#1398 - World economic recovery

In fact, in Ernst's previous life, Africa had a Common Market for Eastern and Southern Africa (COMESA), whose secretariat was located in Lusaka, the capital of Zambia.

The reason why this regional organization, led by 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.

East Africa is a very unique country, occupying almost half of Africa's area, and its territory occupies large areas of eastern and southern Africa.

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

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

Take the East African Common Market as an example. First of all, East Africa itself is the traditional name used by the Rhine Empire in the international community, which does not reflect internationality and is easy to cause ambiguity.

Moreover, from the current African geography, the narrow sense of East Africa is basically located within East Africa, with only a few colonial islands in the Indian Ocean, the eastern part of South Africa's colonies, and the eastern part of North Africa slightly bordering on East Africa.

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

In the view of the East African government, the Common Market for Eastern and Southern Africa is only a preliminary attempt and transitional regional international organization. In the future, it may well become a powerful international organization integrating most of Africa, such as the "African Union" and the "African Economic Cooperation".

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 try the waters with the "Common Market for Eastern and Southern Africa" first.

Subsequently, the East African government conducted fierce discussions on the framework of the organization and the participating countries, but the most controversial were Italy and Belgium.

Although Spain has a higher status than these two countries, Spanish Guinea is not of great value and presence, so much so that 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. This is a relatively fair economic cooperation organization. At least in the early 20th century, this type of economic cooperation organization was progressive.

The headquarters of this economic organization was undoubtedly located in Rhine City, the capital of East Africa, while some functional departments such as the Development Bank and the Arbitration Court were located in some cities in northern East Africa to facilitate transportation between member states.

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

......

At the time when the Common Market for Eastern and Southern Africa conference was held, new changes also occurred in the world's economic trends.

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

Under normal circumstances, after experiencing World War I, there should have been a wave of post-war reconstruction, thereby stimulating the recovery of the world economy.

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

But now that the epidemic is over, coupled with the overall peaceful situation in the world, and the resumption of post-war reconstruction work in Europe, East Africa and the United States also need to digest the spoils of World War I.

Therefore, in mid-1922, East Africa's moribund economy finally saw the light, market confidence was restored, investment activities came out of the trough, and the national economy showed vitality again, which relieved the East African government.

However, compared to East Africa, the economic recovery process in North America and Western Europe was even more rapid.

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

A typical example is that in early 1922, the steel industries of European and American countries not only recovered to pre-war levels, but also began to launch an impact towards higher production capacity.

The steel production of the United States and Germany had returned to its peak by the end of 1921, and it made rapid progress in early 1922.

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

The situation in Europe and the United States was naturally seen by the East African government.

Rhine Palace.

Crown Prince Friedrich, who had just sent away representatives from various countries, began working on other aspects without stopping, and Ernst also sent a report on the current economic situation to Crown Prince Friedrich.

Ernst looked at his son, who was growing rapidly and was already able to shoulder great responsibilities, and was very pleased: "Friedrich, you have performed very well in the past few months. The overall handling of government affairs is barely satisfactory, so I have to give you more responsibilities and accumulate more work experience."

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

"Yes, Father!" Friedrich took a slightly thick document from Ernst's hand, sat down on the chair, and began to read it.

Through these materials, Friedrich's brow could not help but furrow.

Although these data cannot be too accurate because they involve other countries, they are also of great reference value.

Through these data, and comparing them with the domestic economic data of East Africa, it can be reflected that East Africa's economic recovery process is slower than that of European and American countries.

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

"Father, through the materials from these statistical departments, it can be seen that the world economy as a whole is in a recovery phase. The economic slump that lasted for nearly two years since the end of the war has finally bottomed out."

"However, due to various factors in different regions of the world, economic trends may also be somewhat different. For example, our country's current economic growth rate is slightly lower than that of the United States or Western Europe."

"There are even some areas in the world where the economy has fallen into a state of decline, but the overall impact is not significant."

Ernst asked: "Then how do you view the fact that East Africa's current economic development speed is not as fast as that of European and American regions?"

Friedrich replied confidently: "Although the domestic economic development expectations are not as good as those of European and American countries, I do not think this is entirely a bad thing."

"Because our East Africa is currently in the midst of economic transformation, with large amounts of funds being invested in research and development, and the support of high-end and emerging industries, and this process is slow and difficult to produce results."

"For example, in the past two years, our country's steel industry has closed down and eliminated some inefficient or outdated production equipment in order to carry out industrial production and adjustment."

