Abstract
Despite geopolitical progress, the resolution of tensions and uprisings remains the same: a feeble effort to accumulate support. In the 21st century, an act more prominent than military intervention comes from economic policies. The tactile decision to invest in other countries has been a proficient strategy for gaining political support. Nevertheless, despite this efficiency, the expenses and trade-offs are dire. Despite economic growth spiking in FDI-infused economies, poverty rates are yet to drop, and the reasons are three-fold: high-interest debt traps, resource extraction, and the rise in volatile cryptocurrencies, all in all, proliferating corruption. Though the rise in investment stimulates short-term economic growth, none of it goes to the people. In fact, the risk of conflict spikes due to uprisings and foreign exploitation, shown perfectly in Sierra Leone through blood diamonds. Foreign countries use exploitative resources to fund terrorists in an effort to change the status quo. This notion of intervention is highlighted throughout international affairs, and the involvement of FDI illuminates it perfectly: intervention is synonymous with colonization. Although times have changed, the double-edged sword of innovation is, ultimately, a faucet for colonial ideas to come to fruition.
Introduction
Although colonial exploitation through military means has slowed, the drive for economic and political power has never stopped. This drive for hegemony has leaked into the global economic policies that favor investment. Despite sounding beneficial on paper, this hypocrisy as a policy traps African economies and their citizens in endless cycles of intergenerational poverty. Overtaxed by the burden of reform, these African countries face the downsides of foreign direct investment (FDI). Ultimately, investment, stroked by the flames of domination, has turned into an arms race akin to the cold war. Although military aggression has comparatively dissipated, the West and China have invested profusely into African countries, fighting over regional power vacuums. This investment has proven to be detrimental. Empirically, investment has trapped African countries into debt traps, draining their natural resources while fueling corruption. Not only does exploitation weaken the host countries' governmental systems, but it fosters flashpoints for conflict, equivalent to Sierra Leone's infamous blood diamonds. Even worse, the rise of cryptocurrencies has bled into FDI. This intrinsically volatile form of payment fluctuates based on weak governmental structures. This symbol of innovation illuminates the change and adaptation of colonization. Above military posturing, the future indicates that political and economic goals can be solved "legally" through FDI, only at the expense of the African countries through debt traps, exploitation, and political pressure.
Economic exploitation and inefficiency are prominent throughout the history of investment in Africa. The rise in debt traps ignited through high-interest rates has stalled economies, while targeted resource extraction has contracted them. This investment, targeted toward smaller and weaker governments, allows world powers to exploit them financially. For instance, the South African country, Angola, faces unprecedented monetary pressure administered by China. This form of pressure, compounded through time, is what debt traps are: the economic enclosure and submission of financially weaker countries (Chiwanza). Within China and the West's toolbox resides interest-based monetary policies–high-interest rates that beat out competitors like the International Monetary Fund due to an absence of fiscal discipline (Nikkei, China doubles). With this discipline in place, countries flock towards China in fear of discipline, synonymous with harsh tax reforms and radical uprisings akin to the Greek default in 2009. For this reason, debt in places like Angola, for example, has surmounted over $42.6 billion (SCMP, Angola looks). Unfortunately, this constant repayment of loans prevents economic growth in the long term. The money gained in the status quo goes straight towards repayment, and Angola is a perfect example of limited growth. Despite the South African nation standing as one of the biggest oil producers in the world, they hardly profit off their resources (Chiwanza). Not only does this specialization inherently risk recession, but it gives total control to the buyers. China has purchased less oil from Angola, with regions like the Middle East and countries like Russia filling in (SCMP, Angola looks). Absent these purchases, Angola either fails to repay China's debt and threatens default, or they physically lose land. In the past, Sri Lanka, a country that failed to pay back its Chinese debts, looked towards indirect payments. Instead of cash payments, they paid through land, handing over the lease of Hambantota port to China. With Angola being a coastal city, a decrease in the number of ports will decrease trade and prevent fishing, agricultural, or even industrial land development.
Above financial imprisonment, FDI hampers growth through resource extraction. Exploitation is protrusive, as 80% of foreign investment has gone to natural resource exploitation (Chen). Resource removal's implications are twofold: extraction hampers economic growth and fosters civil conflict. Between 99 developing countries, it is proven that there is an inverse relationship between FDI and natural resources (Asiedu). Despite this decay in natural deposits, weaker governments are still prone to investment; despite the downsides of FDI, regions that seek economic aid lack druthers and are forced to seek out FDI. These regions that are rich in natural resources have weak institutions, and unfortunately, the involvement of FDI perpetuates the constant economic and political downward spiral. This spiral accelerated in Sierra Leone during the early 1990s. The rise of investment by European-backed mining companies, security, and firms, poured into Sierra Leone. Fostering conflict in this proxy war, blood diamonds, extracted through FDI, became a lynchpin for destruction (Flanagan). These diamonds, mined by foreign companies, enriched rebel groups and allowed them the cash flow for terrorism. With blood entrenched in the greedy hands of capitalist countries, the reds and greens of their money and conscientiousness should illuminate the dangers of FDI: 50,000 dead and millions displaced, with FDI acting as the blockchain for terrorism funding (Washington, 2 million).
