The Impact of Imports from China on African Textile Exports

Abstract

African economies are highly dependent on trade because Africa is, in terms of the ratio of trade volume to Gross Domestic Product (GDP), one of the world’s most open regions, just behind East Asia (Broadman, 2007). According to the Organisation for Economic Co-operation and Development (OECD, 2002), between 1950 and 2000, the share of Africa’s GDP in PPP globally fell by a third, that of exports by two-thirds, and that of Foreign Direct Investment (FDI) from 6% to 1%. The downward trend in Africa’s share in world GDP and exports can be explained largely by the changes in the terms of trade. Since the mid-1990s, however, most African countries have realized an average growth rate of more than 4%. This growth rose steadily between 2000 and 2009. In 2007, it was at a record high of 5.5% (OECD, 2008). One explanation is the growing trade linkage with some emerging industrial regions, particularly China (Alden et al., 2008; Asche and Schuller, 2008; Manji and Marks, 2007). Most economists regard this linkage as a major opportunity for African countries. This view has been expressed, for example, in two publications by the World Bank and the OECD (Broadman, 2007; Goldstein et al., 2006).