Understanding China's move into Africa: an empirical analysis

An important new issue on the international scene is the upsurge in market and non-market South–South relations. The aim of this paper is to understand the dynamics that lie behind the recent Chinese move into Africa by empirically exploring the determinants of Sino-African relationships. In order to have a comprehensive picture, the analysis takes into consideration the main channels of commercial and political interactions: outward foreign direct investment (OFDI), trade and aid (international economic cooperation). The empirical analysis utilises a panel data set, from 1998 to 2005, for 43 African countries. The econometric estimates for three simultaneous equations are based on an instrumental variables method. Results show that the Chinese move into Africa is driven by strategic interaction among the three channels (FDI, trade and economic cooperation) as well as by pull factors, i.e. the characteristics of the receiving countries in terms of natural resource endowments and their market potential.     

新形势下的中非关系及其挑战

中国和非洲国家正在继续致力于谋求共同发展,因为这是一种"双赢"关系。近年来,中国在非洲的影响力不断扩大,中非间的信赖合作关系备受世人瞩目。为了保持中非关系的健康发展,我们要积极应对未来中非关系可能出现的挑战。本文的结构安排如下:首先,分析中国的发展对非洲产生的影响;其次,阐述新形势下的中非关系;最后,就未来中非关系发展面临的挑战提出政策建议。     

SOUTH AFRICA AND THE NEW PARTNERSHIP FOR AFRICA'S DEVELOPMENT: ECONOMIC SPIN-OFFS AND LINKAGES

The New Partnership for Africa's Development (NEPAD) is a concerted effort by Africa's political leaders to develop a comprehensive and integrated strategic policy framework to raise current levels of socio‐economic development and reduce high levels of poverty across the African continent. The NEPAD framework recognises the need for African countries to pool their resources together in order to enhance regional development and economic integration. To this end, NEPAD emphasises capacity building and also seeks to solicit and disburse funds towards infrastructural development programmes and poverty alleviation projects, among others. South Africa's involvement with the rest of Africa has increased significantly since 1994. Trade exports, foreign direct investment (both market and resource‐seeking in nature) and public‐private partnerships have mushroomed in many parts of the continent. Many South African firms are providing the financial impetus for the infrastructural development and rehabilitation of African economies. This paper discusses salient economic linkages between South Africa and the rest of Africa within the framework of NEPAD. South Africa is the economic hub of sub‐Saharan Africa (and indeed of the African continent), with significant agricultural, manufacturing and services capacity. South African firms have invested in the development of a number of sectors in the rest of Africa, taking advantage of the new investment incentives offered by the NEPAD framework. The target sectors range from mining, the hospitality industry, engineering and construction, finance to telecommunications. These investments and economic involvements are crucial to the development of African countries and the relevant sectors that are important for the realisation of some of the objectives of NEPAD.     

Race: China’s Question and Problem

Race poses a challenge to the ruling Communist Party of China. Contemporary news reports about China’s relationship with various African states warn of a reestablishment of 19th century colonial relations, with China standing in the shoes of England or France. When indictments of neo-colonialism are promoted, China recalls a historical brotherhood with African states under the banner of Third World solidarity. This paper attempts to shed light on both sides of this argument, demonstrating that for China, the issue of race in foreign relations poses both a question of motives and a problem of national identity.     

Building Complementarities in Africa between Different Development Cooperation Modalities of Traditional Development Partners and China

Abstract: China's relationship with Africa has grown exponentially over the last decade with US$95 billion in bilateral trade in 2008 and US$5.4 billion of Chinese investment in Africa for the same year. The growth of Sino‐African relations also has an impact on the role of traditional development partners in Africa in particular in the aftermath of the 2008 financial crisis, which has already led some traditional development partners to reduce their aid budgets and subsequently their Official Development Assistance (ODA) flows to Africa. The objective of this paper is to analyse different development cooperation modalities in Africa of traditional development partners and China. This requires identifying trends in aid, debt relief, general budget support, trade, preferential trade access, and investment flows of both traditional development partners and China. The paper advocates that complementarities can be built between these development modalities on a national, regional and global level. This would enhance development effectiveness, increase efficiency and create win‐win situations which would be beneficial to African countries, China and traditional development partners.     

