Development through cooperation?
The effectiveness of Sino-founded special economic
zones as transformative catalysts in Africa
By Chris Koenis MSc Thesis Political Science (track: International Relations) University of Amsterdam June 2019 Research project: China’s Rise in the Global Political Economy Supervisor: Dr. Julian Gruin Second reader: Dr. Farid Boussaid Amount of words: 19.003 Student ID: 11784962The darkest thing about Africa has always been our ignorance of it. ~ George H.T. Kimble
To maximise global social welfare, policymakers should strongly encourage the diffusion of knowledge from developed to developing countries. ~ Joseph E. Stiglitz
Table of Contents
Abstract 5 Acknowledgements 6 Abbreviations 7 List of Maps, Figures and Tables 9 1. Introduction 10 1.1 Research question 14 1.2 Core concepts defined 14 2. Origin of China’s model of economic development 16 2.1 Introduction 16 2.2 Three policy paradigms on economic growth 16 2.3 The East Asian model of economic development 18 2.4 The Chinese development model 20 2.5 A brief history of SEZ research 22 2.6 China’s developmental model goes abroad 24 2.7 Conclusion 26 3. Theoretical framework and hypotheses 27 3.1 Introduction 27 3.2 The developmental state and its evolution 28 3.3 Global production networks and development 30 3.4 Following the flying geese model 33 3.5 Conclusion 36 4. Methodological approach and data 38 4.1 Research design 38 4.2 Case selection 39 5. Empirical analysis: a closer look at Sino-founded SEZs in Africa 41 5.1 Introduction 41 5.2 China-Egypt TEDA Suez Economic and Trade Cooperation Zone (Egypt) 42 5.3 Eastern Industry Zone (Ethiopia) 44 5.4 Jinfei Economic Trade and Cooperation Zone (Mauritius) 475.5 Ogun-Guangdong Free Trade Zone (Nigeria) 50 5.6 Zambia-China Economic & Trade Cooperation Zone / Chambishi Multi- Facility Economic Zone (Zambia) 52 5.7 Lusaka East Multi-Facility Economic Zone (Zambia) 55 5.8 Conclusion 57 6. Conclusions and recommendations 60 Bibliography 63 Appendices 75 Appendix 1: Conducted interviews 75 Appendix 2: Composed list of active companies in Ogun-Guangdong Free Trade Zone 76
Abstract
This research aims to analyse the characteristics and outcomes of Sino-African partnerships in the early 21st century. It addresses the rise of China and its subsequent political-economic influence through international relations. More specifically, it examines China’s presence and long-term commitment within the first set of special economic zones (SEZs) in African countries and its potential effects for sustainable and inclusive local development, as a possible alternative to traditional development aid and cooperation from traditional western partners. It finds that more connections with global production networks lead to increased investment and subsequently the creation of employment. However, before Sino-founded SEZs are able to have developmental impact in Africa multiple conditions are required. If these specific SEZs are able to meet most of these conditions, they could become successful by gradually growing towards more economic activity like the Chinese SEZs they are modelled after. At the same time, when these conditions are not met they could easily fail completely.
