“Use the data and your economic knowledge to assess the view that living standards in the UK are likely to benefit from sustained economic growth in the economies of Africa.”

Apologies for the huge amount of normative economics.

Although the development of African economies will definitely have an impact on the British economy as a whole, it is uncertain if this impact will be positive or detrimental. Moreover it is hard to see how this distant growth is going to have a significant impact on the standards of living in the UK. If we use National income to measure the standard of living we could see a potential benefit but using more complex methods such as the UN Human development index it is hard to see how and “African expansion” no matter how sustained, could have a any type of impact, be it positive or negative.

Looking at it from a purely economic and National income based view, the sustained growth of any economy is likely to have an impact on the UK’s. Developing trade in UK goods is likely to be beneficial, and as the countries move from third world to more developed economies they may rely on the strong financial services industry in London, thus investing money in the city and combined, through this affect on aggregate demand in the UK economy lead to a shift and thus an increase in GDP.

Similarly, on the supply side, emerging African economies with increased productivity and firms operating in their area to produce raw materials, ( a strong contender of where a sustained African economic growth will come from), could lead to shift in the short run aggregate supply of the UK economy, with cheaper raw materials and lower costs of production a similar affect may be seen, shifting the SRAS curve outwards and thus in a highly simplified way to a higher GDP.

As National income (or GDP per capita) is a measure of the standards of living in an economy and indeed it is a component of the Human Development Index, it is not to far a leap to suggest that this growth will lead to the UK – and all economies – standards of living increasing.

But we must question the strength of the apparent clear argument above. The first issue is the source of the “Sustained” growth. Just because growth is sustained does not mean it is sustainable or not affecting the productive potential of economies for future generations. In source B we get an idea of where the growth is coming from. “Major supplier of raw materials”. This is in no way sustainable growth, and the raw materials are not being replaced – the depletion of these raw materials could be argued to decrease the standard of living in the UK and helps highlight the problem of equating National income and even the Human development index with standards of living.

Environmental damage, although hard to quantify is very much a factor of the standard of living – ask a person whether they want to save all the panda’s gain a higher income and most would choose the former. If the economic growth in Africa is stemming from the depletion of natural resources,

then it is unlikely that the UK standards of living would improve, both in the short and longer run due to the affects this may have on global warming.

Looking more closely at the Human Development Index and its components it is hard to see how African economic growth is going to affect UK’s Health (Measured by life expectancy at birth) and Education attainment (measured by Literacy rates), so any change in the UK’s standards of living have to come from the African economies affect on GDP.

The weight of the initial argument is also reduced when we consider what may be the negative side effects of African growth to the UK economy. Increased competition to UK exports may results as the African economies being able to produce, for example, agricultural products to the world market at a lower cost, this could in turn have a reverse affect on AD as exports fall and foreign money stops seeping into the UK economy.

What is also interesting to note is the limited power that the UK has in African economies at the moment, starkly different than that which existed during the slave trade. Although our limited dominance is a good thing, the emerging African economies owe the UK no favours, whereas Chinese investment in Africa is huge. From construction projects, bridges and business investment the Chinese have invested in companies from the Eastern Cape to the Ivory Coast and across the Kenya. Any sustained growth in Africa is more likely to have positive affects in the standards of living of the Chinese as they use these links to draw money into their economy in return for their investment (or what I would call exploitation with a friendly hand shake) in the African economies.

The UK is in no such position, a few dilapidated colonial embassy buildings in African countries are not going to draw the wealth of Africa into the UK and thus increase our standard of living. Ok ,this may be exaggerated, but the point still stands. Multinationals as I am sure Karl Marx would agree keep the money so that the owners of the capital get richer and the workers stay on subsistence livings. Parallels I am sure can be drawn to the Chinese work on the copper trade in Zambia.

Away from that tangent, we can see that the only way that the UK’s standards of living would improve is through the affect that sustained growth may have on the national income of the UK, but as we evaluated even this affect is in doubt. The Sustained growth of African countries is not sustainable and it is this non-sustainable nature that may, through the environment actually non-quantifiably reduce the welfare of British citizens. The Chinese African love affair, although weakening shows us that the UK is in no position to exploit the African countries growth – regardless of the moral conscious. And thus, the sustained economic growth in the African ecomomies that we can see as frightfully high in extract 1 is unlikely to have a effect on the UK standards of living, and even more unlikely to have a positive effect.