The Africa economic boom is arguably the largest in terms of absolute value. Besides the already mentioned South African diamond exports, another important factor that contributes to the African economy is the volume of foreign direct investment (FDI). There has been a sharp increase in the number of multinational companies setting base in Africa over the past decade. This has helped African businesses to access the world market more easily and at very competitive prices. Some of these multinationals are taking advantage of the fact that the trade deficit with the USA is significantly reducing the cost of goods to the continent, and this has resulted in an increased demand for African manufactured goods.
Trade in commodities such as gold, oil, cocoa and timber has also increased dramatically over the past years, with a further increase expected in the next few years. Currently, the single largest trade deficit in the world is with the USA. However, if Africa was to develop faster economic growth, this deficit could soon narrow to become much less significant. The major beneficiaries of a faster pace of African economic growth are likely to be the large rural populations that have remained relatively untouched by industrialization.
The agricultural production in sub-Saharan Africa is also highly diversified, reflecting both the inability of agricultural land to support agricultural production in its current form and the rising importance of agricultural export markets to local producers. Increased access to international markets may open new trading opportunities for African farmers and thus widen the scope of diversification. However, increased trade also implies increased competition for African agricultural produce. Developing nation farmers have often relied on imported machinery and inputs to boost agricultural production. This may now be changing with increased FDI coming into the country, which could reduce the profitability of agricultural exports.
The infrastructure in many African cities remains relatively poor, but this could improve as development occurs. Urbanization has been one of the biggest drivers of the economic diversification process in Africa over the past couple of decades. However, despite this growth there is still a sizeable gap between richer and poorer countries. The influx of highly educated professionals from developed countries is one of the driving factors behind this phenomenon.
Rapid political and economic developments in South Africa have also had an important impact on Africa's economic performance. The peace and unity achieved following the end of the Apartheid era encouraged more investment and migration to the country. This migration has been accompanied by an increase in cross-cultural employment across all sectors of the economy. As well as creating opportunities for better employment, this has also meant an increased demand for labour in various skilled occupations.
Africa's political and economic evolution offers promising prospects for African governments and businesses. Recent changes in . . . . . . the structures of the World Trade Organization have sparked a global response to Africa's economic situation. Given the size and magnitude of Africa's potential for economic growth, combined with the benefits of political stability, a stable and inclusive political environment is key to achieve African economic growth and contribute to its creation. This is why governments throughout the region must act quickly to mitigate any adverse effects on the economy that might result from political turmoil. Africa's economic diversification efforts are also underway to ensure that the region continues to enjoy a strong and resilient economic growth.