Purchases of New Machinery by Import Origin and Firm Nationality

INVESTMENT
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TRADE LINKAGES IN AFRICAN
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ASIAN COMMERCE
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Still, a key finding from the business case studies is that China and India are rapidly becoming important source markets for imports of sophisticated capital goods for firms producing on the African continent, and regardless of firm nationality. Price advantage appears to be a major factor.
To take but a few examples, new Chinese-manufactured tower cranes and aviation control pumps newly built to custom specifications were recently purchased by firms in South Africa and India has been a key source market for new road-paving equipment in Ghana, new water-purification systems in Senegal, and new automated nut-processing machines in
Tanzania. A particularly interesting finding is that the transfers of technology are not unidirectional from China and India to Africa in some cases,
Africa has been a source market for capital goods exports to China and
India, resulting in reverse technology transfers see box Second, the firms in Africa understudy clearly make their capital goods purchase decisions based on price-quality tradeoffs. In particular, although machinery and other equipment available from China and India often embody a price advantage, firms covered in the business case studies indicated that in some instances due to lower quality, they purchased these capital goods elsewhere. Conversely, other firms are willing to accept lower-quality machinery in return for having to pay a lower price. For example, an African construction company looked into procuring Chinese
BOX 6.6

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