@DailyNation

Trade blocs, not secession, will help poorer regions to develop

5 months ago, 1 Jan 23:54

By: Betty M. Gachire

The latter part of last year was dominated by talk on secession, which is not likely to go away soon as its advocates still allege marginalisation. The proponents of secession claimed it would cure alleged marginalisation, which they said contributed to their regions’ underdevelopment. What has not been clear is if, indeed, secession would actually solve the problem of underdevelopment. At the formation of the United Nations in 1945, there were about 76 independent countries. Today, there are almost 200 nations. The disintegration of the former USSR opened the floodgates for secession. It has also promoted a discussion on the economic viability of secession and if the size of a country matters. One of the leading economic analysts on this topic is Joseph Schumpeter. EDUCATION He states the benefits of a larger country as, first, the lower per capita costs for public goods such as infrastructure, security, healthcare and education. This is because when you have many taxpayers the costs will be shared among a larger group, therefore reducing the individual costs. This is particularly an important point to ponder because the regions that are said to be marginalised and underdeveloped have been depending on the tax redistribution from the national government to the county or from the richer to the poorer regions. This is why poorer regions would want to form larger countries to include the richer regions while the latter may prefer independence so as to avoid sharing resources. Poorer regions need to ponder on the expenses of forming a new government as the inability to invest in public goods can only lead to more underdevelopment. A second issue to consider is that a larger country (in terms of population and national product) is less subject to foreign aggression. AGGRESSION This is because, with a larger population, there is capacity to form a military for its defence and its sheer size alone can detract aggression. Thirdly, the size of the country affects the size of their markets. A larger market increases productivity and economies of scale. This is the reason why, globally, many countries are partnering within their geographical regions to form regional trading blocs. The formation of regional trading blocs has become an important way of protecting countries’ trade and particularly helping poorer regions to integrate and come out of economic recession faster than if they were alone. This is why the Kenyan government has been working hard to ensure the success of the East African Community (EAC) because all the region’s countries will reap better trade benefits if they worked as a single common market as opposed to individually. GLOBAL MARKET This is crucial for African countries that are the last to industrialise and will face stiff competition in the global market. They must, therefore, take advantage of their internal market for economies of scale and promote efficiency of their products regionally before expanding to the global market. However, the disadvantage of a big country is that ethnic diversity increases and, therefore, more individuals and regions ...
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@DailyNation

Trade blocs, not secession, will help poorer regions to develop

5 months ago, 1 Jan 23:54

By: Betty M. Gachire
The latter part of last year was dominated by talk on secession, which is not likely to go away soon as its advocates still allege marginalisation. The proponents of secession claimed it would cure alleged marginalisation, which they said contributed to their regions’ underdevelopment. What has not been clear is if, indeed, secession would actually solve the problem of underdevelopment. At the formation of the United Nations in 1945, there were about 76 independent countries. Today, there are almost 200 nations. The disintegration of the former USSR opened the floodgates for secession. It has also promoted a discussion on the economic viability of secession and if the size of a country matters. One of the leading economic analysts on this topic is Joseph Schumpeter. EDUCATION He states the benefits of a larger country as, first, the lower per capita costs for public goods such as infrastructure, security, healthcare and education. This is because when you have many taxpayers the costs will be shared among a larger group, therefore reducing the individual costs. This is particularly an important point to ponder because the regions that are said to be marginalised and underdeveloped have been depending on the tax redistribution from the national government to the county or from the richer to the poorer regions. This is why poorer regions would want to form larger countries to include the richer regions while the latter may prefer independence so as to avoid sharing resources. Poorer regions need to ponder on the expenses of forming a new government as the inability to invest in public goods can only lead to more underdevelopment. A second issue to consider is that a larger country (in terms of population and national product) is less subject to foreign aggression. AGGRESSION This is because, with a larger population, there is capacity to form a military for its defence and its sheer size alone can detract aggression. Thirdly, the size of the country affects the size of their markets. A larger market increases productivity and economies of scale. This is the reason why, globally, many countries are partnering within their geographical regions to form regional trading blocs. The formation of regional trading blocs has become an important way of protecting countries’ trade and particularly helping poorer regions to integrate and come out of economic recession faster than if they were alone. This is why the Kenyan government has been working hard to ensure the success of the East African Community (EAC) because all the region’s countries will reap better trade benefits if they worked as a single common market as opposed to individually. GLOBAL MARKET This is crucial for African countries that are the last to industrialise and will face stiff competition in the global market. They must, therefore, take advantage of their internal market for economies of scale and promote efficiency of their products regionally before expanding to the global market. However, the disadvantage of a big country is that ethnic diversity increases and, therefore, more individuals and regions ...
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