Capital Flight Repatriation: Investigation of its Potential Gains for Sub‐Saharan African Countries*

Abstract: Despite the substantial recent increase in capital flows to sub‐Saharan Africa (SSA), the sub‐continent remains largely marginalized in financial globalization and chronically dependent on official development aid. The current debate on resource mobilization for development financing in Africa has overlooked the problem of capital flight, which constitutes an important untapped source of funds. This paper argues that repatriation of flight capital deserves more attention on economic as well as moral grounds. On the moral side, the argument is that a large proportion of the capital flight legitimately belongs to the African people and therefore must be restituted to the legitimate claimants. The economic argument is that repatriation of flight capital will contribute to propelling the sub‐continent on a higher sustainable growth path while preserving its financial stability and independence and without mortgaging the welfare of its future generations through external borrowing. The anticipated gains from capital repatriation are large. In particular, this paper estimates that if only a quarter of the stock of capital flight was repatriated to SSA, the sub‐continent would go from trailing to leading other developing regions in terms of domestic investment. The paper proposes some strategies for inducing capital flight repatriation, but cautions that the success of this program is contingent on a strong political will on the part of African and Western governments and effective coordination and cooperation at the global level.     

意识形态先行还是民生改善优先?——冷战后西方“民主援非”与中国“民生援非”政策之比较

20世纪90年代冷战结束以后,西方和中国对非洲的战略都有重大调整。西方把推行西式的民主与价值观作为其对非洲战略的首要目标,把经济援助作为其在非洲推进西式民主的工具。中国则把扩大对非洲经贸合作、实现经济上的互利双赢作为对非战略调整的重点,通过改革援非的方式,形成了援助与经贸相结合的援非新政策。总体上看,以西方意识形态优先的援助方式脱离了非洲当下的民生急需,成效不甚理想。中国经济优先的援非政策却因较为理性务实,给中非双方都带来了实利,从而获得了持续推进的动力。目前,西方对非援助又进入了一个新调整期,意识形态优先的做法有所变化;中国对非洲的援助也需要适时调整,努力完善对非援助战略。     

The role of the psychologist in culturally diverse Southern Africa∗

This paper attempts to make a contribution to the on‐going debate among psychologists in Southern Africa about the relevance of their discipline to the social problems of this region. It argues that the main focus of attention among psychologists in this region should be directed at the poverty and underdevelopment that characterize most Black areas in Southern Africa. The paper further argues that the main cause of this poverty and underdevelopment lies in cultural factors, which account for a ‘person‐environment mismatch’ between the Western‐oriented organizations found in the region and the traditional African culture that characterizes most Black members of these organizations. It describes the main differences between Western and traditional African culture and considers whether psychologists and other behavioural scientists interested in contributing towards a solution of this problem, should attempt to Westernize the Africans or to Africanize the organizations.     

Estimating the future health care cost of population aging in South Africa

ABSTRACT

This paper analyses the relationship between health care expenditure and population aging in South Africa using yearly data from 1983 to 2015. Empirical evidence from an Autoregressive Distributed Lag approach to cointegration indicates that old dependency and life expectancy are major drivers of public health expenditure in South Africa besides the income. Particularly, when structural breaks are controlled for, income exhibits a long-term elasticity with respect to health spending greater than unity; suggesting that South African public health care has become a luxury good over time. Interestingly, South African public health spending is found to be responsive to demographic development only in the long run. This is consistent with the micro evidence that health expenditure increases with individual age with significant impacts in the long term. Finally, using economic and demographic projections statistics, we find that public health expenditure could roughly double in the next fifteen years ceteris paribus.     

The personal and social benefits of urban agriculture experienced by cultivators on the Cape Flats

Urban agriculture is considered a grassroots solution to food security in Africa. Research consistently supports this belief, and in South Africa urban agriculture is promoted by national and local government. One city supporting urban agriculture is Cape Town, the only South African city with an urban agriculture policy. Although many questions remain regarding the sustainability of non-governmental organisation (NGO)-supported urban agriculture projects in Cape Town and their contribution to food security, this study argues that one must look beyond economics and the physical benefits of urban agriculture to the personal and social benefits. By capturing the lived experiences of cultivators on the Cape Flats in Cape Town, the study shows that urban agriculture not only contributes to food security but builds social capital, which improves livelihood strategies and interpersonal relations. This is especially the case where urban agriculture projects are facilitated by NGOs that fund, train and oversee cultivators in these impoverished communities.     

