China and Africa : Expanding Economic Ties in an Evolving Global Context
Economic growth in Sub-Saharan Africa (SSA) has averaged roughly 5 percent per year over the past decade, improving living standards and bolstering human development indicators across the continent. Stronger public institutions, a supportive, priva...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/03/24177102/china-africa-expanding-economic-ties-evolving-global-context http://hdl.handle.net/10986/21788 |
| Summary: | Economic growth in Sub-Saharan Africa
(SSA) has averaged roughly 5 percent per year over the past
decade, improving living standards and bolstering human
development indicators across the continent. Stronger public
institutions, a supportive, private sector focused policy
environment, responsible macroeconomic management, and a
sustained commitment to structural reforms have greatly
expanded opportunities for countries in SSA to participate
in global markets. In recent years, many countries in the
region have benefited from an increasingly favorable
external environment, high commodity prices, and an
especially strong demand for natural resources by emerging
economies, particularly China. Over the longer term,
leveraging Chinese investment to support broad-based growth
will require policies designed to boost the competitiveness
of sectors in which China s economic rebalancing may create
a comparative advantage for SSA. To date, few African
countries have been able to benefit from large-scale Chinese
investment outside the resource sector. However, as China s
growth slows and its economy shifts toward a more
consumption-driven model, it is likely that global demand
for resource imports will slow as well. Countries with the
most heavily concentrated export mix, particularly in the
mineral and oil sectors are the most vulnerable to China s
economic rebalancing and should be ready to adopt measures
to mitigate the impact of negative terms-of-trade shocks. By
contrast, as wage rates in China continue to rise and firms
refocus their attention on domestic demand, countries in SSA
will be well positioned to exploit emerging opportunities
for investment in export-oriented manufacturing. Ethiopia
provides an instructive example, as its inexpensive yet
relatively skilled labor force, coupled with the
government s proactive efforts to court Chinese investors,
have enabled Ethiopia to attract substantial investments in
labor-intensive industries. Infrastructure enhancement,
workforce development, and good-governance reforms offer a
promising strategy for many countries in the region.
Although the establishment of industrial zones has yielded
mixed results, several salient success stories warrant
careful attention. This report discusses how Africa could
take advantage of the untapped opportunities offered by
China s progressively intensifying investment and trade ties
with SSA. It is hoped that this analysis will enrich the
ongoing dialogue between policy makers, private firms, and
civil society regarding China s increasingly important role
in the growth and development of Sub-Saharan Africa. |
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