The abstract for a new working paper titled “The Contribution of Chinese FDI to Africa’s Pre-Crisis Growth Surge.” Skip to the part in bold font if you just want the punchline:
In the 3 years before the 2008 financial crisis, GDP growth in sub-Saharan Africa (averaged over individual economies) was around 6 percent, or 2 percentage points above mean growth rates for the preceding 10 years. This period also coincided with significant Chinese FDI flows into these countries, accounting for up to 10 percent of total inward FDI flows for certain countries in these years. We use growth accounting methods to assess what portion of this elevated growth can be attributed to Chinese inward FDI. We follow Solow (1957), Dennison (1962), and others and use data for individual economies between 1990 and 2008 to calculate Solow residuals for these years for individual economies. We use capital stock data, workforce, and factor share data by country. Capital stock data is unavailable directly, and so we use perpetual inventory methods to construct the data. Factor shares come from UN National Accounts data. We then run counterfactual growth accounting experiments for thirteen sub-Saharan African countries excluding Chinese FDI inflows for 2005-2007 and also 2003-2009. Our individual results vary by year and country, but there are several year/country combinations where Chinese FDI contributed to an additional one half of a percentage point or above to GDP growth. These results suggest that a significant, even if in some cases small, portion of the elevated growth in sub-Saharan Africa in the three years before the Financial Crisis and also in the two years afterwards (2008-2009) can be attributed to Chinese inward investment.
They Had to Go There, Didn’t They?
Some of us development folks work very hard to dispel the notion that Africa is the so-called “Dark Continent,” and that not all news coming out of Africa is bad. As Binyavanga Wainaina wrote very sarcastically some time ago in Granta magazine:
Always use the word ‘Africa’ or ‘Darkness’ or ‘Safari’ in your title. Subtitles may include the words ‘Zanzibar’, ‘Masai’, ‘Zulu’, ‘Zambezi’, ‘Congo’, ‘Nile’, ‘Big’, ‘Sky’, ‘Shadow’, ‘Drum’, ‘Sun’ or ‘Bygone’. Also useful are words such as ‘Guerrillas’, ‘Timeless’, ‘Primordial’ and ‘Tribal’. Note that ‘People’ means Africans who are not black, while ‘The People’ means black Africans.
According to Wikipedia, the expression “dark continent” comes to us from the 19th century, when it was “used to describe Africa, particularly Sub-Saharan Africa. As Europeans knew little about the continent’s interior geography, map-makers would often leave this region dark.”
I was thus very surprised that the Guardian — of all newspapers in the world, perhaps the one that cares most about development — would publish the following map to illustrate the 2011 distribution of the United Nations’ human development index:
That’s right.