At the same time, stricter standards were set for the development of the steel industry, and the threshold for entry into the steel industry was raised. This led to a decrease in China's steel production instead of an increase, and its growth rate was even lower than that of major steel producing countries such as the United States and Germany.

Since 1910, major changes have taken place in the East African steel industry pattern. In the past, it was completely monopolized by the East African government, but now private investment and the construction of steel companies are allowed.

However, due to the low income levels of East African nationals and the weakness of private capital in the early stages of market opening, private steel companies were generally dominated by small steel enterprises with low technical content and relatively small scale.

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

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

In fact, during World War I, East African private steel companies had accumulated a certain amount of capital after several years of barbaric growth, and even took over some local steel industry enterprises with poor operating conditions.

By the time World War I was completely over, the proportion of national production in the East African steel industry had reached nearly 60/40.

This was mainly because those large East African state-owned steel enterprises had excessively high production capacity. A single steel enterprise could reach a steel production capacity of 100,000, hundreds of thousands, or even millions of tons. Such large-scale steel production enterprises required huge investment, and only the East African government had the ability to invest.

During the Fifth Five-Year Plan period, the development of the steel sector in East Africa was affected by policies. After shifting to high-quality development, the promulgation of relevant laws and measures raised the threshold for steel industry enterprises and promoted the elimination of backward production capacity.

This will undoubtedly suppress the short-term development of the East African steel industry. For example, some steel plants may not be able to pass government audits due to unfavorable factors such as equipment conditions, operating conditions, and related measures, so they will be shut down, suspended, or even go bankrupt directly.

In this way, the overall steel production capacity will naturally not increase significantly, but will instead experience a significant decline in the early stages.

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

"Steel production in European countries has recovered, and the steel production capacity of countries such as the Empire and the United States has grown wildly during World War I. Even many backward countries and regions have invested in the construction of many steel production enterprises during World War I."

"Therefore, the world's steel production has greatly increased compared with the pre-war period, but this growth is also unhealthy."

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

"However, except for East Africa, few countries in the world are aware of this. Their steel production enterprises are still expanding their production capacity without any scruples due to market inertia or other factors, which can easily lead to a vicious circle. The more they produce, the lower the steel price, and eventually it may even lead to a break in the capital chain, thereby causing a large number of steel companies to go bankrupt."

"Especially in some backward countries and regions, out of consideration for politics, national defense, and other aspects, they are expanding steel production without limit. If they do not grasp the degree of it, they may suffer even more severe backlash."

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

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

The development of the steel industry in industrial countries like East Africa has also gone through this process. In 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.

The East African solution was also very simple and crude, that is, closing the country to the outside world and producing and selling domestically. By closing the country to the outside world, it protected the domestic market and prevented the weak East African steel industry from being strangled in the cradle by foreign steel giants.

Domestic production and 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, thereby playing a positive role in the domestic steel industry.

However, East Africa can use these methods, but it does not mean that other countries can do it. One of the most important points is that today's backward countries and regions in the world do not even have the right to develop independently.

For example, India, as a British colony, whether India can vigorously develop the steel industry is entirely a matter of London's words. Indians do not have the independent right to decide on the development of their national industry.

Therefore, for some countries, if they want to develop their national industry, the prerequisite is to be independent and autonomous and control their own destiny.

Although East Africa is a country developed from a colony, it has always been independent and autonomous since the colonial era. There was no suzerain state in the colonial era of East Africa. Instead, it was the colonial activities promoted by the Rhine royal family, that is, the Black Heringen royal family at that time, and the Rhine royal family has always regarded East Africa as a major base for development.

Friedrich said: "Therefore, in the current situation of blind development of the world's steel industry, our East Africa's steel industry upgrading and transformation does suppress the increase in production in the short term, but in the long run, it is more conducive to the development of the domestic steel industry."

Once East Africa's steel industry upgrading and transformation is completed, the East African steel industry with higher production efficiency, lower overall costs, and better product quality will be more competitive, and at the same time, its ability to resist market risks and economic crises will be stronger.

However, achieving this requires time, especially in the case that East Africa's Fifth Five-Year Plan has been postponed due to the impact of the epidemic compared to other five-year plans. It is estimated that the complete upgrading and transformation of the steel industry will have to wait until after 1924.

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

Therefore, Friedrich concluded: "Since we know that the path we are taking is correct, we should implement it more firmly. Some rumors will naturally be dispelled when the time comes, and the situation is always within a controllable range. Although the economic recovery in East Africa is slower than that in Western Europe and North America, it is also higher than in other parts of the world, which means that some small problems will not affect the overall development of the country."