International Economics Module Assignment

Course Name: International Economics Course Code: MIR564

Student Name: Samuel Edem Samuel

Index Number – MIR0123035

Word Count: ……….

Dr. Frank Bannor

Professor
Table of Content
Ghana’s International Economic Integration ----------------------------------------------------------
2
Categorization of Criticisms of the WTO, IMF and World Bank ----------------------------------
2
How Countries with no Absolute Advantage Gain from Trade-------- ----------------------------3
References -------------------------------------------------------------------------------------------------7
Q1: GHANA’S INTERNATIONAL ECONOMIC INTEGRATION

International Economic Integration; referring to deliberate measures by states to remove

conventional barriers to trade or exchanges of economic value across its borders with other
nations has since the end of the second World War witnessed a consistency in its ascendancy
of acceptance around the globe. Despite the slow pace of the immediate aftermath of the two
devastating world wars and its consequent impact on nations who became absorbed in their
own affairs and closed to the world, the sheer fact that a China, Germany or Japan now
actively seek ways to open their markets to the world and indeed export its value across
various areas with other nations is a testament to the fact that the tides have indeed turned
permanently towards progress in the race to ‘make the world a truly global marketplace’
which fundamentally sums up the idea of international economic integration – also known as
globalization at least on a generalized basis (CFI, 2024).

World Trade, International Capital Flow, International Migration and Convergence of

Prices across Markets

Ghana as a nation has not been left out of this development and indeed more intentionally
over the last 20 years which essentially forms the most part of its fourth republic. In
discussing this further, it is important to note that Ghana up until 1992 which signalled a new
order of its now sustained successful experiment with democracy was led by successive
military regimes with a typical iron-clad control over the market, trade and value exchange
especially internationally. And there is also the stigmatization of every nation operating a
military regime with regular large economies vis-à-vis democracies like the United States of
America and its characteristic free or capitalist market skeptical about dealings with such
extensively on any serious bilateral trade arrangements (Felbermayr, 2015).

Accordingly, Ghana’s experienced a drastic shift from 1992 but more significantly for this
context – year 2000 with the dawn of President John Agyekum Kufuor era that would witness
the country taking significantly more bold steps at driving its international economic
integration efforts whether it was in an initial adoption of a Highly Indebted Poor Country
(HIPC) status with the Bretton Wood Institutions and the consequently loosening off of
needed funding for investment or capital expenditures and a pushing of Ghana in the decade
following to become a truly middle-income country at an economic growth rate that was
unparalleled by many contemporaries across the globe. With the country more open for
investment having achieved a relatively stable currency, exchange rates, low inflation and an
overall comparatively affordable interest rates which enhanced productivity across local
industries; Ghana has over the last twenty years more deeply involved in the sub-regional as
well, regional economic integration compacts as represented by the Economic Community of
West African States (ECOWAS) and the more recent Africa Continental Free Trade Area
(AfCFTA) – assuming leading roles as chairs of both multilateral states economic or trade
partnerships and even currently serving as host of the AfCFTA Secretariat. The past two
decades has also seen the Gold Coast nation opening up its market to the world beyond the
West with Ghana signing up on the BRICS bloc and deepening its bilateral ties with India
and China respectively on a multiple fronts for economic alliance; education, technology,
financing and market access. Ghana has also through its active participation in the World
Trade Organization with a centre in Accra provided a window that first and foremost exposes
its local ‘Made in Ghana’ products to the world as well as, a legal path for international
vendors to make their way into not just the country but the West African sub-region
capitalizing on Ghana’s strategic position as a gateway nation for West Africa. Furthermore,
the establishment of the Ghana Free Zones Enclave as managed by the Ghana Free Zones
Authourity (GFZA) and the Ghana Export Promotions Authority (GEPA) has also deepened
the its effort in creating a truly global marketplace within its domestic marketplace with those
agencies actively engaging external investors for Foreign Direct Investments and set up of
factories or production centres of some sort by multinationals in Ghana without conventional
bottlenecks of entering a new market and enhancing globally fair and competitive prices for
products and services (Orefice, 2015).

On a whole, the very preoccupation of Ghana’s government in such initiatives as are targeted
at international economic or socioeconomic integration including the Year of Return, Beyond
the Year of Return, and even partnerships with Ghanaian led private social enterprises that
seek to promote international economic exchanges as typified by the likes of the Black
History Festival by the BIDEC or the Africa Prosperity Initiative is a testament of how far the
country has come in its effort to be more economically integrated than it has ever been
whether twenty years ago or beyond.

