Performance and Patterns of

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AFRICA
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S SILK ROAD
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CHINA AND INDIA
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S NEW ECONOMIC FRONTIER
goods and machinery and China and India’s needs for Africa’s natural resources.
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This differs from the recent growth in Africa’s trade with the
European Union (EU) and the United States, which is largely stimulated by preferential treatment in these two markets. The evidence presented points to the fact that the complementarities between the two regions are strong in terms of economic resources, indicating the likely sustainability of the current African-Asian trade and investment boom. Following the descriptive analysis a quantitative assessment is presented of the roles of “at-the-border” trade policies, “between-the-border” constraints, and “behind-the-border” conditions in shaping the flows of trade and investment between Africa and Asia. The examination also considers the linkages between trade and investment activity. The analysis suggests that, while formal trade policies such as tariffs and regional trade agreements matter, behind-the-border and between-the-border factors also have significant, if not greater, impacts. The findings also suggest that foreign direct investment (FDI) inflows to African countries have a complementary effect on the continent’s export flows greater FDI stocks appear to be associated with an increase in exports. The chapter concludes by highlighting the policy implications of the key factors contributing to African-Asian trade performance and investment,
and how they may leverage domestic growth in African countries in the future.
Africa and Asia in the Global Economy
World trade has dramatically expanded in the last 15 years, the period well-characterized by the term globalization Currently, many countries in Africa are experiencing an economic boom, partly due to high prices for their major export commodities. However, not all countries on the African continent have benefited from this boom. The region is quite diverse in many aspects, including natural resource endowments and economic performance see figure 2.1, table 2.1, and table A in annex A. One-third of the world’s resource-dependent economies are in Africa.
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This engenders a high degree of dependence on resource rent and, concomitantly, significant opportunities for corruption.
Not surprisingly, and partly as a result, the continent is characterized by a high degree of income inequality and is prone to conflict.
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PERFORMANCE AND PATTERNS OF AFRICAN
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ASIAN TRADE AND INVESTMENT FLOWS
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In Africa, there are 45 small economies and two regional superpowers South Africa and Nigeria—that together account for 55 percent of the continent’s economic activity. Still, 15 African countries, accounting for 34 percent of the continent’s population, have grown in a sustained manner in the last decade these include Ghana, Senegal, and Tanzania, to name a few. However, 13 African countries, accounting for one-fifth of the
African population, have experienced little or negative GDP-per-capita
FIGURE 2.1

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