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AFRICA
’
S SILK ROAD
:
CHINA
AND INDIA’
S NEW ECONOMIC FRONTIER
ferent risk-aversion profile than do
Indian firms, as reflected in their foreign investment decisions
regarding mode of entry, their degree of vertical integration, the origin of source markets for their inputs, and the strength of affiliation with state (as opposed to private) entities
in conducting transactions, among other attributes. Chinese businesses in Africa pursue business strategies that yield them greater control up and down the production chain, resulting in enclave types of corporate profiles, with more limited spillover effects. Indian firms, conversely, pursue African investment strategies that result in greater integration into domestic markets and operate extensively through informal channels, indeed even into facets
of the local political economy, surely a result of the fact that there is a longer tradition of Indian ethnic ties to Africa
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(see tables 8 and Global value chains offer real opportunities for African countries to use
Chinese and Indian investment and trade activities
to increase the volume,
diversity, and value-added of exports from the continent see table Indeed, as has happened elsewhere in the world to developing countries and economies making the transition from central planning to capitalism,
even landlocked countries in Africa—with the right mix of policies—may well engage in network trade.
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Detailed value chain analysis of industry cases in Africa shows that certain factors are likely to be especially critical for African businesses wanting to successfully engage in network trade. These include implementing pricing schemes that fully take
into account market conditions;
taking steps to enhance product quality, for example, through ISO certification organizing lines of business to be as flexible and as responsive as possible to changes in demand and supply
developing the capacity toTABLE 7
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