The Impact of China and India on Africa: Trade, FDI and the African Manufacturing Sector Issues and Challenges

"In this paper an attempt to examine the impact of the Asian drivers on the manufacturing sectors of African economies are made. An examination of the existing literature and empirical regularity suggest looking into the following issues which might be important for policy makers. First, China and India’s growth is creating a demand surge for African commodities.Second, it seems that some policy makers are worried about the detrimental impact of the Asian drivers on their country. Third, Africans need to develop dynamic capability to scan changing environments, to developing appropriate strategic response and to implement these strategies effectively. Fourth, what is important for Africa may not relate to the static gain and loss but to future industrialization of Africa and the space left by China and India. Fifth, effective industrial policy requires, subject to state competences, an appropriate macro environment – for example, exchange rate competitiveness, reasonably stable prices, property right, enforcement of contracts etc. Finally, the distributional implications of trade with China and India are also examined."