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Foreign Direct Investment Between Africa and China and India
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Morley, David - The Cambridge introduction to creative writing (2011) - libgen.li
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| Foreign Direct Investment Between Africa and China and India Patterns of Africa’s Inward FDI As figure 2.22 shows, the volatility of FDI to African oil countries is understandably very high. Another noticeable fact is that the difference between FDI as the share of GDP and domestic investment has been declining for China while increasing for Africa. This could indicate that the multiplier effect of FDI Distribution services Foreign companies have been banned from engaging in freight forwarding unless they form a joint venture with local partners. Many have stayed away. With China’s accession into the World Trade Organization, these and other structural issues are moving to positions more inline with international standards. These changes are to be fully compliant with negotiated accession terms within five years of the accession date. Ports: China has 16 major shipping ports with a capacity of more than 5 million tons per year, combined fora total country shipping capacity in excess of million tons. The Port of Shanghai is going through a significant upgrade. Software: China’s exports of software were $2.6 billion in 2004. Energy and natural resources China’s Africa Policy encourages and supports competent Chinese enterprises to cooperate with African nations to develop and exploit rationally their natural resources Africa contains about percent of the world’s proven oil reserves, 70 percent of which are off the west coast in the Gulf of Guinea. The low sulfur content of West Africa’s oil makes it an attractive investment opportunity. China is investing in oil exploration and construction of pipelines. These construction services are creating opportunities for Chinese exports of services in other areas such as restaurants and small stores. Another anticipated benefit of these new investments is that they generate backward linkages with the rest of the economy. Source: Office of the United States Trade Representative 2005. 02-Chap2:02-Chap2 10/9/06 2:41 PM Page 91 92 AFRICA ’ S SILK ROAD : CHINA AND INDIA ’ S NEW ECONOMIC FRONTIER in China is much higher than it is in Africa. The multiplier effect of FDI is the amount of additional income that one FDI dollar can generate in the host economy. FDI invested in the light manufacturing sector typically has much larger multiplier effects than FDI invested in the extractive sector. While FDI is resources-oriented in Africa, it is manufacturing-oriented in China. FDI as a percent of GDP has been declining in China even though the absolute level of FDI has been increasing. This indicates that GDP grows at apace that can outweigh FDI growth, very possibly as a result of both a high multiplier effect of FDI and complementary high domestic investment. In comparison, FDI as a percent of GDP has been increasing rapidly in Africa, indicating that GDP grows at a much slower pace than FDI inflows, possibly as a result of a low multiplier effect and low complementary domestic investment. FIGURE 2.21 Download 5.17 Mb. Share with your friends:
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