Thursday, July 28, 2005
Making money in Africa
In an earlier post, I had referred to the fact that developing country firms had begun to invest in other developing country markets. Carolyn O'Hara writes a similar story in Foreign Policy on the Indian and Chinese invasion (ed: any similarity to the 'British invasion' is coincidental) of African markets.
Of course, Ms O'Hara then feels compelled to ruin a good story by making some really silly arguments about the dark side of it all.
Why are India and China any different from western governments that did business with everyone from Mobutu to the apartheid regime in South Africa? Why the different standards for the two countries?
You mean, if China and India didn't invest in Africa, the rich-country investment dollars would go to Africa instead?
Sounds remarkably like an autarkic argument to me, which I thought already belonged in the dustbin of history. And when you say foreign, do you also mean western goods? Should Africa close itself to western goods as well? Or does foreign only refer to Indian and Chinese goods and services?
Chinese companies are snapping up African oil and gas fields, investing in telecom companies, and funding programs to boost farm output. The value of China’s trade with Africa has jumped from $10 billion in 2000 to nearly $30 billion in 2004. India arrived late but is starting to see gains as well. It is a driving force behind the new African Institutes for Science and Technology, which aim to replicate India’s technology-led economic growth. In 2004, India extended $500 million in credit to eight West African countries to promote the purchase of Indian information technology. India’s state-owned oil firm has invested heavily in Sudan and is exploring options in West Africa. “China is making greater inroads,” says Peter Draper of the South African Institute of International Affairs, “but with its historical connections, India will catch up.”
Why all the interest in the forgotten continent? A goodie bag of exploitable markets and exploitable resources. China has flooded Africa with cheap textiles, rice, and electronics. India has cornered the market in generic pharmaceuticals used to treat HIV and offers the hardware and software needed to get Africa on the information superhighway. Africa, in turn, is feeding the insatiable Asian thirst for energy: Both India and China have negotiated oil, gas, timber, and coal contracts worth billions of dollars.
Of course, Ms O'Hara then feels compelled to ruin a good story by making some really silly arguments about the dark side of it all.
In contrast to Western countries, neither India nor China pesters African governments about good governance or human rights.
Why are India and China any different from western governments that did business with everyone from Mobutu to the apartheid regime in South Africa? Why the different standards for the two countries?
Foreign investment without strings of lectures is enticing, but it has drawbacks. Most African governments are eager to do business with the developing world’s superstars, but their interests do not always align with those in India and China. The rich-country investment dollars that go to Beijing or New Delhi don’t go to Africa.
You mean, if China and India didn't invest in Africa, the rich-country investment dollars would go to Africa instead?
And if foreign products continue to flood African markets, local industries will suffer.
Sounds remarkably like an autarkic argument to me, which I thought already belonged in the dustbin of history. And when you say foreign, do you also mean western goods? Should Africa close itself to western goods as well? Or does foreign only refer to Indian and Chinese goods and services?
