News Archive January 2015

China’s ‘Maritime Silk Road’: Don’t forget Africa

China’s “Maritime Silk Road” is expanding beyond Asia to the African coast.

On Sunday, a Chinese State Council official told a conference in Hainan that more than 50 countries are interested in participating in China’s Silk Road Economic Belt and Maritime Silk Road projects, jointly known as “one belt and one road.” “Along the belt and road are many developing countries with a combined population of 4.4 billion and an annual economic output of 2.2 trillion U.S. dollars,” Xinhua paraphrased the official as saying. In other words, China’s Silk Road is a big deal, and not just for Asia. In fact, the Silk Road is making progress on an entirely different continent – Africa.

During Foreign Minister Wang Yi’s trip to Africa in mid-January of this year, he visited Kenya and spoke about China’s plan to build a $3.8 billion railroad linking Nairobi, Kenya’s capital, to Mombasa, a port on the Indian Ocean. Though the railroad project isn’t being pitched as part of the Silk Road, it’s no coincidence that Nairobi, an inland city, is included on Xinhua’s Maritime Silk Road map. The rail link between Nairobi and Kenya’s largest port will be crucial in actually connecting Nairobi to the maritime trading route.

For now, Nairobi (presumably via Mombasa) is the only African city specifically marked on the map. But both Africa and China have far more ambitious dreams for upgrading African infrastructure. Speaking about the railroad project while in Kenya, Wang referenced a 2014 statement by Nkosazana Dlamini Zuma, the chair of the African Union Commission, in which Zuma spoke of a “a dream that one day the capitals of all African countries will be linked by high-speed railways.” Wang added, “As a good friend of Africa, China is willing to make efforts to help African friends realize the dream.” Building up that sort of infrastructure (which Wang called “a century project”) would potentially connect all of Africa to China’s Silk Road vision. The Kenya railroad project alone will eventually link Nairobi with the capitals of Uganda, Rwanda, Burundi, and South Sudan.

And Mombasa is not the only port China is developing on the African coast. China is also involved in developing ports in DjiboutiTanzania, and Mozambique; it may also have plans to invest in ports in Madagascar and the Seychelles according to a Bloomberg report citing the Namibian Times. That would give China no less than six African ports on the Maritime Silk Road, ranging from the Indian Ocean through the Red Sea.

Brian Eyler, writing for East By Southeast, suggests that the Maritime Silk Road “is all about Africa.” Eyler argues that “in actuality the focus of the Maritime Silk Road is to support and facilitate booming trade growth between Asia and Africa.” Eyler further reports that China and Thailand recently agreed to create investment vehicles for developing 12 ports – including seven African ports (in Djibouti, Tanzania, Mozambique, Gabon, Ghana, Senegal, and Tunisia).

The Maritime Silk Road, like its overland counterpart, is currently in a stage that heavily emphasizes the building of infrastructure projects. That was China’s rationale for founding the Asian Infrastructure Improvement Bank in addition to a separate $40 billion Silk Road Fund. Both funding sources aim to “break the connectivity bottleneck,” in President Xi Jinping’s words.

China has long engaged in these sorts of infrastructure development projects in Africa, constructing roads, railways, and public buildings. While still rhetorically separate from the Maritime Silk Road, these projects speak to the same vision: regional connectivity, brought to you by Beijing. So while China publicizes its Silk Road progress in Asia, don’t forget that similar themes are unfolding in Africa – and that the two projects will eventually link up, if Beijing has its way.

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China’s ‘Maritime Silk Road’: Don’t forget Africa

30 Jan 2015
China’s “Maritime Silk Road” is expanding beyond Asia to the African coast. On Sunday, a Chinese State Council official told a conference in Hainan that more than 50 countries are interested in participating in China’s Silk Road...
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High Level African Trade Committee (HATC) discusses the launch of the Continental Free Trade Area (CFTA) negotiations

The 4th High Level African Trade Committee (HATC) meeting kicked off on 29 January 2015 in Ethiopia, Addis Ababa on the sidelines of the 24th Ordinary Session of the Summit of the African Union.

