African Entrepreneurship Records 2

Chapter 1393 World Economic Recovery
In fact, in Ernst's previous life, there was a Common Market for Eastern and Southern Africa in Africa, whose full name was the Common Market for Eastern and Southern Africa, and its secretariat was located in Lusaka, the capital of Zambia.

The reason why this regional organization established under the leadership of East Africa is still called the Common Market for Eastern and Southern Africa is closely related to the current political map of the African continent.

The country of East Africa is too unique. It occupies less than half of Africa, and its territory occupies a large area of ​​eastern and southern Africa.

Therefore, it is most appropriate to use the term Southeast Africa to cover these countries on the periphery of East Africa.

Neither the East African Common Market nor the South African Common Market can achieve this effect.

Take the East African Common Market for example. Not to mention that East Africa itself is the traditional name of the Rhine Empire in the international community. It does not reflect its international nature and can easily cause misunderstanding.

Moreover, from the perspective of current African geography, the eastern part of Africa in a narrow sense is basically located in East Africa, with only a few colonial islands in the Indian Ocean, the eastern part of South African colonies, and eastern North Africa having some connection with East Africa.

For example, the country of Egypt is located in what can be called "Northeast Africa", in the northeast corner of the African continent, so it is far-fetched to classify Egypt as part of East Africa.

Moreover, based on Egypt's culture, history and religious attributes, the world prefers to classify Egypt into the larger geographical concept of North Africa. Of course, the North Africa here refers to Africa north of the Sahara Desert, which corresponds to the larger concept of sub-Saharan Africa. North Africa can also be seen as a desert or an area influenced by Arab culture.

Therefore, in order to bring the neighboring countries in East Africa into one system, the concept of the Common Market for Eastern and Southern Africa is currently the most appropriate.

In fact, the previous Common Market for Eastern and Southern Africa was not limited to South Africa and East African countries. For example, Libya, a typical North African country, was also its member state.

From the perspective of the East African governments, the Common Market for Eastern and Southern Africa is only a preliminary attempt and transitional regional international organization. In the future, it is entirely possible that it will become a powerful international organization such as the African Union and the African Economic Cooperation that integrates most parts of Africa.

At the current stage, the colonial forces of Europe and the United States are still relatively strong throughout the African continent, so East Africa can only test the waters by establishing the "Common Market for Eastern and Southern Africa".

Subsequently, East African governments held heated discussions on the organization's framework and participating countries. However, the most controversial countries were Italy and Belgium.

Although Spain's status is higher than these two countries, Spanish Guinea does not have much value and presence, so the Spanish government does not pay much attention to it.

After a month of discussion, the Common Market for Eastern and Southern Africa was officially established. It is a relatively fair economic cooperation organization, which was progressive, at least in the early 20th century.

The headquarters of this economic organization is undoubtedly located in Rhineland, the capital of East Africa, while some functional departments such as the Development Bank and the Arbitration Court are located in some cities in the north of East Africa to facilitate transportation between member countries.

In the future, as the organization grows and expands its influence, it may move some important functions to the northwest.

……

When the Common Market for Eastern and Southern Africa meeting was held, new changes also occurred in the global economic trends.

Although international competition is becoming increasingly fierce, with the end of World War I, the overall world situation has returned to the mainstream of peaceful development.

Under normal circumstances, after World War I, when the war just ended, there should have been a wave of post-war reconstruction, which would have stimulated the recovery of the world economy.

However, due to the sudden outbreak of the epidemic, the world economy remained in a depression until early 1922, with no signs of improvement.

However, now that the epidemic is over, coupled with the overall world peace situation, post-war reconstruction work in Europe has resumed, and East Africa and the United States have to digest the spoils of World War I.

So in mid-1922, East Africa's half-dead economy finally saw the light of day, market confidence was restored, investment activities came out of the low ebb, and the national economy showed vitality again, which made the East African governments breathe a sigh of relief.

However, compared with East Africa, the economic recovery in North America and Western Europe was faster.

The reason why East Africa's economic recovery is slower than that of Europe and the United States is that during this period, East Africa's economic transformation had already begun, and it was naturally difficult to achieve results in a short period of time.

