Goldstein, A., N. Pinaud, and H. Reisen. "The rise of China and India: what's in it for Africa?" OECD Development Centre (2006)
[via ELDIS
This brief examines the impact which China's and India's rise has on African countries. Since 2001, China and India have jointly contributed approximately 30 per cent to global output growth and helped hold world output growth above the 4 per cent threshold-level crucial to improving the terms of trade for primary commodity producers.
Findings of the study include:
* China's and India's strong appetite for energy and metal has boosted international prices and the volume and value of African exports
* China in particular has become the main trade partner for a number of African countries providing cheap manufactured goods and reducing Africa's dependence from its traditional trading partners
* despite the push for exports, terms of trade and growth that the Asian giants provide to Africa, risks for sustainable poverty reduction are visible in higher raw material dependence and rent-seeking activities.
The paper argues that improving the macroeconomic policy mix is crucial. To avoid remaining stuck in the unpromising corner of vulnerable, capital-intensive and high-risk dependence on raw materials with little local-labour content, Africa will have to carefully manage the windfall gain generated by higher commodity prices. In addition, diversification of economic activities is very important.
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