October 22, 2019

The Future Is in Africa, and China Knows It

“Some Western observers worry that this represents a new form of colonialism. Given the continent’s history with European conquerors and rich countries trying to cheaply exploit its natural resources, that suspicion is understandable. But although China can sometimes be predatory — for example, when uneconomical projects saddle African companies or governments with unpayable debt — the new African investment bears little resemblance to the colonialism of old.

Colonialism, and the pseudo-colonial exploitation that sometimes followed independence, was mostly about extracting natural resources (and sometimes slave labor). Although securing access to natural resources is surely one of China’s goals, its investments in Africa go beyond extractive industries. The sectors receiving the most Chinese money have been business services, wholesale and retail, import and export, construction, transportation, storage and postal services, with mineral products coming in fifth. In Ethiopia, China is pouring money into garment manufacturing — the traditional first step on the road to industrialization.

Receiving foreign investment isn’t the only way that a country can industrialize. But as China itself has shown in dramatic fashion during the past few decades, attracting foreign capital can be a key part of an effective growth strategy. When a company from China — or the U.S., Japan, France or elsewhere — employs Africans to make clothes, program software or build houses, African workers immediately share the benefits. This also provides income to local African entrepreneurs, who create new businesses to sell things to the foreign companies and their employees.

And if countries are smart about appropriating foreign technology, it can lead to long-term productivity increases as well. As Africans learn techniques, ideas and tricks from foreign companies (and invent new ones themselves), they will gain the leverage to capture an ever-bigger slice of the value that foreign investments create — and as their productivity improves, that value will grow in size. Meanwhile, African governments will control access to an increasingly large share of the world’s young customers, and will be able to use this leverage to extract ever-greater concessions — money, technology and favorable contract terms — from multinational corporations.

Instead of standing on the sidelines and wringing their hands over China’s investments, Westerners and people in other rich countries should be looking to copy or surpass China’s efforts to tap the final frontier of emerging markets.”

Read more

JJ Editor's Picks

"During the debate on Prime Minister Boris Johnson’s new Brexit deal in the United Kingdom’s Parliament on Saturday—which ended, as these things often have, with a vote calling for another delay—Johnson exposed the most basic blindness of Brexit..."

"Mick Mulvaney, the acting White House chief of staff, wants to change his story about Ukraine. On Thursday, at a press briefing, Mulvaney confirmed that when President Donald Trump suspended military aid to Ukraine in July, one reason was that..."

"I travelled with Bedouin in the Western Desert of Egypt. When we got a puncture, they used tape and an old inner tube to suck air from three tyres to inflate a fourth. It was the cook who suggested the idea; maybe he was used to making food..."

"The ultrasound technician places the wand on my daughter’s lower abdomen and moves it slowly across taut skin glistening with gel. I’ve been holding my breath since being ushered into the dimly lit cubicle to witness a sonogram that will..."

"Even many Democrats are criticizing Senator Elizabeth Warren for refusing to admit, in plain words, that her Medicare for All plan will require taxes to increase. They’re right to complain. The point could hardly be simpler: All presidential..."

"How do you update Watchmen for 2019? That might sound like a question with an obvious answer: You just do Watchmen. After all, the graphic novel, which has been consistently in print since its 12-volume run ended in 1987, is pretty terrific..."

"The climactic face-off of the 2019 Israeli Apartheid Week at the University of the Witwatersrand in Johannesburg took place on a wide, sunny plaza, between a statue dedicated to the millions of anonymous miners who had toiled under inhuman..."

"Mark Zuckerberg has rarely been so compelling. Facing increased scrutiny — especially after leaked audio of an internal meeting in which Zuckerberg called Sen. Elizabeth Warren (D-Mass.) an existential threat — the Facebook CEO outlined his..."