Chinese FDI and Structural Transformation in Africa: Technology Transfer, Linkages, and Learning

Lead Research Organisation: Johns Hopkins University
Department Name: John Hopkins University

Abstract

For the past decade, Sub-Saharan Africa has been growing, yet growth is not the same as structural transformation. China's development trajectory since 1980 provides an example of how a government focused on modernization can marshal foreign capital and technology to assist in the reduction of poverty and economic transformation in manufacturing and agriculture. In Africa, China is largely seen as a competitor for local firms, primarily through imports. This competition can be devastating in some countries and some sectors, driving local firms out of business. Yet on the other hand, growing Chinese investment in African manufacturing and contract farming can also offer opportunities for joint ventures with local firms, training, and diffusion of more productive technologies. If this were to follow Asian experience, Chinese firms could be catalysts for local firms to move into manufactured exports, although they might also be footloose investors, moving on with only fleeting impact on local knowledge. In agriculture, Chinese investment might also be enclave, with little connection to local farmers - the picture presented in fears of "land grabbing" - or it might follow the pattern laid out by foreign investors in China, with out-growers, demonstration farms, and technology and skills transfers.
Our earlier research suggested that Chinese firms are thinking strategically about backward linkages. For example, at least five Chinese shoe manufacturers we interviewed in 2009 had moved their shoe-making assembly lines to Nigeria, while still importing uppers and soles from China. In 2012, one company was in discussions with their Chinese supplier about moving to Nigeria to produce soles locally from Nigerian rubber. Similarly, we have identified Chinese contract farming investments and commercial agriculture projects with demonstration farms, advisers, and input supplies in places like Mali, Zimbabwe, and Malawi.
This project will enable a more refined picture of the actual scope and impact of Chinese investment and the potential and experience of technology transfer in commercial agriculture and agro-industry. We will combine multiple methods: database construction, scoping studies, cluster surveys, a national survey, and eight paired, comparative case studies, following an approach tested in our earlier research on Chinese agro-industrial and commercial agriculture engagement in Ethiopia (2011-2014), and Chinese commercial agricultural investment in Zambia and Zimbabwe (2013). The scoping studies will allow us to better map existing Chinese (and other) investment in agro-industry and commercial agriculture, while the cluster surveys will provide an overview of existing linkages and opportunities for technology transfer. A further level of depth will be obtained through adding a technology-transfer module to two national surveys of manufacturers. Finally, eight in-depth, paired case studies will complement the survey research by using process-tracing to compare specific experiences of agro-industrial FDI and technology transfer in China, with Chinese and a similar non-Chinese experience in Africa. For example, we will study the institutional framework and approach that allowed the Thai firm CP Group to become China's largest foreign investor in the Chinese poultry industry, with significant technology spinoffs, and compare this with the spinoffs and technology transfer from significant Chinese and South African investors in Zambia's poultry industry (Zhongken Farm and Astral Foods). The output of the research will be a far more robust basis for analysis of the current and future possibilities for technology transfer in China's African investment, and guidelines for governments and development partners to derive maximum benefit from these opportunities.

