Trying to Pull Together- Africans are asking whether are making their lunch or eating it

Gilbert Strizich 144211

Proyecto de Titulación I

The piece Trying to Pull Together, published by The Economist in 2011, provides a broad analysis of the changing relationship between the Chinese government and selected sub-Saharan African countries receiving economic resources from China. Chinese companies that were initially viewed as sources of growth are now being criticized for their aggressive business tactics and the shoddy quality of their construction projects. Many African countries now view billion dollar projects and investment with increasing anxiety.

                  The Chinese approach to development in Africa differs drastically from the American approach. As mentioned in the article, “Politics can be even murkier than finance. For years China has been chummy with African despots who seem to be reliable partners.” Whereas the United States companies require a certain amount of  “good governance” in prospective countries in order to protect investments, the Chinese for go such requirements.  This has meant in part that the Chinese are investing more vigorously in Africa- but what is the real economic impact of this investment? In addition to concerns over ill constructed infrastructure projects, there is increasing evidence that shows certain forms of foreign direct investment can radically raise inflation in economies that are less developed. This in turn can put unforeseen pressures on a country’s currency. Similarly, certain forms of foreign direct investment are more susceptible in retaining wealth in the receiver country, and others not- it is important to know which is the case in Africa.

                  Also worth considering are the different approaches in providing finance, and the implications of these approaches. The article points out, “Perhaps the most significant Chinese push has been in finance. Industrial and Commercial Bank of China has bought 20% of Standard Bank, a South African lender and the continent's biggest bank by assets, and now offers renminbi accounts to expatriate traders. Other mainland banks have opened offices too, and from their sleek towers they make collateral-free loans to Chinese companies. In theory Africans are eligible to borrow on the same terms, but this rarely happens.” This is only an aspect of financial practices to analyze.

                  The real potential area of investigation that comes to mind is a comparative study of these two approaches on economic growth through examining macro-economic indicators over the last ten years. While one may accurately assume that the healthy growth is more likely in countries receiving American investment, what is the effect of a rapid influx of investment, even if the investment is more volatile? These are questions that many have considered, but it is worth wondering if there is anything unique to African countries that would alter these considerations.  After all, each country is different. Perhaps the best way of doing this is two compare the two countries that receive the highest amount of investment by the Chinese and Americans, respectively. However, should it be highest amount in proportion to the their respective GDPs, or would that even change the results?

                  These are only facets of the analyzing what is in reality a huge, highly complex question. To attempt to isolate certain tendencies to within these approaches, then accurately analyze their impact on growth and development is a huge task. However it is a question that needs to be considered, as insights provided through attempted to address it could be highly beneficial to African countries, and perhaps also developing economies.

http://www.economist.com/node/18586448

De esto sale bien fácil una tesis de licenciatura, con la siguiente pregunta de investigación: Have the two approaches towards economic development in sub-Saharn Africa practiced by the United States and China over the last ten years led to similar levels of economic growth, and what is the nature of this growth? Y la siguente hipótesis: The two varying approaches have had a number of different consequences in certain areas of the economy, leading to some countries in a healthier economic state than others.