Q2: MAIN CATEGORIES OF COMPLAINTS ABOUT THE WORLD BANK,

INTERNATIONAL MONETARY FUND AND THE WORLD TRADE
ORGANIZATION
Following their establishment and activation of operations, the Bretton Woods institutions
which best represents global economic institutions have served various purposes that signals
a huge public good for the world in many regards. From their role in helping rebuild Europe
and indeed the world post World War I and II combined to providing needed fall back for
uncertain economic times of global recessions, pandemics as well as in providing some
relieve funding for nations ravaged by war and natural disasters or perhaps its minimal
attempt to promote freer trade among nations; one would almost pass these institutions for
just the right reasons (Smith, et al., 2016).
On the contrary, these global institutions have come under immense cross-fires from fierce
critics over their usefulness and indeed the integrity of their claimed necessity of existence as
a service to the world. Placing these criticisms in perspectives, there are some significant
categories within which each of them falls and for the purpose of conciseness, this piece
looks only at three known ones:
Sovereignty and Transparency
The first in this main categories of global institutions as earlier mentioned is the question of
sovereignty and transparency. The International Money Fund (IMF) particularly comes under
attack on this regard in its inherent role as a lender of last resort especially for debt financing,
technical expert assistance and policy guidance as well as its infamous ‘IMF Conditionality’,
which basically seeks to dictate economic policy priorities for those nations that run to her for
help. Critics have pointed out that the intervention of these global institutions and for
contextual example – the IMF, limits the policy bandwidth of nations who have to tailor their
national budgets or spending priorities under the dictates of this often harsh lender whose
focus has historically been on squeezing its borrower the best possible to ensure optimum
returns on their loan finance through unfair interest rates, demand for raise in domestic taxes
as well as the prices of goods and services with direct devastating impact on ordinary citizens
who just want government to provide basic cushioning that supports hardworking people.
Hence, the sovereignty of the nations who seek the help of these institutions are structurally
infringed on specifically in their government’s capacity to make economic policies that
would best benefit their people without external interference or their capacity to access
investment or debt finance from outside threatened. The critics in this category also believe
that the immense voting weight of powerful Western economies such as the United States,
United Kingdom, among others also undermines’ the global institutions – particularly the
World Bank for a contextual focus to make objective decisions or be fairly transparent in
their relations with all nations of course, with the poor or struggling economies being at the
mercies of their stronger counterparts and indeed the receiving end of all the constraints that
impede their opportunity for unrestrained economic growth using what resources are
available to them (Shai, 2019).
Ideology
Critics of the global institutions on the ideological prism believe that neither the World Bank,
International Monetary Fund nor the World Trade Organization is free from the predominant
framework of a pro-western capitalist ideology. In fact, critics in this regard are of the view
that the very foundations upon which the global institutions were established was biased in
favour of the Western economic ideologies and hardly takes into consideration alternative
perspectives for instance from the Communist China or pro-African position that advocates
for the continent to be the master of its own house especially in the way it uses and chooses
to share its natural resource endowments with the rest of the world.
Policy Implementation and Adjustment
Finally in these three main categories of criticisms of global institutions, critics argue that
their rules, regulations and policies are solely targeted at making poor and weak economies
slaves to the powerful western counterparts. For instance the GATT trade protocol managed
by the World Trade Organization which tries to promote free trade across nations allows for
Western and now powerful emerging eastern powers as China to dump all manner of poor
quality goods in Africa yet, indigenous African produce can barely find breathing space in
their effort to penetrate Western markets like the United States, Canada and the United
Kingdom despite the many PR by western leaders about some open marketplace. The result
has been a dismal flooding of local African markets with foreign goods from multibillion
dollar Western State-backed multinationals selling at prices that snuff the life out of
indigenous competitors who are battling against not just the market but harsh pricing and
financing policy impositions from the likes of the IMF that makes cost of production
excruciatingly high and access to capital an exclusive reserve of those with political
connections. Accordingly, these critics believe that the policy implementations of the global
institutions are unfairly targeted at poor countries with the least capacity to adjust without
hurting the livelihood of everyday working people living in those countries (Vreeland, 2019).

Q3. HOW A COUNTRY WITH NO ABSOLUTE ADVANTAGE CAN GAIN FROM

TRADE
Absolute Advantage refers to a country holding a higher labour productivity potential if it
chooses to specialize in a specific good. It allows a country to benefit from both its decision
to specialize in the production of certain goods or services or trading it with other countries.
However, gaining from trade is not just an exclusive reserve of countries with absolute
advantage. A country with no absolute advantage can benefit from trade by focusing on its
opportunity cost for a particular good if it had to produce or import it regardless of whether
they have absolute advantage in its production, or vice versa.
A typical example may be better understood with an illustration below:
India Nigeria
Mobile Phones 5 1.25
Glass Bowls 5 2.5

India has no absolute advantage in the production of either mobile phones or glass bowls.
However, if India does not trade, it is limited in its potential to diversify into the production
of other goods as may be needed by Nigeria which basically means giving-up 2.5 tons of
Glass Bowls to enable her trade with Nigeria. It is important to also note that Nigeria would
be willing to engage in a glass bowl trade with India because it has a higher (though not
absolute) gain from trade in that than mobile phones. Accordingly, both countries could
mutually benefit from the trade.

SUMMARY
This assignment presented an opportunity to address three key issues of significant
importance in international economics. First, the issue of economic integration and
contextually with regard to Ghana over the last two decades. This is followed by a discussion
on criticisms of international institutions with particular emphasis on the Bretton Wood
group; the World Bank, International Monetary Fund and the World Trade Organization.
Finally, the paper also briefly delves into the issue of absolute and comparative advantages
with emphasis on, how a country with no absolute advantage can gain from trade’.
REFERENCES
Britannica (2024). The World Bank. https://www.britannica.com/topic/World-Bank
CFI(2024). Economic Integration.
www.corporatefinanceinstitute.org/resources/economics/economici-integration.

Felbermayr, G., et al (2015). Migration, Internatyional Trade and Capital Formation: Cause
or Effect. https://www.sciencedirect.com/science/artcle/abs/pii/B978044537683000187

Gerber, J. (2022). International Economics. Pearson.

Orefice, G.(2015). International Migration and Trade Agreements. The New Role of PTAs.
https://www.jstor.org/stable/jstor.org/stable/43818277

Shai, K., et al (2019). A Critical Analysis of Difficulties faced by International Organizations

within the context of the role of the United Nations.
https://apsdpr.org/index.php/apsdpr/article/view/263/426

Vreeland, J.(2019). Corrupting International Organizations. Annual Review of Political

Science. https://www.anualreviews.org/content/journals/10.1146/annurev-polisci-050317-
071031