Planned Impact

The topics we propose to study are also practical issues that have been the subject of much interest from practitioners and decision-makers. Further, as this research call notes, the general level of knowledge of China's economic cooperation activities in Africa remains quite low. Our focus on evidence-based analysis of learning and technology transfer, our emphasis on entry-level manufacturing, agro-industrial value chains, and commercial agriculture, and our comparative perspective, mean that specific beneficiaries of this research will be those who work to support African entrepreneurs, women, farmers, and workers: governments, development organizations and donors; NGOs. For example, our studies of technology diffusion from foreign agribusinesses to Chinese farmers, and from Chinese (and other) manufacturing operations to African investors, workers, and farmers in Africa, can be used by governments and their donor partners to determine which kinds of policies and approaches might prove most useful, not simply to attract Chinese (and other) manufacturing enterprises, but to assist African firms, workers, farmers and institutes to take advantage of the learning opportunities presented by these new investors.
We have shaped this proposal for maximum impact, on the basis of multiple discussions with potential stakeholders, including Agence Française de Développement, Danida, GIZ, USAID, the World Bank, UNDP, NORAD, the EU, the IMF, CIDA, AusAid, JICA, and DFID and numerous NGOs, including WWF, Revenue Watch, World Resources Institute, and Transparency International. We have also discussed the issue of Chinese technology transfer with African governments, including the Minister of Industry in Ethiopia, Bureaus of Investment in Tanzania, Zimbabwe, and Nigeria, and Ministers of Agriculture in Sierra Leone. These meetings have already provided important inputs into the proposed research.
A variety of communication tools will be used to maximize impact. Workshops in cntry, a website and blog, a major conference, policy briefs and social media, and continued advisory work by the PI and team members will ensure that the lessons of our research are broadly shared. Approximately 12% of our total budget has been allocated for these efforts. The China Africa Research Initiative at SAIS has its own website, which will publish the working papers and policy briefs outlined blow. We use Twitter and an extensive listserv to engage the policy community on China-Africa research. Team members write regularly for the Financial Times, The Guardian, and Foreign Affairs, which will also serve to disseminate our findings to a broad audience. In addition to the journal articles and book outlined in the Academic Beneficiaries section, we will produce, and publish online, a database of commercial agriculture and agro-industrial investments, working papers for the field scoping studies, cluster surveys, and comparative case studies, and at least eight policy briefs. The PI for this effort, Prof. Brautigam, has an extensive scholarly and practical track record of impact, having helped shape the agenda for research on China-Africa and economic development, accumulating over 2000 citations on Google Scholar since 2009, with over 600 of these for her recent book on China's African aid and economic engagement: The Dragon's Gift. Co-PI McMillan is also widely cited. Her 2011 NBER paper on structural change has already garnered over 250 citations. Team members have given dozens of interviews to news media, spoken at the World Economic Forum, debated the impact of China in Africa on television, radio, and news media websites, and given over a hundred public lectures since 2007. An asset for the project is the popular blog on China and Africa run by PI Brautigam, which receives over a thousand hits daily, and has accumulated nearly a million hits since it was launched.
 
Title Handbook for scoping studies 
Description This is a handbook created to standardize how we carry out scoping studies. It details research methodology, answers common questions, and guides researchers on successfully tracking technology transfer and linkages in their fieldwork. Sections include: how to carry out initial steps of pre-fieldwork research, making contacts in the field, data collection, and coding methods. 
Type Of Material Improvements to research infrastructure 
Provided To Others? No  
Impact We have been able to start standardizing our methodology for the scoping studies, especially since different researchers are carrying them out. 
 
Title Training materials for desk studies 
Description In order to train the researchers selected to conduct the initial desk studies, we created detailed training materials on conducting in-depth searches and analysis of Chinese FDI in Africa. In addition to a written manual, our research team created a video tutorial that highlights our methodology. The method entails using Chinese and other non-English sources, verifying and cross-checking databases and media stories, and summarizing the nature of investment. Now, these materials will form the base for our future data collection and analysis and training of new researchers. 
Type Of Material Improvements to research infrastructure 
Provided To Others? No  
Impact As a result of close training and monitoring of the studies, the researchers at various stages in their careers will benefit from the centrality of our knowledge and years of skills experience. As a result, we envision that the skills they gain from working with us will carry into their own independent research projects as well. 
 
Description Center for International Private Enterprise (CIPE) - The New Great Game? China's Investment Model in the Developing World (Feb 6, 2018) 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Public/other audiences
Results and Impact Prof. Deborah Brautigam was invited to speak at a CIPE (Center for International Private Enterprise) panel on Chinese investment in African manufacturing.

"China's international investments have increased rapidly over the past decade, expanding from a narrow focus on natural resources and construction to real estate, finance, brands, and service industries. Much of this international investment has been spearheaded by state-owned enterprises, which operate under both market and political logic. Are China's investment patterns distinct from international investment norms in either form or strategy? How does investment by its state-owned enterprise serve national goals? Do China's development and investment model impact traditional western development models? What are the impacts on governance and democratic institutions in recipient nations?"

Speakers:
David Barboza, Correspondent, New York Times;
Deborah Brautigam, Director of the China Africa Research Initiative, School of Advanced International Studies (SAIS);
André Soares, Counselor at the Board of Directors, Inter-American Development Bank;
Sun Yun, Senior Associate with the East Asia Program, Stimson Center;
Andrew Wilson, Executive Director, Center for International Private Enterprise (discussion moderator).
Year(s) Of Engagement Activity 2018
URL https://www.cipe.org/events/new-great-game-chinas-investment-model-developing-world/
 
Description China Institute in New York City - Panel Discussion: China in Africa: New Growth Engine or Colonialism Redux? A conversation with authors Irene Sun and Deborah Brautigam (March 8, 2018) 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Public/other audiences
Results and Impact Prof. Deborah Brautigam was invited to speak at a China Institute event in New York City.

