Hans-Heinrich Bass

The paper analyses the feasibility of a common currency for the East African Community (EAC), which comprises Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda. The paper discusses theoretical insights on the benefits and costs of a common currency. It then uses the introduction of the common European currency, the euro, as a potential yardstick to assess the feasibility of a common currency in East Africa. The paper analyses the readiness of the EAC’s economies for a common currency as measured by relevant indicators. It concludes that some caveats are in order with regard to the feasibility of a common East African currency at the present point in time. It also warns that expectations of the development impact of a common currency should not be too high, as the example of the euro shows that the real outcome in terms of trade facilitation and consumer welfare is much lower than expected.

Around the turn of the millennium, Tunisia achieved sizeable rates of economic growth. Given the additional fact of an increasing financial deepening and an emerging industry, the country had been considered by many observers as one of the ‘African Lions.’ However, even before the Arab Spring movements started in Tunisia, the average growth rate was still far from the rate required for a fast catch-up with high income economies. This article aims at analysing the role which foreign direct investment (FDI) has played and can play in spurring economic growth in Tunisia. It analyses domestic saving and investment as well as presents patterns of FDI and present promotional policies. The author argues that foreign direct investment can help to overcome some constraints in capital accumulation and even contribute to ‘inclusive growth,’ i.e., a regionally, socially, and inter-generationally balanced growth pattern. There are, however, two preconditions: capital inflows must be directed by appropriate promotional policies and Tunisia must insulate itself from any negative repercussions from the present political unrest in the Middle East and North African region.

This paper aims at presenting an overview of the six most important trends in the world trade of our times: (1) a continuing expansion of world trade volume – but with declining dynamism, (2) new relations between the old and the new world-trade powers, and (3) further shifts in the sectoral composition of trade flows (commodities, manufactures, and services). In addition, there is the influence of (4) new players in the commodity trade (i.e., the ‘financialisation’ of commodity trade), (5) new forms of enterprise cooperation in manufacturing (production networks, strategic alliances, global value chains), and (6) new tradables in the service sector.

This article aims to evaluate the integration of Tunisian firms into global value chains (GVC), to offer a prognosis of their future prospects in this area, and to offer policy recommendations to improve GVC participation. Based on the OECD data on trade in value added, indicators for the current status and the previous dynamics of backward integration as well as the previous increase in GVC participation have been calculated. The data shows that the integration of the Tunisian economy into GVCs is relatively strong in only two industries: electrical machinery and textiles. It can be shown that an increase inGVCparticipation goes hand in hand with a strengthening of the position in GVCs. However, most industries relevant for employment generation (especially food and textiles) show only weak improvements in GVC participation. One reason can be seen in an inappropriate investment promotion policy. As the forecast shows a delinking of Tunisia from international capital flows, this situation is not likely to change for the better in the near future without changes in the country’s investment policies. It is recommended to concentrate on the promotion of the local transformation of agricultural products that are usually exported untreated (deepening GVC participation) and to create niche products from other traditional sectors, such as technical textiles (broadening GVC participation). It is also suggested to increase the links of local small and medium enterprises to GVCs to allow for larger employment effects of GVC participation and for a more socially and regionally balanced economic growth.