The HATC meets and provides policy orientation and recommendations to the Assembly on the acceleration and deepening of Africa’s market integration agenda. The meeting was organized by the Department of Trade and Industry of the African Union Commission and chaired by H.E. Mr. John Dramani Mahama, President of the Republic of Ghana.

The HATC meeting received an update on the progress of the Tripartite Free Trade Area Negotiations, as well as a presentation on the outcome of the 9th Ordinary Session of the Conference of AU Ministers of Trade. It also recommended actions for implementation by the Commission and Member States in preparation for the launch of the Continental Free Trade Area (CFTA) negotiations, the World Trade Organisation (WTO) issues, the African Growth and Opportunity Act (AGOA) and the implementation of the Boosting Intra-African Trade (BIAT) action plan.

The HATC’s main responsibility is to facilitate and unlock the blockages in the implementation of the framework, road map and architecture for fast-tracking the establishment of the continental free trade area (CFTA), and the action plan for boosting intra-African trade (BIAT) which became AU policy in January 2012.

The meeting reviewed and discussed the recommendations of the Ministers of Trade on intra-African trade, CFTA, WTO issues, EPA and AGOA among others and gave strategic guidance to the Commission on the way forward, particularly in the light of mega trade deals being concluded at the global level. The HATC also reviewed progress towards the launch of the CFTA Negotiations at the next AU Summit.

In his opening remarks, the President of the Republic of Ghana, H.E Mr. John Dramani Mahama emphasized on the urgency of the establishment of the CFTA saying, “It was a dream of our founding fathers to create a continent where people can move freely and goods and services across the continent. Fast tracking the creation of a CFTA is the way to go”

Also speaking during the meeting was the Deputy Chairperson of the African Union Commission,H.E Dr Erastus Mwencha,who commended the efforts of the tripartite members for the progress made towards launchingof thetripartite free trade area.

However, the deputy chair noted that for realization of the establishment of a CFTA, we need to move forward and not leave anyone behind.

“It is crucial to enhance value of African products, to industrialize and to forge toward the realization of a CFTA. We need to maintain the unity of purpose and talk with one voice for integration purposes.”

High Level African Trade Committee is made up of the Chairpersons of the Regional Economic Communities. The current members of the HATC are Chad (Chair of ECCAS and CENSAD), Ghana (Chair of ECOWAS), Ethiopia (Chair of IGAD), Kenya (Chair of EAC), Libya (Chair of AMU), Zimbabwe (Chair of SADC) and Democratic Republic of Congo (Chair of COMESA). The African Union is the key institution driving Africa’s Continental Free Trade Area (CFTA) initiative, with the Department of Trade and Industry having the primary responsibility for the CFTA within the AU Commission.

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Industrial Policy as a Tool of Development Strategy

Using FDI to Upgrade and Diversify the Production and Export Base of Host Economies in the Developing World

Harsha Vardhana Singh – drawing on arguments developed by Dani Rodrik, Ricardo Hausmann, Justin Lin, and others – argues that industrial policy may have a key role to play in designing development strategy in the contemporary period.

Traditional views of industrial policy have typically begun with trade protection as a strategy to promote the creation of infant industries that grow to become viable international competitors. Following Lin’s Comparative-Advantage-Following (CAF) model, this paper adopts a perspective quite at variance with the older trade-protection approach, starting instead with foreign direct investment (FDI) promotion to attract multinational corporations into sectors that bring the host country immediately to the frontier of technology, management, and quality control.

The focus on harnessing FDI – in particular in manufacturing and assembly – to promote broad-based development complete with economic and social spillovers and externalities assumes special importance in light of the discovery that developing countries that diversify and upgrade their production and export base enjoy more rapid growth and greater welfare gains than those that simply do more and more of what they have always done.