Moderator: Dinda Elliott;
Speakers: Irene Yuan Sun, Deborah Bräutigam.

"As Chinese factories mushroom across the African continent and the Chinese government extends its "One Road, One Belt" to Africa with railroads and infrastructure, China's strategy seems very different from the United States' historical approach: Instead of seeing Africa as a place in need of aid, China regards Africa as a land full of business opportunities. Will the Chinese way lead Africa into modernization or layers of problems? To find out more, join the insightful panel discussion with Irene Yuan Sun, author of The Next Factory of the World: How Chinese Investment is reshaping Africa, and Professor Deborah Brautigam, author of The Dragon's Gift: The Real Story of China in Africa."
Year(s) Of Engagement Activity 2018
URL https://www.chinainstitute.org/event/china-in-africa/
 
Description DEGRP Research in Context piece on Chinese investment and knowledge transfer in Africa (September 2017) 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact This brief summarises and sets in context emerging findings from DEGRP project 'Chinese FDI and structural transformation in Africa', presenting the research led by Deborah Brautigam, and the project studying the potential for Chinese investment to enhance structural transformation in Africa, with a focus on knowledge transfer between Chinese and African firms. The brief presents the studies completed so far in Madagascar, Kenya, Zambia, and Malawi and currently under review.
Year(s) Of Engagement Activity 2017
URL http://degrp.squarespace.com/reflections/2017/9/27/chinese-investment-knowledge-transfer
 
Description IGC-PEDL 2017 Conference in London - Ying Xia presentation on "What Kinds of Chinese "Geese" Are Flying to Africa? Evidence from Chinese Manufacturing Firms" - December 2017 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Ying Xia was invited to present the paper "What Kinds of Chinese "Geese" Are Flying to Africa? Evidence from Chinese Manufacturing Firms" (Authors: Deborah Brautigam, Tang Xiaoyang and Xia Ying) at the IGC-PEDL 2017 Conference in London. She drew on her recent trip to Tanzania to show that how fast the status of investment projects is changing in practices, and on her research in Kenya and Tanzania to show how industrial parks vary in African countries.
Year(s) Of Engagement Activity 2017
URL https://cepr.org/7013/programme
 
Description Launch workshop with EDRI in Addis Ababa 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact After conducting desk studies at Johns Hopkins SAIS to map Chinese investment in a dozen African countries, CARI held a research workshop with the Ethiopian Development Research Institute (EDRI) in Addis Ababa, Ethiopia, on June 27, 2016 and organized a public event on technology transfer and Chinese manufacturing investment in Africa the following day, June 28. The goal of the workshop was to select African countries in which to carry out field scoping studies, focusing on those that offer the best possibilities for examples of local diffusion of skills and technology from China through manufacturing or agribusiness subcontracting. The workshop was attended by CARI Director Deborah Brautigam, Research Manager Janet Eom, Pre-doctoral Fellow Ying Xia, and Affiliated Researchers Margaret McMillan, Ian Taylor, Girum Abebe, and Tang Xiaoyang and a small group of invited researchers. The following day, the public event brought together researchers, government officials, and local stakeholders for a day of presentations and discussion on productive approaches to Chinese manufacturing investment in African countries.
Year(s) Of Engagement Activity 2016
URL http://www.sais-cari.org/event-details/2016/6/27/cari-ethiopian-development-research-institute-works...
 
