##ayotou further notes the failure to provide evidence that the occurrence of lax environmental standards in emerging economies leads to fdi, on account of the fact that investment decisions by manufacturing plants and other multinationals to invest in countries is based on factors such as political stability, favourable economic policy, labour quality, and infrastructural developments. it is therefore clear that economic development is not without costs. in fact, the much desired economic growth if not carefully balanced with the need to protect the environment may result in permanent adverse effects on the environment for a country and the world. specific to africa, the application of these models and research findings lends itself to further caution. with the continental economy still facing numerous problems to the extent that most national economies are yet to provide sufficiently for their nationals, it is unlikely that a point would soon be reached in africa ’ s economic growth, at which adequate resources become available for commitment to environmental concerns. in other words, thought needs to be given to the social background against which utilisation of resources from economic growth will depend. the various human and social challenges such as poverty and epidemics confronting the continent may well explain the relatively low emphasis by policy makers on environmental concerns when compared to their western counterparts. that said, however, it must be recognised that in respect to the ecosystem, the globe is one and benefits that accrue to one corner due to environmental preservation, accrue to the entire globe. in this regard, measures need to be developed to quickly put africa ’ s high potential economic growth on a path that is environmentally sustainable. deliberate actions need to be taken in successfully transferring environmentally friendly technologies to africa. a case in point is the use of solar technology, for which achievements thus far are promising. most of africa is endowed with solar energy, and transforming it into usable energy would substitute the widespread use of wood fire energy by the majority of the continent ’ s population. in addition, because this is proven technology no more resources need to be devoted to research and development. further, solar energy circumvents the costs related to the generation and distribution of yet another clean source of energy, hydroenergy. in addition to generation, distribution of hydroelectricity presents africa with a unique challenge of supply network or grids due to the vast landscapes that constitute the rural setting where majority of the population resides. this is part of the wider infrastructural constraint that the continent is yet to overcome. 4. africa and the world economy

many persistent ways. 15 on the horizontal ( or intra - temporal ) dimension, small and medium - sized enterprises ( smes ) and low - income households were hit hardest by the crisis. wage cuts and income losses, for example, have been the largest for low - skilled, low - wage workers. according to eurostat, the dispersion of disposable income in the euro area as measured by its gini coefficient has risen by more than 3 % between 2005 and 2011. recent ecb surveys show how smes and households reported increasing financing obstacles, with bank loans becoming harder to obtain. 16 in addition, recent data suggest that smes, if they can obtain a loan, face higher costs of bank lending than large companies. in fact, interest rate spreads on sme loans compared with those for large non - financial companies have widened to an average of 40 basis points since 2010. finally, the crisis has brought to the fore the spatial ( or geographical ) dimension. euro area countries suffered different fates during the crisis. we have observed sharp cross - country dispersion in the cumulated changes in real gdp since the start of the crisis. in 2012, real gdp was around 20 % lower than in 2007 in the country most affected, while it was around 10 % higher in the country least affected by the crisis. the cross - country dispersion of unemployment has also widened, with latest unemployment rates ranging from 4. 8 % in austria to 27 % in greece. spatial inequality has been magnified by the adverse feedback loop arising from the close association between banks and their sovereign, which has led to fragmented financial conditions across countries and, at the height of the crisis, to fears of a euro break - up. in particular, banks ’ funding costs have remained persistently high in some countries despite cuts in the ecb policy rate, implying heterogeneous financing conditions for households and firms across countries. this was also shown by the increasing reliance of banks in stressed countries on eurosystem funding. widening target2 imbalances – that is, large intracentral bank positions – is a well - known symptom of these developments. so what did the crisis mean for monetary policy? first, we saw impairments to the traditional inter - temporal arbitrage mechanism, which has curtailed the effectiveness of our standard in addition, recent research suggests that the cost of job loss in terms of income loss is significant over the entire life cycle, especially when the job loss