Will the World Bank’S Vision Materialize? Relocating China’s Factories to Sub‐Saharan Africa, Flying‐Geese Style

Abstract

A number of studies have recently explored China’s growing - yet still nascent - manufacturing investments in sub-Saharan Africa, which the World Bank hopes to see further expanded so as to ignite industrialization. These studies have looked mainly at the Africa-side situation (i.e., what is happening in the host region). Instead, this paper focuses on China-side factors that may motivate the country to relocate factories to the host region on a significant scale (i.e., the 'push' factors) and touches on the institutional issues involved in this hoped-for scheme of industrial transplantation. The central question addressed in this study is whether the World Bank’s wish will actually come true. China’s potential in this scenario is assessed in terms of the 'flying-geese' growth model that explains how comparatively disadvantaged industries in such a rapidly catching-up economy as China’s may be transplanted overseas. This paper concludes that at the moment, China’s capacity to transform the sub-Saharan region into a vibrant manufacturing base via FDI is still underdeveloped and quite limited.

Keywords: China’s manufacturing investment in Africa, flying-geese growth model, foreign direct investment

JEL Classification: F21, O24, O43, O53, O55