The effects of the war in Ukraine are felt in many ways – the one that is probably most pervasive in the daily lives of people around the world is rising prices.
Russia and Ukraine have a significant influence on the world economy due to their role as suppliers of several essential raw materials. These include fossil fuels, agricultural commodities as well as several metals.
The latest OECD Economic Outlook states that the two countries together account for around 30% of world wheat exports, 15% of maize exports, 20% of mineral fertilizers and natural gas exports as well as 11% of oil exports.
As a result of the Russian invasion the prices of many of the commodities in question have risen sharply.
This is particularly the case for coal and wheat, whose prices increased between 60% – 70% on average.
The price surge is also significant for other important raw materials, such as gas and oil (from 25% – to 55%) as well as metals such as nickel and platinum (between 21% – 47%).
While exploding prices and supply disruptions have significant repercussions for many economies, emerging and developing countries dependent on grain deliveries are especially vulnerable to these changes as the current situation in Somalia shows.
Where Are the World’s Fastest Roads?
High-speed roads that can carry goods to customers in far-off markets raise productivity, reduce poverty and are an important contributor to sustainable and inclusive economic development.
This is why economists spend time trying to assess the state of the world’s roads through surveys and the like.
IMF staff have developed a novel measure of road quality across 162 countries using Google Maps to determine the mean, or average, time it takes to drive between large cities that are at least 80 kilometres (50 miles) apart.
As the chart below illustrates, the world’s fastest roads are found in richer economies including the United States, Portugal, Saudi Arabia, Canada, South Africa and Namibia.
The slowest roads are found in the poorest countries – another obstacle to inclusive growth.
Simplicity is a main feature of the score.
Average speeds are easy to calculate and simple to monitor frequently.
This makes it an inexpensive complement to other connectivity metrics that rely on satellites or surveys.
The IMF research shows that road quality is highly correlated with travel times.
It is difficult to distill road quality into a single statistic.
For example, speed does not capture road safety, the availability of alternate forms of transport such as rail, or congestion during peak hours or seasons (when farmers might all take to the roads at once to get their produce to markets).
Furthermore, they might not fully capture the engineering challenges of building quality roads in diverse and difficult terrain.
Nonetheless, this simple metric can support policymakers and planners in assessing their road infrastructure relative to peer countries and the value of future road investments.
It can also be easily extended to monitor speeds in smaller roads that can be critical for many in rural areas.
This can help countries design policies to overcome road bottlenecks and improve their competitiveness by moving people and goods more expeditiously.
Webinar Invitation – South Africa’s use (or not) of Trade Agreements
Join us for the fourth in our trade series of webinars.
Hear global trade expert, Donald MacKay and I discuss South Africa’s use of Trade Agreements.
Join us on 21 June 2022 from 10:00 – 11:00 (CAT).