Even worse, the inherent volatility within the business cycle is now synonymously connected with the intrinsic volatility in cryptocurrencies. A platform that many African countries now use to receive foreign investment (Maister) has harmed the African people. In Nigeria, the implications of crypto restrictions were dire. These restrictions not only obstruct foreign investment in the fintech sector but also disproportionately "impacted millions of young Nigerians earning a living from the sector" (Oluwole). In other words, the financial decisions of the Nigerian people rest in the government's hands: a region of governments, which not only abused from colonization in the 1800s but exploited through FDI in the 2020s. Ultimately, foreign involvement is a factor in exploitation. Throughout Africa, investment has dirtied its hands. Debt traps in Angola, resource extraction in Sierra Leone, and crypto fallout in Nigeria prove that the suspect is the investor. The constant bickering for international involvement, in fear of regional power vacuums, cause these investors to pile in. Fear is an intuitive concept, not only for investors but to investees. Anxiety entitles investors to "donate" frequently while allowing investees to accept donations. Blinded by the fear of defaulting, investors have successfully shifted the fear away from them. In actuality, these investors are artificially creating these financial problems. Countries should not be afraid of natural business cycles, but these hegemonic loan sharks are biting their teeth in foreign waters; because, frankly, they should not be there.
Absent economic endeavors, the incentives behind FDI have always been full of politics. While countries like the US and China benefit through modern-day satellite states, these states are forced to put their own government and people on hold, barring the rise in corruption. Indeed, out of 56 new and old African countries, fraud is notable. China's FDI has increased corruption in African governments and economies (Liu). Damagingly, this rise in corruption has fostered poverty all across Africa. Strong and transparent governmental systems are requisites for bringing people out of poverty. Stimulus checks, food stamps, and healthcare are vital tools governments use to spot-reduce penury. However, corrupt FDI-filled institutions have proven to launder cash. For instance, corruption and money laundering have decimated the Angolan government's reputation. Money laundering has been especially prevalent, where over $3 billion have been siphoned away from the government (Browning). Juxtaposed with economic growth, it is clear that FDI can not reduce poverty. Despite Libya's economy growing 12.5 times that of America's (African Development Bank Group + Aljazeera, US economy), the people there are not reaping the benefits. Even with that growth, over 33% of the local population lives below the poverty line, pleading for basic human necessities, while the government fails to support them (Faulkner). They lack stimulus checks, food stamps, and even healthcare, forms of critical governmental involvement. Instead of donating the $3 billion to the Libyan people, government officials launder the cash, perpetuating a cycle of corruption and, thus, poverty. Economic growth will never equate to poverty reduction alone. As FDI spikes corruption and economic growth, it is ultimately the people who suffer. Those who deal with an unfit government in an unfit liberal hegemonic system are those who pay the price, not the investor or the ones accepting the investment.
Furthermore, African countries have become a stepping stone towards power in the US and China's attempts to complete and counter liberal hegemony. Absent conflict, power is demonstrated politically, whether through rhetoric or global platforms like the UN; power, or rather the drive for it, has carved out the topography of politics. Hardened through time, these Western countries that won after the Cold War implemented their western frameworks. These liberal lenses have polarized and defined good vs. bad. This polarization puts the importance of political voting allies in the limelight, and unfortunately, FDI does this extremely effectively. Indeed, African countries that received investments from China were 78% more likely to vote for them (Li). Because of this efficiency, Chinese investments are no longer pulled by the strings of economic growth but rather by international relationships. These relationships not only fill up power vacuums that are susceptible to the West but also give China more freedom. This autonomy, backed by the African countries that receive foreign investments, stands in the way of Western frameworks. Without Western hegemony, there is no incentive to follow the status quo. China is quickly becoming the majority; economically, politically, and, quite frankly, physically. In this sense, China has more power to act on radical beliefs. The genocide of the Uyghur population is not only inherently malicious, but it demonstrates the power of support. More often than not, African countries support China and its ethics, and this genocidal dilemma is no different (Olewe).
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