中国对非援助的出口贸易效应——基于出口增加值的视角

基于Eora26投入产出表数据和全球中国官方金融数据库，本文检验了中国对非援助与中国对非出口增加值的因果关系及机制。研究结果显示：(1)中国对非援助可以显著提升中国对非出口增加值，在进行了一系列的稳健性检验和处理了内生性问题后，该结论依然成立；(2)提高非洲国家的交通和通信设施质量是中国对非援助影响出口增加值的主要机制；(3)中国对非援助的出口增加值效应会随产业分类、援助类型的不同而产生差异；(4)进一步研究表明，非洲接受的DAC发展委员会国家和国际多边组织援助的“碎片化”会削弱中国对非援助的出口增加值的促进作用，这种影响在经济实力和政府治理能力较弱的非洲国家更为明显。本文的结论为中国对非援助的贸易效应提供了进一步的经验支持，并揭示了中国对非援助影响中国对非出口增加值的内在规律。这对于加强中非经贸关系，构建“中非命运共同体”具有重要意义。     

China and India's Growth Surge: Is it a curse or blessing for Africa? The Case of Manufactured Exports

Abstract: In this paper, we address two major questions. First, the question of whether China and India are displacing the African manufacturing export from the third market. Second, whether there is an evidence of shifting comparative advantage from China and India to Africa. We employed a gravity model with a panel data using 13 African exporters of clothing and accessories for the period 1995–2005 to answer the first question. To answer the second question, we used a flying‐geese model and estimated Spearman's rank correlation coefficients on indices of the revealed comparative advantage vectors of the African exporters and China and India for the same period. Both the gravity and flying‐geese models predicted similar outcomes. We found that there is strong evidence that China has been displacing African manufactures from the third market while India has been complementing it in the early years of the study. However, the overall third market impact of China and India has been that of complementarity in the later years of the study period. This result is found to vary across countries. Furthermore, we found evidence of shifting comparative advantage from China and India to Africa as the flying‐geese theory predicts, South Africa being the leading goose followed by Kenya. The major implication of the study is that, in the world where China and India are reshaping the global economic order dynamically, the outcomes of the traditionally received wisdom of trade liberalization and industrialization policies through export promotion may be uncertain and requires strategic thinking.     

FISCAL ILLUSION AT THE LOCAL SPHERE: AN EMPIRICAL TEST OF THE FLYPAPER EFFECT USING SOUTH AFRICAN MUNICIPAL DATA1

While South Africa operates a relatively decentralised governance and administrative structure, an important feature of the country's intergovernmental fiscal relations system is the gap that exists between the expenditure responsibilities of sub‐national authorities and their assigned revenue bases. The resulting vertical fiscal imbalance is mainly addressed via significant intergovernmental transfers to provinces and local governments. This factor presents strong a priori grounds for assuming that in the South African context, the heavy dependence of many local governments on intergovernmental transfers may generate fiscal illusion. Despite this, there have not been many empirical studies of fiscal illusion in South Africa's intergovernmental transfer system. This paper extends existing literature on fiscal illusion by using the fiscal year 2005/06 financial and expenditure data from 237 local government authorities in South Africa to evaluate the flypaper variant of the fiscal illusion hypothesis. Empirical results indicate that the marginal effects of municipal own‐source revenues on local expenditure exceed those of intergovernmental transfers. No statistical evidence in support of the flypaper hypothesis within the context of municipal expenditures in South Africa is found.     

Is there a link between BRIC foreign direct investment and SADC export performance?

The BRICS (Brazil, Russia, India, China and South Africa) countries have agreed to strengthen their economic ties, thus paving the way for enhanced trade and investment performance. South Africa's strategic value in BRICS is that it is a gateway to the opportunity-rich Southern African Development Community (SADC). By using South Africa as a production hub for exports to the surrounding region, foreign investors would have ready access to neighbouring markets. This article addresses the question of whether, and in what ways, foreign direct investment (FDI) from the BRIC (Brazil, Russia, India and China) countries to the SADC influences the SADC's export performance. A series of empirical analyses revealed a positive causation between BRIC FDI and SADC exports, offering a clear incentive for the SADC to rejuvenate its trade and investment policies and structures, and strengthen its ties with BRIC countries in the interests of attracting more FDI and building a strong and sustainable export sector.     

