African Entrepreneurship Record

Chapter 1061: Chapter 70: Using ”Europe and America” as a Mirror

The Austro-Hungarian Empire is facing various difficulties, and as time progresses, internal conflicts continue to escalate, affecting the military realm and severely hindering the development of the Austro-Hungarian army. East Africa, being an extraterritorial country, cannot rescue the Austro-Hungarian Empire. After all, in terms of influence, Germany has a stronger impact on Austro-Hungary, especially in the economic sphere.

Of course, the East African Government, considering various factors, still decided to lend a hand to the Austro-Hungarian Empire. After Erich’s visit, the East African Government strengthened its military cooperation with Austro-Hungary.

For the purpose of exchange, East Africa offered some degree of openness in battleship technology to Austro-Hungary, and in return, Austro-Hungary helped East Africa with artillery technology.

Although East African artillery has developed well, there is still a certain gap compared to strong European nations, and Austro-Hungary excels in this field, especially in the manufacture of large-caliber artillery.

Of course, there aren’t many military technologies from Austro-Hungary that East Africa covets. Since the South African War, the East African Army has ventured into new territories, with various military technologies and equipment emerging one after another, significantly enhancing both the army and navy.

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Rhein City.

Sivert: ”According to news from New York, since October this year, a crisis has erupted in the U.S. financial sector, and this crisis is likely to impact Europe. Many banks in the United States have already gone bankrupt, the capital chains of small and medium-sized enterprises have broken, and American industry has entered a new stage of stagnation.”

Ernst has become numb to the economic crises of capitalist countries, as similar incidents occur almost every year, but it depends on the scope of their impact.

The 1907 economic crisis undoubtedly had a profound impact, for instance, the creation of the Federal Reserve was directly caused by this crisis. This economic crisis will also be transmitted to all capitalist countries with the United States being the foremost industrial nation, further exacerbating the contradictions among capitalist countries.

The outbreak of capitalist economic crisis will inevitably impose certain impacts on East Africa’s own industrialization plans, requiring more intervention from the East African Government to ensure the export of its industrial products.

Ernst said: ”The crisis in the U.S. financial industry will certainly trigger a new round of world economic crisis, especially affecting the Europe and America markets. In the short term, excess industrial capacity will severely suppress the prices of industrial goods in the market, and the consumption capacity of Europe and America markets will also be weakened accordingly. At this stage, it is very unfavorable for our country’s export of light industrial consumer goods.”

The economic crisis in the capitalist world poses both advantages and disadvantages for East African industrial development, but it will not have a significant impact on East Africa’s own industrial growth. During this industrial plan development phase, East Africa has set up only a few new enterprises, and East Africa’s controlled market can also play a buffering and isolating role against external world markets.

During the period of the industrialization plans, East Africa invested in and constructed more than a thousand enterprises above a certain scale, which must be completed within five years. Meanwhile, during the period from 1906 to 1907, the United Kingdom registered nearly twenty thousand new enterprises, and Germany, the United States, and other industrial giants registered even more.

Therefore, the threshold for establishing enterprises in Europe and America is too low, and small and micro enterprises face operational difficulties with the slightest stir. Due to the mania for wealth in European and American societies, many people with spare money follow the trend of starting factories, while European and American banks are short-sighted and poorly regulated, resulting in too many bad debts, eventually leading to outright bankruptcy.

”During the economic crisis, a large number of enterprises in Europe and America go bankrupt, which is also an opportunity for us. We can appropriately introduce production machines and equipment in light industrial areas we have never ventured into to quickly fill various gaps in East African light industrial production.”

Through decades of development, East Africa is not like the Soviet Union before its first two five-year plans when the industrial foundation was too weak. Furthermore, the East African Government doesn’t have too much spare money to massively introduce Europe’s and America’s excess industrial manufacturing machinery.

After the first five-year plan, East Africa’s heavy industry development has reached a certain level of sophistication, so it is only natural to direct the machinery manufacturing necessary for domestic light industrial production towards domestic heavy industrial enterprises.

For example, in the textile industry, East Africa previously imported a large quantity of foreign textile machinery, primarily from Germany and the United Kingdom. However, after the first-five year plan, East Africa has been able to produce some fairly good quality textile machinery on its own, and to support domestic enterprises, East Africa has naturally prioritized using machinery produced domestically.

Of course, the scope of light industry is wide, and East Africa may not have the convenience found in the textile industry sector in other areas of light industry. Therefore, there is still a need to fulfill domestic market demand for light industrial consumer goods via imported machinery or goods.

Sivert: ”This current crisis has a significant impact on Japan, Tsarist Russia, and the Austro-Hungarian Empire because their finances are the worst. The United States and Germany have the ability to cope with the crisis, but their industrial development will also suffer to some extent.”

Due to war causes, both Tsarist Russia and the Japanese Government are heavily in debt, while Austro-Hungary, though not having undergone war, is not much better off.

As for the United Kingdom and France, they are now prioritizing financial industry development, and having colonies as reservoirs undergo minimum impact, at least this is manifest in their homeland. The survival of their colonies is not within their consideration.

Due to East Africa’s economic system, its relationship with the world market is not deep, so the impact from the shocks won’t be too severe.

Under a planned economy, at this stage East Africa will at least not recklessly establish enterprises like those in Europe and America. For instance, the United Kingdom has a population of nearly forty million, less than half of East Africa’s. From 1906 to 1907, the enterprises established far exceed the entirety of East Africa’s industrialization plans, and many enterprises can operate just by putting up a sign, prone to bankruptcy at the slightest market fluctuation.

”Regardless of how the Europe and America market shifts develop, our country’s light industrial production must be raised during the industrialization plans. Even though exports will be affected, it is necessary to ensure the normal operation of enterprises, releasing production capacity domestically, and further optimizing our national industries in response to problems in the Europe and America economic crisis.”

The economic crisis is also a process of survival of the fittest, especially reflected in the fields of enterprise technology and management. This provides a very good demonstration effect for East African industrial development. East Africa is fundamentally unlike the Soviet Union, hence it has no qualms about leveraging the industrial development experiences of typical capitalist countries.

Of course, this will also increase East African Government’s workload during the industrialization plans and may even impact many ongoing enterprises in East Africa. Nonetheless, even if it requires more effort, the East African Government must take this approach; otherwise, it risks falling into the Soviet Union’s industrial trap—particularly in light industry—making it difficult to self-renew, resulting in challenges for the quality and diversity of domestic light industrial products competing with Europe and America.

Historical tides surge forward, industrialization in East Africa can’t go against the stream, especially light industry development. Under the current economic system in East Africa, light industry development is already less flexible compared to Europe and America’s enterprises. If it doesn’t timely refer to Europe and America’s enterprises for light industry updates, it will inevitably plant hidden dangers for future enterprise development in East Africa.

Thankfully, East Africa’s five-year plan has never been particularly aggressive. Therefore, even with increased government and enterprise workloads, causing serious impacts, adjustments under the double influence of the industrialization plans and the world economic crisis won’t create major negative effects.

With adjustments from top-level government and the influence of unforeseen economic crisis events, significant disruptions have occurred in the mid to later stages of the industrialization plans, especially regarding the pressure for East African domestic export enterprises to complete orders. As the economic crisis develops, industrial products are in excess on the market and consumer capacity diminishes, forcing East African export enterprises to reduce prices and other means to absorb the excess capacity.

The industrial recession in Europe and America has also affected East African mineral and agricultural product exports, especially to Germany. Between 1907 and 1908, exports of East African cotton, coffee, cocoa, rubber, chrome iron ore, and manganese ore to Germany showed certain declines.