A typical example is that in early 1922, the steel industry in Europe and the United States not only recovered to the pre-war level, but also began to strive for higher production capacity.

Among them, steel production in the United States and Germany had returned to its peak at the end of 1921, and increased by leaps and bounds in early 1922.

The United States gained more world markets during World War I, while Germany created a large amount of market demand due to post-war reconstruction.

The situation in Europe and the United States is naturally also being noticed by the East African governments.

Rhine Palace.

Crown Prince Friedrich, who had just seen off representatives from various countries, immediately started working on other areas. The current economic situation was also reported to Crown Prince Friedrich by Ernst.

Ernst was very pleased to see his son growing up quickly and taking on important responsibilities. "Friedrich, you have performed very well in the past few months. The overall handling of government affairs is satisfactory, so I will give you more responsibilities and help you accumulate more work experience."

"This is a recent economic report. Take it and have a look at it first, then tell me your views and opinions."

"Yes, father!" Friedrich took a slightly thick document from Ernst, sat on the chair and started to read it.

After reading this information, Friedrich couldn't help but frown.

Although these data may not be too accurate because they involve other countries, they are still of great reference value.

By comparing these data with the domestic economic data in East Africa, we can see that the economic recovery process in East Africa is slower than that in Europe and the United States.

After a long time, Friedrich finally finished reading all the information, and Ernst sat aside and waited patiently for Friedrich to speak.

"Father, from the data from these statistical departments, we can see that the world economy as a whole is now in a recovery phase. Since the end of the war, the nearly two-year economic depression has finally bottomed out and rebounded." "However, due to various factors, different regions in the world may have different economic trends. For example, my country's current economic growth rate is slightly lower than that of the United States or Western Europe."

"There are even some parts of the world where the economy is declining instead of growing, but the overall impact is not significant."

Ernst asked, "What do you think of the fact that East Africa's current economic development is not as fast as that of Europe and the United States?"

Friedrich answered confidently: "Although the domestic economic development forecast is not as good as that of Europe and the United States, I don't think this is a completely bad thing."

"Because East Africa is now in the midst of economic transformation, a large amount of funds are invested in research and development, and in supporting high-end and emerging industries. However, this process is slow and difficult to produce results."

"For example, in the past two years, my country's steel industry has shut down and eliminated some companies with low efficiency or outdated production equipment in order to carry out industrial production and adjustment."

"At the same time, stricter standards have been set for the development of the steel industry, raising the entry threshold for the steel industry. This has led to a decline in my country's steel production, and the growth rate is even lower than that of major steel producing countries such as the United States and Germany."

Since 1910, the pattern of the East African steel industry has undergone major changes, from being completely monopolized by the East African government to allowing private investment and construction of steel companies.

However, because it was the early stage of market opening, the general income level of East African citizens was low and private capital was weak, which made private steel companies generally small steel companies with low technology content and relatively small scale.

After more than ten years of development, these private steel companies had formed a group of steel production companies of a certain scale through fierce competition and mergers by 1920. Although they still could not compare with the large state-owned steel companies in East Africa, they were not inferior to some local companies.

Private steel companies were also an important reason for the rapid expansion of East Africa's steel production during World War I. Although they were generally small in scale at the time, they were numerous, so when concentrated together, their overall output was enough to have a certain influence on the national steel market in East Africa.

In fact, during World War I, private steel companies in East Africa had accumulated a certain amount of capital after several years of rapid growth, and even took over some local steel industry companies that were in poor operating conditions.

By the time World War I was over, the proportion of East Africans in the steel industry had reached nearly 60:40.

This is mainly because the production capacity of those large state-owned steel companies in East Africa is too amazing. A single steel company can reach a steel production capacity of hundreds of thousands, or even millions. Such large steel production companies require huge investments, and only the East African governments have the ability to make the investments.

During the Fifth Five-Year Plan period, the development of the steel industry in East Africa was influenced by policies and shifted to high-quality development. Relevant laws and measures were introduced to raise the threshold for steel industry enterprises and promote the elimination of backward production capacity.

