Can Africa Compete with China in Manufacturing? The Role of Relative Unit Labor Costs

Janet Ceglowski, Stephen Golub, Aly Mbaye and Varun Prasad ()
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Varun Prasad: Université Cheikh anta Diop de Dakar

Working Papers from University of Cape Town, Development Policy Research Unit

Abstract: In this paper we examine Sub-Saharan Africa’s (SSA) bilateral trade and cost competitiveness with China. We review patterns of bilateral trade between SSA and China, showing an extraordinary imbalance in the structure of trade, in that China overwhelmingly exports manufactured products to SSA and almost exclusively imports primary products in return. Our principal means of assessing the competitiveness of SSA’s manufacturing sector, vis-à-vis China, are measures of relative unit labor costs (RULC). We find that African RULC levels have generally been very high relative to China, but declined over the 2000s as China’s wages have risen faster than Chinese productivity, while the reverse is true for the SSA countries in our sample. Nevertheless, RULC vis-à-vis China remained elevated for many SSA countries as of 2010. Generally high RULC along with weaknesses in the business climate suggest that most SSA countries are unlikely to be competitive in labor-intensive manufacturing any time soon.

Keywords: Sub-Saharan Africa; China; relative unit labor costs; trade; manufacturing (search for similar items in EconPapers)
JEL-codes: J08 J20 J21 J30 J38 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015-10
New Economics Papers: this item is included in nep-afr, nep-cna and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in Working Paper Series by the Development Policy Research Unit, October 2015, pages 1-30

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https://commerce.uct.ac.za/sites/default/files/con ... PRU%2520WP201504.pdf First version, 2015 (application/pdf)

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Journal Article: Can Africa compete with China in manufacturing? The role of relative unit labour costs (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ctw:wpaper:201504

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