Acknowledgements
In a hot summer some years ago I took my first academic steps on the green hills of Rhodes University, South Africa. After studying and traveling the region, the continent quickly got to me and somehow never let go. After a few inescapable odysseys, a bachelor's degree in journalism and years of gaining the necessary work experience on predominantly economic media, I have returned to the academic realm. What followed was a journey of two more years of studying political science in the most phenomenal city out there. Whereas my academic path was mostly focused on the political-economic field within the international relations programme, I consider myself fortunate to have learned many new insights on other political perspectives and power relations. In front of you lies my thesis, connecting all these elements along the road. I would like to take this opportunity to thank a handful of people. First of all, my sincere gratitude goes out to my supervisor (and globetrotter) Dr. Julian Gruin, for his adequate feedback and valuable suggestions that steered this thesis in the right direction. Also, I like to thank Dr. Farid Boussaid for his willingness to act as a second reader. In addition, a word of thanks to all my lecturers from the past two years for their insights and inspiration, especially the teachers of my electives, which have proved most valuable to me. Finally, I want to thank the people who are always closest to me, Willem, Frida and of course my girlfriend Samira. I am grateful for your faith and support in truly every aspect of my life. Chris Koenis June 21, 2019
Abbreviations
AU African Union ADB African Development Bank ASEAN Association of Southeast Asian Nations CADFund China-Africa Development Fund CCP Chinese Communist Party CDB Chinese Development Bank CNMC China Nonferrous Mining Company CPE Comparative Political Economy EIZ Eastern Industry Zone, Ethiopia FDI Foreign Direct Investment FZE Free Zone Enterprise FOCAC Forum on China-Africa Cooperation GCC Global Commodity Chain GDP Gross Domestic Product GFC Global Financial Crisis GPN Global Production Network GVC Global Value Chain IFI International Financial Institution IMF International Monetary Fund IR International Relations ISI Import-Substitution Industrialization IPE International Political Economy JFET Jinfei Economic Trade and Cooperation Zone LDCs Least Developed Countries LFTZ Lekki Free Trade Zone MFEZ Multi-Facility Economic Zone MITI Ministry of International Trade and Industry of Japan MCTI Ministry of Commerce Trade and Industry of Zambia MOFCOM Ministry of Commerce of the People's Republic of China MOU Memorandum Of UnderstandingNFCA Non-Ferrous Metals Corporation Africa NIE Newly Industrializing Economy OGFTZ Ogun-Guangdong Free Trade Zone PAFTA Pan-Arab Free Trade Area PRC People’s Republic of China SAP Structural Adjustment Program SCCG Shanxi Coking Coal Group SDG Sustainable Development Goal SEZ Special Economic Zone SME Small and Medium Enterprise SOE State-Owned Enterprise TEDA Tianjin Economic-Technological Development Area TISCO Taiyuan Iron and Steel Group Corporation TNC Transnational Corporation VAT Value Added Tax UN United Nations UNDP United Nations Development Programme US United States of America ZCCZ Zambia-China Economic and Trade Cooperation Zone ZDA Zambia Development Agency
List of Maps, Figures and Tables
Map 1: Global distribution of the Least Developed Countries 12 Map 2: Selected cases of Sino-founded special economic zones in Africa 41 Figure 1: Ōkita’s practical application of the flying geese model (1985) 31 Figure 2: A framework for analysing regional development and global production networks 35 Figure 3: Theoretical framework and hypotheses 37 Table 1: Sino-founded SEZs in Africa (>10 years operational) 40 Table 2: Planned Sino-founded SEZs in Africa (not operational) 40 Table 3: A overview of the hypothesized effects on the selected cases 581. Introduction
“China and Africa share mutual needs and complementarities and face a rare historic opportunity in pursuing development through cooperation”, stated the Chinese president Xi Jinping during his keynote speech at the 15th anniversary of the Forum on China-Africa Cooperation (FOCAC) in Johannesburg, South Africa (Jinping 2015). In his vision, after more than thirty years of opening-up to the world, 21st century China is evidently ready to now support African countries to realize their own “sustainable self-development” (ibid.).
The extraordinary economic progress established by the People’s Republic of China (PRC) in just a few decades is made at an historically unprecedented pace. By transforming from a predominantly agricultural land to a global industrial power the country pursued economic and social transformation and strived to get hundreds of millions of its deprived citizens out of poverty. In the late seventies of the 20th century China’s rapid development path commenced under the rule of political leader Deng Xiaoping. His so-called reform and open up policy blended the PRC’s socialist ideology with capitalist reforms, while embracing foreign investment and global markets. While the East Asian country steadily left its primarily agrarian system behind, the contours of a rapidly growing industrial actor became visible.
