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Africa’s Rising Exposure to China: How Large Are Spillovers Through Trade?

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  • Paulo Drummond
  • Estelle Liu

Abstract

The rapid growth in China’s domestic investment in recent decades has generated a large appetite for global goods, including from sub-Saharan Africa (SSA). This paper estimates the impact of changes in China’s investment growth on SSA’s exports. Although rising trading links with China have allowed African countries to diversify their export base across countries away from advanced economies, they have also led SSA countries to become more susceptible to spillovers from China. Based on panel data analysis, a one percentage point increase (decline) in China’s domestic investment growth is associated with an average 0.6 percentage point increase (decline) in SSA countries’ export growth. This impact is larger for resource-rich countries, especially oil exporters. These effects could be mitigated, however, to the extent that countries can reorient their exports. Copyright International Atlantic Economic Society 2015

Suggested Citation

  • Paulo Drummond & Estelle Liu, 2015. "Africa’s Rising Exposure to China: How Large Are Spillovers Through Trade?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(3), pages 317-334, August.
    • Handle: RePEc:kap:iaecre:v:21:y:2015:i:3:p:317-334:10.1007/s11294-015-9537-9
    DOI: 10.1007/s11294-015-9537-9
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    References listed on IDEAS

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    1. Mr. Ashvin Ahuja & Mr. Malhar S Nabar, 2012. "Investment-Led Growth in China: Global Spillovers," IMF Working Papers 2012/267, International Monetary Fund.
    2. Mr. Yongzhen Yu, 2011. "Identifying the Linkages between Major Mining Commodity Prices and China’s Economic Growth—Implications for Latin America," IMF Working Papers 2011/086, International Monetary Fund.
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    Cited by:

    1. Azmat Gani & Nisar Ahmad, 2020. "Has Economic Growth of China and India Impacted African Economic Prosperity?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 48(3), pages 375-385, September.
    2. Oyeyinka S. Omoshoro-Jones & Lumengo Bonga-Bonga, 2021. "Global imbalances, external adjustment and propagated shocks: An African perspective from a global VAR model," International Economics, CEPII research center, issue 165, pages 186-203.
    3. Anan Wiranto & Nia Yustiana, 2019. "China’s Economic Spillover to ASEAN-6 Economies: Before and After Renminbi Internationalization," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 5(4), pages 240-256.
    4. Emma Serwaa Obobisa & Haibo Chen & Emmanuel Caesar Ayamba & Claudia Nyarko Mensah, 2021. "The Causal Relationship Between China-Africa Trade, China OFDI, and Economic Growth of African Countries," SAGE Open, , vol. 11(4), pages 21582440211, December.

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    More about this item

    Keywords

    China; Sub-Saharan Africa; Investment; Trade; Spillover; Panel data; Econometrics; F01; F15; O53;
    All these keywords.

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • F15 - International Economics - - Trade - - - Economic Integration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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