Spillovers from China Onto Sub-Saharan Africa: Insights from the Flexible System of Global Models (FSGM)

35 Pages Posted: 9 Nov 2015

See all articles by Derek Anderson

Derek Anderson

International Monetary Fund (IMF)

Jorge Iván Canales-Kriljenko

International Monetary Fund (IMF)

Paulo Drummond

International Monetary Fund (IMF)

Pedro Espaillat

International Monetary Fund (IMF)

Dirk Muir

International Monetary Fund (IMF)

Date Written: October 2015

Abstract

What is the impact of economic spillovers from China on sub-Saharan Africa (SSA)? This is an increasingly important question because of China's growing economic role as a partner of SSA countries for both trade and the buildup of infrastructure in the region. The impact of spillovers from China has been an open question because of the challenge to use an internally consistent framework with solid economic foundations that accounts for both the direct impact China may have on individual countries in SSA through a variety of channels (trade, investment, financial) as well as the impact on the region through the global economy (economic activity and commodity prices). This paper explores those channels of transmission and provides illustrative order of magnitude for the short- and medium-term economic impact by using AFRMOD, a module of the Flexible System of Global Models (FSGM), a multicountry general equilibrium model developed at the IMF. Three alternative scenarios are considered: first, lower potential output in China that is originally misperceived as a temporary cyclical slowdown; second, structural reforms in China that aim to increase potential output; and third, a relocation of low-end manufacturing to sub-Saharan Africa.

Keywords: macroeconomic interdepedence, trade, investment, exports, economy, Forecasting and Simulation, Monetary Policy (Targets, Instruments, and Effects), Open Economy Macroeconomics, Forecasting and Simulation, Globalization: Macroeconomic Impacts,

JEL Classification: E12, E17, E52, F41, F47, F62

Suggested Citation

Anderson, Derek and Canales-Kriljenko, Jorge Iván and Drummond, Paulo and Espaillat, Pedro and Muir, Dirk, Spillovers from China Onto Sub-Saharan Africa: Insights from the Flexible System of Global Models (FSGM) (October 2015). IMF Working Paper No. 15/221, Available at SSRN: https://ssrn.com/abstract=2687405

Derek Anderson (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jorge Iván Canales-Kriljenko

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

Paulo Drummond

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Pedro Espaillat

International Monetary Fund (IMF)

700 19th Street, N.W.
Washington, DC 20431
United States

Dirk Muir

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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