Emerging Markets / August 9, 2018

Strategic Routes and Wealth Quadrants in the Indian Ocean

Historically, the Indian Ocean world has been a highly interconnected and economically prosperous region. Renowned for the production of spices, such as pepper and cinnamon cloves, as well as the cultivation of coconuts, the world’s third largest ocean has also been a somewhat self-contained cosmos due to the arch of land masses that create a vault around it. From South Africa to Australia, the Indian Ocean can be divided into four quadrants. Intersected by a north-south axis that follows the natural trajectory of the triangular Indian subcontinent through the Maldives and the British Indian Ocean Territory (Chagos Islands) all the way to the Southern Ocean, the Indian Ocean is divided into western and eastern spheres. Likewise, the Ocean is divided into north and south by the parallel that stretches from Zanzibar (Tanzania) to the Strait of Malacca between Malaysia and Indonesia.

Strategic Routes and Wealth Quadrants in the Indian Ocean

The majority of the Indian Ocean littoral, from Mozambique and Madagascar to Burma and East Timor, is composed of highly productive tropical lands that receive substantial amounts of rain every year. This climatological reality stands in stark contrast with other regions of the Indian Ocean, such as the Arabian Peninsula and the Horn of Africa, whose weather is dry and arid. Additionally, one must take into consideration the added challenge of global weather variations due to increases in CO2 emissions. Thus, it should come to no surprise that Middle Eastern economies import large amounts of agricultural goods from other South Asian and African nations. For instance, India, Pakistan, and Thailand are key rice suppliers to the United Arab Emirates (UAE). In this regard, Middle Eastern countries prefer to import commodities and goods from neighboring Indian Ocean nations due to the lower freight costs. Likewise, the agricultural staples of the Indian Ocean, such as basmati rice, are consumed and produced by societies throughout the region. Similarly, the Indian Ocean cosmos incorporates Australia, which is the top producer of the barley imported into the UAE.

However, apart from agricultural production, the economies of some countries along the Indian Ocean benefit from mineral resources, such as precious metals and fossil fuels, which yield their respective economies substantial economic benefits. Therefore, both historically and contemporarily, there are a large number of trade routes and strategic chokepoints throughout the Indian Ocean. For example, the Strait of Malacca, which connects the Indian Ocean with East Asia and the Pacific Ocean, is a historically important route due to the markets that it connects and, to this day, remains essential to the energy security of Major Asian economies. Thus, the trade route that runs from the Indian Ocean’s northwestern quadrant where the Arabian Sea is located, to the Strait of Malacca is rich, due to its fossil fuel sources, and congested. This route and its economic dynamic has boosted the prosperity of countries such as Oman, India’s western Malabar coast, the UAE, Singapore, and Indonesia. In turn, the Indian Ocean has non-prosperous regions that do not benefit from strategic trade routes or substantial economic activity, such as its northeast quadrant, where the Bay of Bengal, Bangladesh, and India’s poorer eastern provinces is located.

(Read more about European Agribusiness and International Trade)

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