A significant part of this remarkable transformation has been attributed to the establishment of special economic zones (SEZs). The first of these zones arose along the southeast coast of mainland China. These geographically delimited areas in which different tax and trade laws applied were aimed to attract foreign investment, grow businesses and to attract jobs and innovation. The economic acceleration and dramatic fall of the poverty rate that followed has made a wide impression globally and remains to this day an inspiration for politicians and economists in many other nations. Certainly with regard to countries that are also struggling with economic and societal maturation in a rapidly internationalizing world. Precisely the fact that China as a late developing country achieved such a catch-up effort, in an increasingly complex world in which countries are ever more economically interconnected and interdependent, attracts
attention. The acceleration of the country’s economic production was both substantial and quickly visible. Between 1952 and 1978 the average growth rate of real per capita gross domestic product (GDP) was just below three percent a year. However, from 1978 to 2007 this rate accelerated to over eight percent per year, mainly driven by productivity growth (Xiaodong 2012). By 2010, China’s new and open economic strategy had definitely proofed itself in many parts of the country with the emergence of infrastructure and new metropolises. By implementing its labour-driven catch-up strategy eventually over four hundred million people had been lifted out of abject poverty (Ozawa and Bellak 2011).
Both the African Union (AU) and the African Development Bank (ADB), consider industrialization and infrastructure development as key factors in Africa’s collective agenda towards inclusive and sustainable development (AU 2015; ADB 2018). For these institutions the acceleration of industrialization is key for achieving poverty reduction in African nations. To facilitate their ambitions and unlock manufacturing potential, several African countries already turned their attention towards the East. This has quickly lead to an abundant amount of contemporary Sino-African relations in the 21st century. Despite China being a developing country itself, currently no other state in the world is so deeply anchored with the African continent in terms of trade, investment, financing and aid (Tull 2006; Sun et al. 2017; CARI 2019).
These increased Sino-African relations had led to a broader scientific debate towards its consequences, which can be roughly divided between an optimistic ‘win-win’ position across from a mere pessimistic neocolonialism position. However, it has become clear that traditional development aid and cooperation from predominantly western partners to African nations overall has so far not led to the desired development results. On the United Nations (UN) list of the Least Developed Countries (LDCs) – countries which are suffering from structural impediments to sustainable development – currently 33 of the 47 listed nations are African [see Map 1]. Therefore, the need for new fruitful approaches towards development is of considerable relevance to the disadvantaged population living in these countries.
This research focuses on one of these new approaches. More specifically, it analyses the efforts of African state transformation towards sustainable economic development through Sino-African cooperation. For African countries, a strategy build upon industrialization, labour, exports and foreign direct investment (FDI) can potentially lead to economic take-off. Late 2006 at the FOCAC summit in Beijing the Chinese government committed to establish overseas economic and trade cooperation zones in Africa, where it proclaimed to support this strategy, while encouraging Chinese enterprises to invest in the continent (Davies 2008; UNDP 2015). Three years later there were official Sino-founded SEZs in Zambia, Egypt, Nigeria, Mauritius and Ethiopia. All these zones are using the Chinese experimental policymaking approach, which is “an unprecedented business model in Africa” (Bräutigam and Xiaoyang 2011a). Moreover, current cooperation within these pilot zones often represents a long-term commitment towards African countries through joint ventures and common policy. According to involved politicians and also multiple external researchers, these SEZs in Africa are considered as a panacea for development of their host countries. As indicated by the statement of Xi Jinping at the start of this introduction, this contemporary form of South-South cooperation within the zone is supposed to lead to mutual benefits. For
China it contributes to its new global strategy for the 21st century, which is further elaborated upon in chapter 2. While for the African host countries both the infrastructure and the economic activity created in these zone are considered as viable pillars of sustainable development path. Others are more sceptical towards this outlined rosy picture of the future. Predominantly western scholars and politicians point to China’s hidden agenda, in which only amassing geopolitical power, raw materials and the establishment of neocolonial relationships matter for the new economic superpower. Without pretending to provide an unequivocal answer to this debate, which in all its complexity extends much further that the scope of a master’s thesis, it remains largely unclear whether these newly formed SEZs are actually able to contribute to the intended development process. Meanwhile, historical parallels are drawn between China’s own connection with Japan in the 20th century. The underlying idea is that a network of Chinese transnational labour-intensive production locations can act as a stimulating factor for this development. Thus, in theory, African countries are the next in line to develop by being connected to this network (e.g. Alden 2007; Friedman 2009). Similar to China’s own rapid development path, SEZs could again play a pivotal role in this process, by attracting economic activity and act as transformative catalysts for development in African countries.