Description Manufacturing focus at China-Africa Researchers Luncheon 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Professional Practitioners
Results and Impact In October 2015, PI Deborah Brautigam's China Africa Research Initiative at Johns Hopkins SAIS hosted a roundtable with China-Africa researchers in Washington DC. The participants not only represented academic institutions but also groups with close policy impact such as the World Bank, IMF, and former diplomatic missions. In addition, participants included individuals from China and African countries that work closely with policy-relevant issues of Chinese investment in Africa on the ground. We led a discussion on the availability of quality data on sectors including manufacturing and agriculture activity. As a result, we were able to share our findings from our mapping and scoping studies, especially on technology transfer in Madagascar.
Year(s) Of Engagement Activity 2015
URL http://www.sais-cari.org/event-details/2015/10/15/china-africa-research-luncheon
 
Description Panel discussion at NYU School of Law - March 8 on "China, Africa, and the Law" - Ying Xia presentation on plastic recycling industry in Tanzania 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Postgraduate students
Results and Impact Researcher Ying Xia was invited to speak at a panel discussion at the NYU School of Law on March 8, 2018, on "China, Africa, and the Law". She presented her study of plastic recycling industry in Tanzania as a case study for discussing the role of law in regulating the global value chains in plastic industry.
Year(s) Of Engagement Activity 2018
URL http://blogs.law.nyu.edu/docket/student-affairs/exploring-the-legal-dimensions-of-chinas-presence-in...
 
Description Participation on manufacturing panel at conference in Addis Ababa 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact PI Deborah Brautigam participated on a panel on manufacturing in a major conference on investment in Africa co-hosted by the World Bank and the China Development Bank in July 2015 in Addis Ababa. It was a collaboration between the Government of the People's Republic of China, the World Bank Group (WBG), China Development Bank (CDB), the China-Africa Development Fund (CAD-Fund), the Government of Ethiopia (GoE) and United Nations Industrial Development Organization (UNIDO).
Year(s) Of Engagement Activity 2015
 
Description Presentation at the World Bank on Chinese investment in manufacturing 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact PI Deborah Brautigam was invited to present on Chinese investment in Africa (with a focus on manufacturing) at the World Bank in September, 2015. Her presentation contributed to World Bank initiatives to understand the Chinese impact on economic transformation and export diversification in Africa, focusing on how to remove barriers and maximize positive development impact.
Year(s) Of Engagement Activity 2015
 
Description SAIS-CARI Panel Discussion - Friday, March 9, 2018 - Chinese Investment and Knowledge Transfer in Africa's Manufacturing Sector: Fact and Fiction 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Public/other audiences
Results and Impact The China Africa Research Initiative at SAIS held a panel discussion on Friday, March 9, 2018, titled "Chinese Investment and Knowledge Transfer in Africa's Manufacturing Sector: Fact and Fiction."
Three researchers presented their ESRC-funded work and discussed technology transfer and Chinese investment in African manufacturing.

"Over the past few years, hundreds of Chinese firms have invested in manufacturing in Africa. Our researchers explored the realities of this investment on the ground: what sectors are Chinese firms investing in? Is technology being transferred? Are Africans gaining manufacturing skills?"

Moderator: Prof. Deborah Bräutigam, Director, SAIS-China Africa Research Initiative.

Panelists:
Yunnan Chen, PhD Student, International Development, SAIS;
Ying Xia, SJD Student, Harvard Law School;
Prof. Tang Xiaoyang, Associate Professor, Department of International Relations, Tsinghua University.
Year(s) Of Engagement Activity 2018
URL https://www.eventbrite.com/e/chinese-investment-knowledge-transfer-in-africas-manufacturing-sector-t...
 
Description USAID visit and consultation 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact PI Deborah Brautigam and Research Manager Janet Eom met with high level officials at the US Agency for International Development in Washington DC. During our discussion, we emphasized the role of Chinese agriculture and manufacturing in Africa, with a focus on recommending climate-smart agriculture (environmentally friendly irrigation and mechanization) as the basis for USAID's on-the-ground role in engaging further with Chinese counterparts.
Year(s) Of Engagement Activity 2015
 
Description Wits Colloquium on Chinese Engagements with Africa: Setting a Collaborative Research Agenda on the Belt and Road Initiative (Employment and Skills Transfer in Chinese Firms in Africa) Prof TANG Xiaoyang - Friday 8 December 2017, University of the Witwatersrand, Johannesburg 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Postgraduate students
Results and Impact Prof. TANG Xiaoyang was invited to give a talk on Ethiopia manufacturing at the Wits Colloquium on Chinese Engagements with Africa: Setting a Collaborative Research Agenda on the Belt and Road Initiative (Employment and Skills Transfer in Chinese Firms in Africa).
Year(s) Of Engagement Activity 2017
URL https://www.wits.ac.za/sacp/featured-projects/wits-colloquium-on-chinese-engagement-in-africa/