Pro-poor microcredit in South Africa: cost-efficiency and productivity of South African pro-poor microfinance institutions

This article compares the performance of selected South African microcredit non-governmental organisations (NGOs) that have a poverty-alleviation focus against various benchmarks drawn from the MicroBanking Bulletin. Donors, governments and many analysts regard sustainability as the benchmark of microfinance institutions' (MFIs) performance. However, the most relevant question is whether microcredit NGOs are doing as well as they can in their context. Of particular contextual importance is income inequality in a society. South Africa has the world's second worst income inequality, after neighbouring Botswana. This creates a situation in which microcredit NGOs must recover ‘First World’ costs, particularly salaries, from revenues based on clients who can only afford loans on a par with Third World countries. Compounding this situation are structural obstacles to microenterprise in South Africa, as well as obstacles to productivity in microcredit NGOs. Taken together, this creates a ‘salary burden’ for South African microcredit NGOs, which is the highest in the world according to relevant benchmarks. South African MFI managers face significant obstacles to improving productivity to compensate for the divergence between staff and client living levels. These include an inadequate skills base, the small scale of the market, rapid labour turnover, and limited resources for capacity development. South African MFIs face the options of moving upmarket (which many have done), adopting methodological innovation or new product development, or closure. Of these, there is a strong argument to be made for supported savings and credit approaches as an alternative to NGO-based microcredit. Such an approach has the advantages of greater voluntary input and social capital formation.     

Contribution of external aid agencies to the social sector: Lessons for South Africa

The contribution of a major aid agency, UNICEF, to the social sector in three African countries is reviewed and important lessons are drawn for developing the social sector in South Africa. UNICEF's commitment to children and women and its substantial development expertise bestow many advantages on developing bilateral relations with UNICEF. It is equally important to develop sound social policies and adequate community‐based programmes in which UNICEF's expertise and resources can be incorporated. Guidelines are formulated for reducing dependence and vulnerability to donor assistance in the social sector.     

Family formation and economic insecurity among youth in South Africa

ABSTRACT

Youth unemployment continues to be a burden and concern for the South African government. Being economically insecure, the situation is dire with the government needing to provide resources to a population who should be economically independent. There is a need to look at the social determinants of economic insecurity among youth in South Africa. Family formations could either promote or inhibit economic well-being. This article aims to assess whether economic security improves as youth enter into unions and/or have children. The South African National Income Dynamics Study is used. Unmarried youth with no children are measured at baseline (2008) and followed up over time to examine whether economic security status changes as union status changes. Results show that while economic security, employment (from 7.61% to 25.67%) and net income per month (from 19.48% to 32.79%) increase over time, youth who marry but have no children have the lowest risk of economic insecurity (relative risk ratio?=?0.02, p < 0.05) compared with those who remain unmarried but have children. Special attention needs to be given to youth who have children and are unmarried and among those who marry and have children soon after.     

A Tale of Two Countries and Two Stages: South Africa,China and the Lewis Model

The paper compares the economic progress of two countries, South Africa and China, in relation to the Lewis model. These economies are chosen because they have interesting similarities and also interesting differences. At the start of economic reform in China and with the advent of democracy in South Africa, both countries had surplus labour: they were at the first, labour-surplus, stage of the Lewis model. It is shown that, since then, South Africa has continued to experience surplus labour: the unemployment rate has risen. By contrast, China’s labour market is shown to have tightened, and there is evidence that China has entered the second, labour-scarce, stage of the Lewis model. The difference lies in their growth rates. There are sections explaining why the South African economy has grown slowly and why the Chinese economy has grown rapidly, in relation to the growth of their labour forces. The Lewis model provides an enlightening framework for explaining how widely the fruits of economic development can be shared.     

澄清对中国对外援助的几种误解

进入新世纪特别是2004年以来,中国对外援助迅速兴起,援助范围与规模不断扩大,引起国际社会的广泛关注。中国是最近才开始对外援助的吗?中国的对外援助是要搞新殖民主义吗?中国的对外援助妨碍了受援国的发展了吗?中国的对外援助是为了驱逐西方国家吗?这些问题近年来备受西方媒体关注,甚至产生误解,文章对此一一进行了辨析。