In the current world order, new political-economic alliances with China provide new opportunities for African countries. As Forje puts it, the fact that Africa now has “the opportunity of creating and choosing new friends and constituting new political alliance may be the opening for the future of the continent” (Forje 2009: 29). With regard to SEZs, it is relevant to further examine whether such an opening is also feasible. Another motivating factor for this thesis is the current international popularity of SEZs. In the mid-70s there were 79 SEZs worldwide, but after China’s economic reforms this number has grown to around 500 SEZs in the 1990s, before accelerating to a current amount between 3.000 and 5.000 zones in predominantly developing countries (Moberg 2015). For many developing countries SEZs are becoming an attractive alternative to current development approaches based largely on aid and loans. Therefore, focused research into the effects of SEZs leads to fruitful lessons for the present development debate. This thesis is an attempt to make a valuable contribution to this research field by answering the following question:
1.1 Research question
What is the impact of Sino-founded special economic zones as part of global production networks on development in African countries?1.2 Core concepts defined
The main objectives of this thesis are to analyse contemporary economic policies and the lessons that government officials of developing countries can potentially draw from its outcomes. For this, global comparisons must be made conceptually between different countries and different time frames. So in order to prevent misinterpretation - or what the prominent Italian political theoretician Giovanni Sartori calls conceptual stretching to “vague, amorphous conceptualizations” (Sartori 1970: 1034) - the core concepts applied throughout this thesis will be defined in order to refrain from ambiguity.
First of all, the ambiguous concept special economic zone is explained. SEZs are defined throughout this thesis as specific geographically delineated areas which, compared to the rest of a host country, have the advantage of deviant business and trade laws, as well as specific tax and labour regulations. At this point it is important to highlight that SEZs are surely not an invention of modern China. In fact, the idea of creating special zones for the promotion of foreign commerce is a centuries-old concept (Thoman 1956; Stoltenberg 1984). Throughout history the term ‘economic zones’ encompasses many different forms and labels, including free trade zones, economic processing zones and trade and economic cooperation zones (Baissac 2011: 23). In this thesis it is therefore necessary to define SEZs in their modern form to make consistent analytical comparisons between the 21st century cases in Africa and their 20th century predecessors in China. In their modern form, the SEZs in China were created to realise four specific economic policy goals: (1) they need to attract significant amounts of FDI, (2) solve large-scale unemployment, (3) be part of a larger economic reform strategy, and (4) act as experimental breeding grounds for market-oriented economic reforms (Baissac 2011). Whether and how SEZs actually deliver on these promises is part of ongoing debate, which will be further discussed in chapter 2. Regarding the selected cases in this study the focus lays explicitly on zones initiated by the Ministry of
Commerce of the People's Republic of China (MOFCOM). Thereby ‘Sino-founded’ is conceptualized as founded by the current rulers of the PRC, governed by the Chinese Communist Party (CCP). Next to that, these SEZs are all so-called pilot zones and thus the first SEZs the PRC has historically set-up on the African continent. The next equivocal concept that must be defined is development. It is vital for scholars of international relations (IR) to keep in mind that a universal accepted definition of the term ‘development’ does not exist and that every conception of it “necessarily reflect a particular set of social and political principles, norms and values” (Evans and Thomas 2017: 471). Nevertheless, in order to be able to make an useful analysis in this thesis, choices must inevitably be made to be able to compare forms of development. Within this thesis, the three theories set out in chapter 3 will therefore act as guidelines to form a way of conceptualizing forms of development in the empirical analysis. As a result, four hypothesized effects are deduced; linkages with global production networks, the increase of investments, job creation and the influx of technology transfer.
