“
BEHIND
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THE
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BORDER
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CONSTRAINTS ON AFRICAN-
ASIAN TRADE AND INVESTMENT FLOWS
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average export intensity of a sector appears to be positively associated with import competition
from China and India, while no particular association is observed with local competition (figure 4.17).
Competition from Chinese and Indian Investment and Local LinkagesIn addition to invigorating competition in Africa through
their exports and investment, Chinese and Indian firms operating in Africa are engendering competition in the informal sector. Building working relationships with informal firms is important for Chinese and Indian firms to survive in
African markets. The WBAATI business case studies reveal
a number of experiences ofChinese and Indian firms operating in both formal and informal sectors in
Africa (box Like foreign investment
from other countries, Chinese and Indian investment in Africa also creates opportunities for backward and forward linkages with local indigenous industries. Thus, while facing competition from Chinese and Indian rivals, local indigenous African firms are at the same time finding ways in which they can engage Chinese and Indian firms through subcontracts and joint ventures (box 4.2).
Sources of Competition in Africa’s MarketIf the degree of competition in African
markets faced by Chinese andIndian firms is important to engendering Africa’s international integration,
what are the main ingredients that give rise to a competitive business environment Numerous studies on the investment climate in African countries point to the critical factors.
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Among them, perhaps the most prominent approach has been taken by the Investment Climate Assessments (ICAs) and the Doing Business reports by the World Bank Group.
Box 4.3 summarizes the principal findings of the ICAs on the investment climate
constraints faced by firms, including Chinese- and Indian-owned businesses, operating in the four African countries under examination.
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