Deal or No Deal : Strictly Business for China in Kenya?
Existing work on China's economic influence in Africa refers to Africa in broad terms, thereby generalizing the results to an extent that is unhelpful for policy-makers in a specific country. Moreover, the emphasis is on oil exporters. This pa...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/03/26157967/deal-or-no-deal-strictly-business-china-kenya http://hdl.handle.net/10986/24159 |
| Summary: | Existing work on China's economic
influence in Africa refers to Africa in broad terms, thereby
generalizing the results to an extent that is unhelpful for
policy-makers in a specific country. Moreover, the emphasis
is on oil exporters. This paper remedies this by focusing on
a single, oil-importing country: Kenya. The paper examines
China's economic presence in Kenya and some of the
popular myths surrounding Chinese economic activity. The
first myth is that Chinese companies do not employ local
workers. In fact, 78 percent of full-time and 95 percent of
part-time employees in Chinese companies are locals. Second,
although China represents a large potential market for local
exporters, the study finds that China has a better chance of
expanding its exports to Kenya than Kenya does to China
based on existing specializations. This may change with
recent oil discoveries in Kenya, increasing the space for
Kenyan exports to China, as well as from China's shift
to a consumption-driven economy which will increase demand
for services, a growing strength of Kenya's economy
(World Bank Country Economic Memorandum 2016). The paper
emphasizes that Kenyan policy makers should be less
concerned about bilateral trade imbalances and worry about
Kenya's overall trade balance. However, the Standard
Gauge Railway and Thika superhighway experiences suggest
that Chinese firms offer relatively few technology transfer
or supplier opportunities for local firms and academia.
Third, the popular focus of Chinese competition is on the
impact on well-organized Kenyan producers and not on
consumers, thereby underestimating the benefits Kenyan
consumer derive from the availability of more affordable
Chinese goods. The paper concludes with policy directions
for improving export competitiveness and transparency in
infrastructure projects, and local content. |
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