As shown later, FDI in manufacturing offers target-rich opportunities for host governments that want to use it to bring structural transformation to the host economy. But this paper also points out that there are important market failures and tricky obstacles to attracting investors in higher-skilled and novel sectors in untried emerging market locales. This brings the analytic investigation back to the design of industrial policy in the contemporary period. What are the precise market failures and obstacles to using FDI to upgrade and diversify a would-be host’s production and export base? And what are the corresponding public sector interventions needed to achieve success?

Here is where this paper hopes to make an important contribution – the most significant market failures and obstacles to using FDI to upgrade and diversify the host production and export base are slightly – but significantly – different from what the Hausmann-Rodrik-Lin framework leads us to conclude. The design of industrial policy has to be refocused to deal with the empirical discoveries about market failures and obstacles that are introduced here. At the same time, some popular conclusions adopted by some of those who use the Hausmann-Rodrik-Lin framework – notably Rodrik but not Lin himself – can be shown to be counterproductive and even damaging to the prospects for development.

The resulting combination of new proposals for the design of industrial policy and new cautions about the design of industrial policy will bear directly on the role of “policy space” for the WTO to better address the needs of developing countries.


Implemented jointly by ICTSD and the World Economic Forum, the E15Initiative convenes world-class experts and institutions to generate strategic analysis and recommendations for government, business and civil society geared towards strengthening the global trade system. The E15 expert group on Reinvigorating Manufacturing: New Industrial Policy and the Trade System is co-convened with the National School of Development at Peking University.

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Industrial Policy as a Tool of Development Strategy

30 Jan 2015
Using FDI to Upgrade and Diversify the Production and Export Base of Host Economies in the Developing World Harsha Vardhana Singh – drawing on arguments developed by Dani Rodrik, Ricardo Hausmann, Justin Lin, and others – argues...
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Global Investment Trends in 2014 and Prospects for 2015

Global foreign direct investment (FDI) inflows declined by 8% in 2014. A solid FDI rise remains distant, reports the latest UNCTAD Global Investment Trends.

In 2014, global foreign direct investment (FDI) inflows declined by 8% to an estimated US$1.26 trillion, due to fragility of the global economy, policy uncertainty and geopolitical risks. A large divestment in the United States also reduced the global level of FDI flows.

FDI flows to developed countries dropped by 14% to an estimated US$511 billion, significantly affected by a large divestment in the United States. FDI flows to the European Union (EU) reached an estimated US$267 billion; this represents a 13% increase on 2013, but is still only one-third of the 2007 peak.

Flows to transition economies more than halved to US$45 billion as regional conflict, sanctions on the Russian Federation, and negative growth prospects deterred foreign investors (especially from developed countries) from investing in the region.

Developing economies saw their FDI inflows reach a new high of more than US$700 billion, 4% higher than 2013, with a global share of 56%. At the regional level, flows to developing Asia were up, those to Africa remained flat, while FDI to Latin America declined.

In 2014, China, with an increase of 3%, became the world's largest recipient of FDI. The United States fell to the 3rd largest host country with almost a third of their 2013 level. Among the top five FDI recipients in the world, four are developing economies.

Cross-border mergers and acquisitions (M&As) rose by 19%, driven mainly by restructuring deals. Announced greenfield investment projects rose by 3% in 2014.

A solid FDI rise remains distant. A subdued global economic outlook, volatility in currency and commodity markets and elevated geopolitical risks will negatively influence FDI flows. On the other hand, the strengthening of economic growth in the United States, the demand-boosting effects of lower oil prices and proactive monetary policy in the Eurozone, coupled with increased liberalization and promotion measures, will favorably affect FDI flows.

UNCTAD Global Investment Trends Jan 2015

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Global Investment Trends in 2014 and Prospects for 2015

30 Jan 2015
Global foreign direct investment (FDI) inflows declined by 8% in 2014. A solid FDI rise remains distant, reports the latest UNCTAD Global Investment Trends. In 2014, global foreign direct investment (FDI) inflows declined by 8%...
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