Commentary
As the Iran war shocks oil prices, countries that have invested in renewables, EVs, and battery development since the 2022 Russian invasion of Ukraine are seeing the value of their investments.
Noah Gordon
{
"authors": [],
"type": "pressRelease",
"centerAffiliationAll": "",
"centers": [
"Carnegie Endowment for International Peace"
],
"collections": [],
"englishNewsletterAll": "",
"nonEnglishNewsletterAll": "",
"primaryCenter": "Carnegie Endowment for International Peace",
"programAffiliation": "",
"programs": [],
"projects": [],
"regions": [
"Southern, Eastern, and Western Africa"
],
"topics": [
"Economy",
"Trade"
]
}
REQUIRED IMAGE
Press Release
Trade is critical for Kenya’s economic growth, but it’s not enough
The implementation of a likely agreement of the Doha Round would improve Kenya’s competitive position in processed food and agriculture, but would harm manufacturing and mining. Depending on the content of negotiations, the liberalization of trade in goods would boost the country’s GDP by 0.2 percent annually, placing Kenya on the winning side of Doha. However, the benefits would be small.
Published on Nov 4, 2009
WASHINGTON, Nov 4—Kenya’s economy has yet to recover from the global financial crisis and the political upheaval and social violence that followed the disputed elections at the end of 2007. A new report finds that the implementation of a likely agreement of the ongoing Doha Round of trade negotiations would improve Kenya’s competitive position in processed food and agriculture, but would harm manufacturing and mining. Depending on the content of negotiations, the liberalization of trade in goods would boost the country’s GDP by 0.2 percent annually, placing Kenya on the winning side of Doha. However, the benefits would be small, according to the report from the Carnegie Endowment, United Nations Economic Commission for Africa, United Nations Development Programme, and Kenya Institute for Policy Research and Analysis.
Key Conclusions
- Eliminating export subsidies for agriculture in Europe and the United States would help Kenya more than partial reductions of domestic support to agriculture in these countries and cuts to tariffs around the world.
- Kenya would enjoy gains in agriculture, processed food, and the service sector, but experience losses in manufacturing and mining.
- Losses in manufacturing and mining follow the weakening of domestic protection in Kenya.
- Changes in the Kenyan economy would decrease poverty, and income distribution in rural regions would fall slightly, but the gap between wages in urban versus rural areas would expand.
- The Doha Round is likely to diminish the importance of Kenya’s regional partners in total trade as its exports of manufactured goods would fall—these goods are often destined for African countries.
- Countries in sub-Saharan Africa should not expect major net gains stemming from the current round of trade negotiations. This underscores the need for human development policies that will accompany trade liberalization.
“The impact of the Doha Round can lead the Kenyan economy to further specialize in agriculture and processed food. And specialization in these activities can help Kenya make good use of its unskilled labor, its most abundant factor,” write the authors. “But Kenya’s long-term development cannot rest on only these two activities. Kenya must aim to build dynamic comparative advantages in activities with higher value added that can support higher standards of living. Trade can help, but trade by itself will not do the job.”
###
NOTES
- Eduardo Zepeda joined the Carnegie Endowment in 2007 as a senior associate in the Trade, Equity, and Development Program. He also serves as a policy adviser to the Bureau for Development Policy’s Poverty Group at the United Nations Development Programme, a position he has held since 2003. Zepeda’s research focuses on employment, poverty, and development policy.
- The Carnegie Trade, Equity, and Development Program undertakes analysis and promotes policies and strategies to make global economic integration work for more countries and more people.
- Press Contact: David Kampf, 202/939-2233, dkampf@ceip.org
Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
More Work from Carnegie Endowment for International Peace
- Some Countries Are Better Prepared for an Energy Crisis This Time
- Rewiring the South Caucasus: TRIPP and the New Geopolitics of ConnectivityArticle
The U.S.-sponsored TRIPP deal is driving the Armenia-Azerbaijan peace process forward. But foreign and domestic hurdles remain before connectivity and economic interdependence can open up the South Caucasus.
Thomas de Waal, Areg Kochinyan, Zaur Shiriyev
- Africa’s Global Economic Edge: Advancing Strategic SectorsArticle
In key sectors such as critical minerals, specialty agriculture, and fintech, Africa can become a global powerhouse by investing more in manufacturing, value-add, and scaling.
Kholofelo Kugler, Georgia Schaefer-Brown
- The Xi Doctrine Zeros in on “High-Quality Development” for China’s Economic FutureCommentary
In the latest Five-Year Plan, the Chinese president cements the shift to an innovation-driven economy over a consumption-driven one.
Damien Ma
- Kenya’s Health Deal Is a Stress Test for the America First Global Health StrategyArticle
U.S. agreements must contend with national data protection laws to make durable foreign policy instruments.
Jane Munga, Rose Mosero
