Working Paper 128 - China’s Manufacturing and Industrialization in Africa

Ron Sandrey and Hannah Edinger

Working Paper Series from African Development Bank

Abstract: While a succession of Asian countries haveexhibited dramatic growth over the last thirtyto fifty years, Africa has largely stagnated.This Asian expansion has been driven bymanufacturing exports to the US inparticular, and enabled through an overallconstructive policy package that openedmarkets, implemented favourable trade andexchange rate policies, and provided asound and stable government that inspiredinvestment and secured property rights.Conversely, Africa has been unable to putthe full package in place, and this hasresulted in a manufacturing sector whosecontribution to both GDP and export sharesis significantly below the continents’developing country peers. Growth in naturalresource-rich developing countries ingeneral has lagged behind those with amanufacturing focus, and this is especiallythe case in Africa with its poor linkages intounskilled labour and its appetite for rentseekingactivities. Africa’s industrial base isnot as robust as theory suggests it shouldbe. Using the continent’s export profile to theUS 90 percent or more is either a dominantmineral fuel or precious minerals for thoseAfrican countries with significant exports.Other than South Africa, manufacturingexports are notably absent, with only textilesand clothing featuring in those countrieswhere manufacturing also features.Importantly Africa has difficulty to capitaliseon its significant tariff preferences into theUS, and we examine the thesis that China ismaking it harder for Africa to diversify awayfrom its natural resource-based exportprofile.

Date: 2011-06-23
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