Paul Collier: China’s Investment in Africa
The New York-based Council on Foreign Relations today published an interview with Paul Collier, currently Professor of Economics and Director of the Center for the Study of African Economies at Oxford University. Formerly he was director of development research at the World Bank and advisor to the British government’s Commission on Africa. He is also the author of The Bottom Billion, a book about the citizens of a group of about 50 failing states whose seemingly unstoppable slide into more and more poverty has defied traditional approaches to development. Seventy percent of the bottom billion live in Africa. In his book, Collier analyzes the major reasons for failure in these countries by taking a closer look at four major traps: civil war, a dependence on the extraction and export of natural resources, bad neighbors, and bad governance. Here is the New York Times book review.
In his interview with CFR, Collier responds to a question about China’s role in Africa:
China is a growing presence on the African continent and could throw a wrench in any aid conditionality. What is your feeling on China’s investment in Africa?
China’s arrival on the scene is, in many respects, very good news for Africa. It’s pushed up commodity prices and it’s pushed down the cost of manufactured goods. So Africa is able to buy very cheap goods and get very high prices for its exports. The Chinese are an inadvertent charity in that they’re so big in the world that they manage to turn the terms of trade powerfully against themselves. That has shifted quite a lot of the benefits of Chinese growth from China to Africa. So we start with a big plus. The minus, of course, is that we’ve got the scramble for Africa part too, with China racing everyone else to the bottom in terms of standards of governance. So it’s important to try and pull back from that and agree [on] a set of common standards. If we try and get China to adhere to our standards, we’ve lost. But if we try and build a common set of standards with China, then that well might be feasible. Because the Chinese have always taken the long-term view and it’s not in China’s interest to build a new vintage of fragile states, some of which then fall into insecurity.
In his book, The Bottom Billion, Collier was somewhat less charitable:
So the growth of agglomerations in Asia has made the export diversification route more difficult for the bottom billion. Another effect of this growth is that Asian countries are increasingly desperate to secure supplies of natural resources. The Chinese are all over the countries of the bottom billion, securing natural resource deals. Superficially, this is good news: it is certainly raising prices, most obviously of oil, which some countries of the bottom billion export. But [with the] trap of poor policy, […] high prices for resource exports are likely to chill the impetus for reform. [With] the conflict trap, […] the spread of high natural resource prices increase[s] the risk of conflict. [And with] the natural resource trap, […] natural resources are not the royal road to growth unless governance is unusually good. In the bottom billion it is already unusually bad, and the Chinese are making it worse, for they are none to sensitive when it comes to matters of governance. When Zimbabwe’s Robert Mugabe was looking for money to bail himself out of the ruinous consequences of his political choices, he came up with the “look east” strategy, East did not mean Russia, it meant China. And China has welcomed his overtures with open arms. The same goes for Angola. After the defeat of Jonas Savimbi’s UNITA, the developed countries finally decided to put the squeeze on the government of Angola, trying to clean up grotesque misuse of the oil money. China came in with over $4 billion in loans, and the Angolan government was off the hook. So the bottom billion are locked into natural resource exports twice over: by the threshold effects of Asian export agglomerations and by Asia’s desperate need for natural resources. (p. 86-87)