China’s Direct Investment in Sub-Saharan African Infrastructure – Kasey Mosby

Poor infrastructure in Sub-Saharan African (SSA) is an inhibitor to economic development in the region. The infrastructure in many SSA countries are lacking in terms of quantity, quality, and access. Inadequate infrastructure increases production costs of exports, which lowers the competiveness of the region’s exported products. In a 2010 study, researchers used a large data set to predict the impact of infrastructure investment on the region’s growth and equity. The researchers found that increased infrastructure investment is positively correlated with long-term growth and negatively correlated with income inequality. This would prove to be a costly process, with 15% of the region’s GDP needed to cut the infrastructure quantity gap between SSA countries in half. However, possible solutions can be made using foreign direct investment (FDI). China is increasingly viewing the SSA as an attractive investment opportunity, particularly investments in infrastructure.

China is the region’s third largest trading partner and has expanded FDI in infrastructure, especially the natural resource sector. China has imported Chinese labor workers and resettlement procedures in order to construct large dams that will increase the region’s hydroelectric power. However, civil society commentators have expressed concern for the application of Chinese-funded projects in SSA. In a region with a rich history of colonization and foreign exploitation of natural resources, precautions should be made when foreign countries have large impact on the economy of the region. Chinese economic intervention in the region should be equitable, with mutual benefit to both SSA and China.

 

Works Cited:

Calderon, C., & Serven, L. (2008). Infrastructure and Economic Development in Sub-Saharan

Africa. Journal of African Economies19. doi: 10.1596/1813-9450-4712

 

Foster, V., Butterfield, W., & Chen, C. (2009). Building Bridges: China’s Growing Role as

Infrastructure Financier for Sub-Saharan Africa. Trends and Policy Options1. doi: 10.1596/978-0-8213-7554-9

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