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Producer-Driven Network Trade Opportunities for Africa

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Harry G. Broadman - Africa\'s Silk Road China and India\'s New Economic Frontier (2007, World Bank Publications) - libgen.li
Morley, David - The Cambridge introduction to creative writing (2011) - libgen.li

Producer-Driven Network Trade Positively Correlates with FDI: International Evidence
Africa Net FDI Inflows Per Capita

Producer-Driven Network Trade Opportunities for Africa
Because producer-driven global networks are characterized by high levels of vertical ownership within the supply chain, a significant amount of FDI
is usually required in producing countries. Producer-driven networks also prevail in industries with greater capital intensity and greater reliance on skilled labor. As new research on the recent experience of the transition countries in Eastern Europe and the former Soviet Union illustrates, there indeed exists a positive correlation between the amount of FDI received and country participation in producer-driven production networks see figure The same research found a positive correlation between the stock of FDI and the share of skilled-labor- and capital-intensive exports.
52
Given the limited amount of FDI attracted by most African economies—
apart from the oil-dominated countries—(see table 6.15), with a few exceptions aside, the prospects for entry by African producers into these
FIGURE 6.9
Producer-Driven Network Trade Positively Correlates with FDI: International
Evidence
Albania
Armenia
Azerbaijan
Belarus
Bulgaria
Croatia
Czech Republic
Estonia
Hungary
Kazakhstan
Kyrgyz Republic
Latvia
Lithuania
Macedonia, FYR
Moldova
Poland
Romania
Russian Federation
Serbia and Montenegro
Slovak Republic
Slovenia
Ukraine
0 2
4 6
8
ln(FDI stock in manufacturing per capita end-200
3)
0 2
4 6
8
ln(network exports per capita in 2003)
Source: Broadman 2005.
06-Chap6:06-Chap6 10/9/06 2:39 PM Page 339

340
AFRICA
’
S SILK ROAD
:
CHINA AND INDIA
’
S NEW ECONOMIC FRONTIER
TABLE 6.15
Africa Net FDI Inflows Per Capita
(dollars)
Country name
Average Equatorial Guinea
1,404
Seychelles
633
Angola
248
Congo, Rep.
166
Gabon
136
Botswana
108
Namibia
97
Mauritania
75
Sudan
48
Lesotho
44
Chad
40
Cape Verde
38
Nigeria
32
South Africa
30
Mauritius
30
Gambia, The
24
Cameroon
22
São Tom and Principe
22
Swaziland
19
Zambia
16
Mozambique
13
Ghana
12
Guinea
12
Côte d’Ivoire
10
Tanzania
10
Togo
8
Senegal
8
Uganda
8
Congo, Dem. Rep.
7
Mali
7
Benin
6
Eritrea
5
Zimbabwe
4
Sierra Leone
4
Malawi
3
Madagascar
3
Guinea-Bissau
3
Central African Republic
2
Kenya
1
Burkina Faso
1
Niger
1
Ethiopia
1
Comoros
1
Rwanda
1
Burundi
*
Liberia n.a.
Somalia n.a.
Source: IMF WEO database, except Burkina Faso, Côte d’Ivoire, Kenya, Niger, Tanzania, Togo, and Zambia, where the World Bank
WDI data were used. For WDI data, the most recent three-year average was used.
Note: * indicates negligible amount FDI; n.a. indicates no data available.
06-Chap6:06-Chap6 10/9/06 2:39 PM Page 340

INVESTMENT
-
TRADE LINKAGES IN AFRICAN
-
ASIAN COMMERCE
341
networks seem limited in the near future. One sector where such opportunities do exist is the automotive assembly and parts industry in South
Africa.
Producer-Driven Network Trade for South Africa’s Automotive Industry
Since the early s, South Africa’s government has pursued a proactive policy of support for developing the nation’s automotive sector see box Just like many formerly inward-oriented economies, South Africa’s industry started to face a radically new competitive environment as its trade barriers began to fall starting in the late 1980s.
53
The initial result was a sharp increase in the trade deficit in the automobile and components sector. In 1995, the
BOX 6.9

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