The last core concept to be dealt with is the term Africa. As a researcher I am well aware that Africa is often considered as “a place with certain characteristics rather than as a diverse continent made up of many countries with their own customs” (Knight 2000). Many articles, books and websites have been devoted to invalidate this incorrect stereotype image of the second largest continent in the world. My research gladly elaborates on this and will therefore explicitly exclude the image of Africa – in line with for instance the Middle East – as being an one-sided area. Instead it is important to study the often large differences between African countries. So by using the term Africa, which is also part of the title of this thesis, I refer to sovereign states on the African continent, fully recognized by the UN. According to the UN’s Department for General Assembly and Conference Management, there a currently 54 recognized member states, gathered in the regional African Group (UN 2019). This conflicts with the number of 55 that the AU uses, whereas the disputed Sahrawi Arab Democratic Republic at the time of writing this thesis is not recognized by the UN.
2. Origin of China’s model of economic development
2.1 Introduction
In order to form a thorough and informed analysis, it is important to first get a better understanding against which historical background a theoretical debate has arisen in the first place. Moreover, in the context of this thesis, it contributes to understanding the intentions behind the foundation of Sino-founded special economic zones. Therefore this chapter discusses the literature on development policies in which the state plays a pivotal role. First, the three main post–World War II paradigms on economic growth ideas are reviewed. The guiding principle here is how the role of the government was viewed at different times in modern history. Subsequently, this chapter will zoom in on the so-called East Asian model as a contemplated alternative to the Washington Consensus policy paradigm. Contentious issues such as conditionality and reciprocity are covered. Next, specific characteristics of the Chinese developmental model are discussed, which in essence made it possible to establish SEZs. Then, the debate on SEZs is discussed. SEZs have been catalysts in successful structural transformation not only in China but also in multiple other nations, including the ‘Four Asian Tiger economies’ (South Korea, Singapore, Taiwan and Hong Kong), Latin American countries including Dominican Republic, El Salvador, Honduras and also in Middle Eastern countries such as the United Arab Emirates (Farole and Moberg 2017). Today, there is a lively debate on the role and efficiency of SEZs, as well as the underlying political intentions of these zones. Lastly, literature will be discussed regarding China’s overseas SEZs and the unanswered questions that still exist in this debate.
2.2 Three policy paradigms on economic growth
After World War II, three paradigms of policy advice on economic growth can be identified (Lindauer et al. 2002). Within these eras of ‘big ideas’ in development thinking, the role of the government shifted at every turn. Within the first paradigm, the government was considered as a dominant and driving force behind coordinated economic development in roughly the 1950s and 1960s. While focusing on economic
development in Latin America, dominant scholars such as Raúl Prebisch and Celso Furtado originated the structuralist economics approach, arguing that countries of the periphery should enhance central planning towards economic integration, for instance through import-substitution industrialization (ISI) policies (Jameson 1986; Love 2005). In order to prevent a lack of private investment, central planning and coordination the government was pointed out as being “responsible for mobilizing and allocating the scarce capital available for direct investments in the necessary infrastructure of a modern economy” (Lindauer et al. 2002: 4).
