Addressing Concerns: US Industrial Policy and Africa’s Economic Development
The passage discusses the Biden administration’s elevated focus on protectionism and industrial coverage, significantly within the context of rising financial tensions with China.
The laws handed in 2022 aimed to advertise home manufacturing of renewable vitality, electrical automobiles, and strategic industries whereas limiting China’s entry to essential applied sciences.
However, these protectionist measures have wider implications for world financial integration and pose potential challenges for African international locations.
The writer expresses concern that the world is getting into a extra harmful interval, with protectionist industrial insurance policies gaining momentum.
The US-China commerce struggle initiated below the Trump administration marked the start of Washington’s protectionist strategy.
The present insurance policies exacerbate financial fragmentation pushed by geopolitical conflicts and sanctions.
As a consequence, world financial integration is being reversed, which had beforehand led to improved productiveness, increased dwelling requirements, and lowered poverty.
The passage highlights that US allies, such because the EU, Japan, and Korea, are responding by adopting their very own protectionist measures and aligning with the US to determine a worldwide provide chain much less dependent on China.
However, this shift may negatively influence African international locations, particularly these going through debt misery.
Scarce fiscal assets, elevated inflation, disruptions in regional integration efforts, and restricted entry to funding may hinder their progress and inexperienced improvement plans.
The passage additional outlines the US’s protectionist industrial coverage, together with the Chips and Science Act, the Inflation Reduction Act, and the infrastructure invoice.
These measures have raised issues amongst European and Asian policymakers, who see them as favoring American corporations and deviating from free commerce rules.
The worry of dropping corporations and investments to the US has led to substantial subsidy plans within the EU and elevated investments in inexperienced applied sciences by corporations like Volkswagen and Samsung.
The fragmentation of the worldwide financial system brought on by the US-led subsidy push and export controls is redirecting provide chains away from China.
However, that is additionally alienating non-EU and Asian allies who can not present comparable subsidies to assist their corporations.
African international locations, missing the monetary assets for substantial subsidies, will face vital challenges.
The International Monetary Fund has warned that Africa stands to lose essentially the most from this world financial fragmentation, probably decreasing GDP by as much as 4% for the median African nation.
To mitigate these challenges, the passage means that the US Strategy Towards Sub-Saharan Africa, introduced by the Biden administration, ought to handle issues in regards to the nation’s protectionist industrial coverage.
Overall, the passage highlights the potential detrimental penalties of protectionist industrial insurance policies and advocates for measures to make sure African international locations can navigate these challenges and profit from alternatives within the vitality transition and commerce diversification.
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