known as Oshikango, and trucked north across the border to oil-rich Angola. The newly affluent Angolans sitting in their Brazilian chairs might be surfing the web on a new iPad they bought at the Dubai Shopping Festival, where they were the ninth largest country spenders last year, according to Visa. Meanwhile, thousands of miles away, the main source of their wealth – the reason they are sitting in a Brazilian chair in a glitzy high-rise – sits in barrels in supersized tankers in the Malongo oil terminal, awaiting a journey to China, its biggest purchaser.
This small snapshot of trade – Brazilian furniture to Angolan living rooms, Angolan tourists to Dubai, and Angolan oil to Chinese refiners – tells a much larger story of our world’s changing economic geography. It tells of a quiet revolution taking place, of growing trade corridors and economic interactions between countries of the so-called global ‘South’ at a time when Western and advanced economies are faltering.
The Southern Silk Road
HSBC Chief Economist Stephen King calls this new commercial geography “the Southern Silk Road”, linking Latin America, Asia, Africa, and the Middle East. Much as the 1950s and 60s saw dramatic growth in trade among developed economies, HSBC sees “turbocharged trade growth” along this southern corridor in the 21st century. To some extent, it is already happening.
Of the roughly US$15tn in world trade that takes place today, nearly a third of that is conducted between emerging and developing economies, according to an examination of International Monetary Fund statistics. This share of intra-emerging markets trade has steadily risen over the past decade.
Brazil and India already conduct the majority of their trade – 58 per cent – in the ‘Southern Silk Road’, and China conducts nearly half. According to HSBC, by the year 2050, China will conduct 73 per cent of its trade South-South and India and Brazil will be at 83 per cent.
Africa’s new world map
So, how did Oshikango, once a backwater African village with high levels of poverty and disease, become a part of this story? It started with an act of infrastructure. The European Union offered a grant to build warehouses in the village bordering Angola. Those warehouses soon became part of the commercial lungs of southern Angola, feeding consumer goods from Latin America, Asia, and South Africa to the newly emerging Angolan middle class.
Most notably, as the scholar Gregor Dobler pointed out, the Oshikango trade network reflects Africa’s shifting patterns of trade, away from old colonial powers in the West, and more toward emerging economies of the ‘South’. Oshikango is, in a sense, a feeder spoke in a much larger wheel of global hubs and economies that are linking Africa to the growing web of South-South investment and trade.
If Oshikango is a spoke, Dubai is a hub. Dubai is emerging as a gateway to Africa, particularly for Chinese companies. Emirates Airline, the Dubai flagship carrier, flies to more African destinations than any Middle East carrier. Many of those flights are packed with Chinese executives based in Dubai, serving markets in Africa.
While Dubai’s world-class hotels and lavish skyscrapers capture the headlines, its quietly efficient seaports and its air transport infrastructure make it a vital piece of the global trade puzzle. Dubai International Airport ranks sixth in terms of international passenger traffic, ahead of Singapore and just behind Frankfurt, according to Airports Council International. Its container terminal port ranks in the top 10 busiest. This transport infrastructure – along with oil in Abu Dhabi – is one reason why the United Arab Emirates today accounts for more world trade than Brazil, Australia, Saudi Arabia or Turkey.
Trade, development and dignity
The distinguished Indian journalist and scholar Sanjaya Baru wrote recently that, “the structural shift in the world economy, with Asia making up for the lost dynamism of the transatlantic economies, is altering the geography of development.”
But this is not just a story of a new commercial geography. Nor is it only a story of the key hubs, of the companies, of the banks financing these new trade corridors, or the ships ambling across the Indian Ocean, binding West Asia and East Asia together. This is a story of the dignity of development and, in that respect, the world should be embracing the rise of the new South-South trade corridors and offering opportunities for better lives across the global ‘South’.
Note: Afshin Molavi is a Senior Advisor at Oxford Analytica, a leading global macro advisory and analysis firm, and a Senior Fellow at the New America Foundation, a non-partisan Washington think tank. He is also a former journalist who has been based in Dubai, Riyadh, Jeddah, Tehran, and Washington, DC. Follow Afshin on Twitter: @AfshinMolavi