In roughly the 1970s and 1980s a second paradigm was established. This time the role of the government was thought-about as being the main obstacle to economic growth. It became clear that in most low- and middle income economies years of strict planned coordination could not bear fruit. This was mainly due to reasons such as increasing corruption and rent-seeking, making the government an obstacle towards economic growth instead of its contributor. Arguably the most striking failure was China’s attempts of central planning under Mao Zedong’s socio-economic transformation campaigns now widely known as the ‘Great Leap Forward’ (1958-1962) and the ‘Cultural Revolution’ (1966-1976). Both campaigns have led to tens of millions of deaths and plunged China into social and economic chaos (Wright 2011: 154-175). Also in other countries such as Cuba, Vietnam and the collapsing Soviet Union central planning was failing. Other important events were the 1973 and 1979 oil crises, leading to higher energy and commodity prices and triggering economic recessions. Meanwhile, ISI policies in Latin American countries underperformed due to the “import-dependent, capital-intensive nature” (Lindauer et al. 2002: 8) of the industries it created. Altogether, this eventually rolled out the red carpet for popular economic theories based on mere rational expectations and perfect functioning capital markets, with as little government intervention as possible.
After another paradigm shift a specific large or small role of the government was no longer seen as a guideline. Confronted with the vast slowdown in growth in the majority of the developing world a new ideal emerged in the third era after World War II. This shift was fuelled by striking financial debt crises based on excessive foreign loans by the countries of Latin America (Hayes 1988), leading to the so-called ‘lost decade’ (La
Década Perdida). Also, the civil war ‘collapse’ of numerous politically instable sub-Saharan African countries and the contrasting rapid economic growth of particular countries – about whom I will elaborate in the following sections – led to the central believe that new ideas on development were necessary. Today, most leading development thinkers argue that LDCs “can grow only by overcoming their own, highly specific constrains” (Gruin et al. 2018). By this these development scholars reject the idea that a certain set of policy prescriptions is universally applicable and that in every case it is necessary to reconsider what solutions are needed for the specific problems that a country faces (Stiglitz 2002, 2005; Lindauer et al. 2002; Rodrik 2007). Inspiration for this point of view in developmental research derived mainly from the extraordinary growth paths and industrialization of several East Asian countries in the late 20th century. Their growth paths were all largely based on certain industrial policies initiated by their governments, including the formation of SEZs. The next two sections zoom in to this idea of state-led macroeconomic planning in first Japan, then the so-called Four Asian Tiger economies and finally China.
2.3 The East Asian model of economic development
The idea that the state plays a significant role in development came to fruition through the Asian success stories mentioned in the previous section. Their rapid economic development in the post-war period has caused different scholars to contemplate on the foundations of their growth. According to Thurbon (2016) the key ingredient is that these countries were ruled by politicians with a ‘developmental mindset’. Within this conceptual framework the worldview of political leaders is distinguished by “a desire for national techno-industrial catch-up and export competitiveness via strategic interventions by the state in economic life to promote national strength in a hostile and competitive world” (Thurbon 2016: 2). Often this mindset is shaped by specific situational challenges, including the geopolitical circumstances which a nation faces. In order to compare this new paradigm within the wider development debate, the concept of an East Asian model of economic development was formed.
The term East Asian model was first coined in the late 1980s as a way to describe similarities between the growth paths of South Korea and Taiwan with Japan (Kuznets
1988). Despite their differences in market size, economic structure and dependence on trade, these three countries shared common economic characteristics that, according to the model, to a great extent explained their rapid growth. Kuznets rejected the idea of a formal model that incorporated inputs and output, but delineated five specific components; high investment ratios, small public sectors, export orientation, labour-market competition, along with substantial government intervention in economic matters. Wade (1990) also scrutinized the successful industrial policies of Japan, South Korea and Taiwan, but emphasises the differences in government intervention, pointing at Taiwan mainly promoting small and medium enterprises (SMEs) and South Korea mere large private companies and heavy industry. A similar viewpoint was made by Lall (1996), who concludes that governments of newly industrializing economies (NIEs) have to deal with different economic objectives and political economies and therefore also intervene different towards more exports and international competitiveness.
