Africa's international trade paradox, technology transfer, and value chain upgrade

Abstract

This study examines the paradoxes in trade and global value chain (GVC) in Africa.

Firstly, we analyzed international trade statistics of selected countries to highlight paradoxes in resource endowments, exports, and imports. We found contrasts between Africa's development potential and its current reality in trade and value capture.

Secondly, we analyzed the content of reports focused on GVC challenges in four countries. We found that the reports predominantly focused on identifying issues in GVC upgrading in Africa rather than proposing solutions. These challenges, faced by developing economies in critical sectors, were categorized across four dimensions identified in the literature: technological capabilities, firms, government intervention, and joint ventures (JVs).

Thirdly, we analyzed how to address these GVC upgrade challenges by using interviews from successful GVC upgrade cases in two additional countries. We applied four theoretical dimensions to categorize actions that successfully facilitated GVC upgrading. We found that of all the success factors, government intervention—acting as a shareholder, producer, regulator, and negotiator—was the most critical for successful GVC upgrading. Actions by the state, such as a well-organized early upgrade plan, coercive local expectations toward foreign firms, a winning negotiation approach, and concise JV agreements, were instrumental in these successes.