Africa's Silk Road: China and India's New Economic Frontier

Africa's Silk Road: China and India's New Economic Frontier

Africa's Silk Road: China and India's New Economic Frontier

Africa's Silk Road: China and India's New Economic Frontier

Synopsis

China and India's new-found interest in trade and investment with Africa - home to 300 million of the globe's poorest people and the world's most formidable development challenge - presents a significant opportunity for growth and integration of the Sub-Saharan continent into the global economy. Africa's Silk Road finds that China and India's South-South commerce with Africa isabout far more than natural resources, opening the way for Africato become a processor of commodities and a competitive supplier of goods and services to these countries - a major departure from its long established relations with the North. A growing number of Chinese and Indian businesses active in Africa operate on a global scale, work with world-class technologies, produce products and services according to the most demanding standards, and foster the integration of African businesses into advanced markets.There are significant imbalances, however, in these emerging commercial relationships. These can be addressed through a series of reforms in all countries:
  • 'At-the-border' reforms, such as elimination of China and India's escalating tariffs on Africa's leading exports, and elimination of Africa's tariffs on certain inputs that make exports uncompetitive
  • 'Behind-the-border' reforms in Africa, to unleash competitive market forces and strengthen its basic market institutions
  • 'Between-the-border' improvements in trade facilitation mechanisms to decrease transactions costs
  • Reforms that leverage linkages between investment and trade, toallow African businesses to participate in global productionnetworks that investments by Chinese and Indian firms can generate.

Excerpt

The dramatic new trend in South-South economic relations is transforming traditional patterns of economic development, and this is nowhere more evident than in African-Asian trade and investment flows. Indeed, while China and India emerge as economic giants in Asia, Africa is coming into its own, finding a vital role in this transformation.

As illustrated in Africa’s Silk Road: China and India’s New Economic Frontier, these new South-South economic relations present real opportunities—as well as challenges—to African countries. They also highlight the need for complementary reforms by China and India to support more vigorous African development.

In analyzing Africa’s intensifying relationships with China and India, Africa’s Silk Road examines the trends to date and considers the implications of these developments for the economic future of the African continent. The diagnosis cautions that the opportunities engendered by China and India’s trade and investment with Africa will not necessarily be converted into growth and poverty reduction in the region. A critical finding of the study is that it is not just the quantity of these trade and investment flows that matters—it is also the quality of the overall commercial relationships underlying as well as shaping these flows.

Both African and Asian policy makers need to devise appropriate policy responses to make the quality of these relationships even better. For China . . .

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