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Research Agenda

 
Phase 2: 2005-10
Programme 1:
Public Action & Private Investment
Programme 2:
Collective Action Around Service Delivery
Programme 3:
State Capacity
 

Phase 1: 2000-05

Programme 1:
Financing the State

Programme 2:
Mobilising Public Action

Programme 3:
Co-Producing Public Services

Public Action and Private Investment

Project: 'China's Private Sector Investment and the Investment Climate in Africa'


Background

This project is concerned with Chinese private investment in Sub-Saharan Africa (SSA) outside the extractive industries. Western firms regard the investment climate in SSA as very poor. However, China has over 800 enterprises in Africa and these are over the long term more focussed in the manufacturing than in the resources sector. This is an increasing trend, according to UNCTAD/UNDP statistics. There is Chinese state sector participation including a special $5 Billion fund to encourage investment in Africa . The most striking trend is that China is steadily becoming a major presence in Africa and its growing investment is already having a significant impact upon African development. The project explores the nature of this dynamic. The conventional investment climate approach implies that a big push to the more rule-based governance typical of OECD countries is the best way to promote investment in developing countries. The PAPI programme questions this, arguing that relationship-based governance where more personalised relationships between public actors and private investors predominate may well be a better means of promoting investment. The project explores how the Chinese private sector experience within China itself especially equips it to deal with the political and institutional climate of relationship-based governance.

Objectives

The objectives of the project are to estimate the significance of Chinese private investment in Africa outside the extractive industries and examine why Chinese firms are so apparently willing to invest in Africa. This analysis will pay particular attention to the relationships between state and private actors. The research specifically focuses upon the perceptions of Chinese firms of the investment climate in the African region as a whole and in individual economies located within it as a key factor in explaining the scale, velocity and sectoral distribution of Chinese corporate direct foreign investment.

Methodology

The project favours an in-depth, qualitative research method, which has three phases: overall assessment of level and destinations of Chinese FDI in Africa, in-depth interview work with potential and actual Chinese investors in China, and in-depth interview work with the Chinese subsidiaries actually operating in selected African countries. The data on investment will be culled from contact with the Ministry of Commerce in China and Chinese Chambers of Commerce. The in-depth research on Chinese investment strategies will be qualitative, based upon interviews and other methods in the key Zhejiang Province and more generally with local and national government officials and business associations. Finally we will explore operations of the interviewed companies in Africa itself.

African country selection is critical. Two countries with strong Chinese investment in the resource sectors and two countries without such investment will be chosen for the sample; also we will consider two countries with good, and two with bad investment climates. Attention will also be paid to sectors of as far as possible, although it is too early to say that investment has settled into particular sectors. The interviews will cover the problematic set out in the above background section.

Researchers

Dr. Jing Gu, Political economist, Institute of Development Studies, Brighton, UK (lead researcher and main contact for this project).

Prof. John Humphrey, Sociologist, Institute of Development Studies, Brighton, UK

Prof. Song Hong, Economist, Director of Department of International Trade, Chinese Academy of Social Science, China

Prof. Rongping Kang, Economist, Institute of World Economics and Politics, Chinese Academy of Social Science, China

Dr Kaiyong Ge, Sociologist, China-Africa Business Council, Beijing, China

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News

The findings of this project are being widely disseminated and receiving a lot of attention in policy making and academic circles.
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