This is an archived blog post from The Acorn.
Earlier this week, in a speech he gave in Senegal’s capital city Dakar, Soros had a few blunt things to say about Africa. He said China and India are the new colonists of the continent, as they hunt for minerals and oil. “They are in the process of repeating the mistakes that the colonial powers have made,” Soros told news agency Reuters. [Mint]
This is what you get when people reflexively mention “China and India” in one breath. As Harry Broadman’s book, “Africa’s Silk Road: China and India’s New Economic Frontier”, published by the World Bank (and reviewed here in Pragati) reveals, the two countries have very different approaches towards Africa.
The book contains useful discussion of the differences in the behaviour of firms from China and India. The Chinese engagement in Africa (as elsewhere) reflects the top-down, state-enterprise led approach (88 percent of Chinese firms engaged in FDI abroad are government owned); while the Indian engagement reflects private-enterprise led bottom-up approach of its economy. Thus, it is a private-sector rather than a state-owned company from India which has recently acquired eleven coal mines in Mozambique. The Chinese engagement is much more strategic, focusing on key sectors, including finance. As an example, China has just acquired a stake in South Africa’s Standard Bank which operates in 18 different African companies. China is also using aid (such as its intention to provide US$5 billion to Congo to fund infrastructure) to develop strategic alliances with key resource-rich countries.
The author suggests that Chinese businesses exhibit “…enclave types of corporate profiles, with more limited spillover effects” (Chinese firms bring workers from China even for construction and other tasks when African countries have severe unemployment problem). Chinese firms are also known to be reluctant to provide sub-contracting opportunities for African companies, and to transfer technological knowledge.
The Indian firms on the other hand have pursued “..strategies that result in greater integration into domestic markets”, and they overwhelmingly rely on labour sourced domestically, even for managerial positions. Indian firms are also more likely to sub-contract to African firms. [Mukul Asher/Pragati]While some of the bracketing is unavoidable especially in the international media, this hyphenation should certainly not be encouraged. [It is rather unfortunate that a member of Dr Manmohan Singh’s council of ministers should write a book titled “Making sense of Chindia”.]
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