This will undoubtedly suppress the short-term development of the East African steel industry. For example, some steel mills may not be able to pass government review due to unfavorable factors such as equipment conditions, operating conditions, and related measures, so they may have to suspend production or even go bankrupt.

As a result, the overall steel production capacity will naturally not increase significantly, but will instead decline significantly in the early stage.

Friedrich said in response to this: "Based on the current development of the international market, the world's steel production capacity has been in a period of explosive growth in recent years."

"Steel production in European countries resumed, and steel production capacity in countries such as the Empire and the United States grew wildly during World War I. Even many backward countries and regions invested in and built a number of steel production companies during World War I."

"So the world's steel production has greatly increased in recent years compared to before the war, but this growth is also unhealthy."

"Increasingly fierce competition has led to a continuous decline in international steel prices, and some steel companies are even operating at a loss. This is not a good phenomenon."

"However, apart from East Africa, few countries in the world are aware of this. Their steel production companies are still expanding their production capacity without scruples due to market inertia or other factors. This can easily lead to a vicious cycle. The more they produce, the lower the steel price will be, which will eventually lead to a break in the capital chain, causing a large number of steel companies to go bankrupt."

"Especially some backward countries and regions, for political and national defense reasons, have expanded steel production without limit. If they fail to grasp the degree, they may suffer more serious backlash."

Steel production companies in backward countries and regions are certainly not as good as industrial countries like East Africa in terms of capital, technology, and talent. However, due to the needs of national development, they have to support the development of the steel industry. This can easily lead to a situation where they have production capacity but low overall production efficiency and product quality that cannot compete with the international market.

If not handled properly, it can easily backfire. Of course, there is a solution to this problem. After all, the development of steel enterprises is a process from nothing to something, from weak to strong.

The steel industry in industrial countries like East Africa also developed in this way. At the beginning, the problems faced by the steel industry in East Africa were not much different from those faced by the steel industry in backward countries and regions today.

East Africa's solution was simple and crude, which was to close the country to the outside world, produce and sell its own products. By closing the country to the outside world, it protected its own market and prevented the then weak East African steel industry from being strangled in the cradle by foreign steel giants.

Self-production and self-sales are based on protecting the domestic market. In addition, East Africa's large-scale infrastructure construction in the last century also created a large amount of market demand, which played a positive role in the country's steel industry.

However, the fact that East Africa can use these methods does not mean that other countries can do the same. A very important point is that the backward countries and regions in the world today do not even have the right to develop independently.

Take India for example. As a British colony, whether India can vigorously develop its steel industry depends entirely on a word from London. Indians do not have the autonomous right to decide the development of their own industry.

Therefore, for some countries, if they want to develop their own industries, the prerequisite is that they can be independent and take control of their own destiny.

Although East Africa is a country that developed from colonies, it has always been independent since the colonial era. During the colonial era in East Africa, there was no sovereign country at all. Instead, it was the Rhine royal family, that is, the Hechingen royal family at the time, that carried out colonial activities, and the Rhine royal family has always used East Africa as its base for development.

Friedrich said: "So in today's world where the steel industry is blindly developing, the upgrading and transformation of our steel industry in East Africa has indeed suppressed the increase in production in the short term, but in the long run, it is more conducive to the development of our own steel industry."

Once the upgrading and transformation of East Africa's steel industry is completed, the East African steel industry will be more competitive with higher production efficiency, lower overall costs and better product quality, and will also be more capable of resisting market risks and economic crises.

However, it will take time to achieve this, especially since the East Africa Five-Year Plan has been postponed due to the epidemic compared to other five-year plans. It is estimated that the steel industry will not be completely upgraded and transformed until after 1924.

During this period of time, the steel production capacity of European and American countries should still be in a state of large-scale growth, and the same is true in other industrial production areas.

So Friedrich concluded: "Since we know that the path we are taking is correct, we should be more determined to implement it. As for some rumors, they will naturally be broken when the time comes, and the situation is always under control. Although the economic recovery in East Africa is slower than that in Western Europe and North America, it is still higher than other parts of the world, which means that some minor problems will not affect the overall development of the country."

(End of this chapter)