In that sense it was an alternative approach to the ‘one-size-fits-all’ neoliberal policy instruments of what later widely became known as the Washington Consensus (Williamson 1990). This technocratic policy agenda for initially struggling Latin American developing countries in the 1970s and 1980s was based on the apparent consensus of both political Washington and the international financial institutions (IFIs) from Washington, the International Monetary Fund (IMF) and the World Bank. In political discourse, the phrase Washington Consensus evolved, much to the dismay of its creator, to the description for a draconian neoliberal ideology (Williamson 2000). In practice, the policy agenda prescribed economic liberalization and reduced government power in favour of free market forces. As a result, governments of developing countries were often unable to implement their own policies if they wanted to get loans. Instead, they were supposed to adhere to structural adjustment programs (SAPs). Due to this coercive and normative pressure from the IFIs, the Washington Consensus was able to grow into a transnational policy paradigm, before it was heavenly criticized for its ‘boilerplate’ approach to the unresolved problems of developing countries, eventually driving many of them to refrain from IMF lending arrangements (Babb 2013).
However, the East Asian model has also widely faced critique. Sceptics have argued that government agencies are unable to identify which industries can best stimulate growth,
i.e. they face difficulties or even hold the inability to ‘pick winners’ (Graham 1992; Powell 2004). Others have stated that a single definition of the East Asian model of economic development simply does not exist. They argue that the same set of industrial polices for different countries, leads to divergent results (Kwon 1994), or raise the question whether the model should even be desired, as it justifies destructive consequences such as authoritarianism, labour repression and environmental damages (Song 2013). Next to that, claims are made that other factors such as price increases of key commodities, US economic aid and the magnitude of capital accumulation are overlooked (Collins et al. 1996; Stubbs 2005).
The model have also been criticised on its effectiveness and ability to provide an ideal generalizable role model for other countries. Here, the counter argument was made that the model has limited applicability. It may ‘break down’ if a large majority of developing countries simultaneously implements export-led developments, as the total amount of exports would be more than international markets are able to absorb (Cline 1982). In addition, there is criticism towards the idea that the model can be applied to other nations in different times by using a comparative political economic framework. As Gore (2000: 800) argues, it remains “a moot point whether it is possible to achieve similar results to those achieved by East Asian countries in their high-growth period”.
2.4 The Chinese development model
Now zooming further in on the domestic growth path of the PRC in the late 20th century, two characteristics can be distinguished. First of all, in line with the other countries associated with the East Asian model of economic development, China’s economic rise was founded on state intervention. What stands out in the case of China was the much weightier role of the local government, where local officials were given both the opportunities and incentives to become market-oriented actor themselves due to fiscal decentralization (Walder 1995; Nee et al. 2007). This mechanism has been described as the ‘corporate governance approach' (Peng 2001) or ‘local state corporatism’ (Oi 1992, 1995). The second characteristic that stands out regarding the Chinese development model is the experimental policymaking approach. From the early days of the CCP the country established a nation-wide climate in which these local experiments were
possible. This so-called ‘from point to surface’ policymaking methodology is a process “initiated from individual experimental points (shidian) and driven by local initiative with the formal or informal backing of higher-level policy-makers” (Heilmann 2008: 2). The experimental approach became successful with the addition of pragmatism in the post-1978 era which gave local governments also more room for contextualized learning and autonomy for experimentation (Florini et al. 2012; Lewin et al. 2016).
Together with these two characteristics China amended its legislation in order to connect with global markets. Under the leadership of Deng Xiaoping and his reform and
open up policy the country opened up to foreign investment and global markets.
Therefore, in 1979 the PRC first approved the “Law of the People’s Republic of China on Joint Ventures Using Chinese and Foreign Investment”, permitting foreign enterprises to launch joint ventures with people in possession of the Chinese nationality (Nishitateno 1983). This novel joint-venture law paved the way to several other investment and ownerships laws, including the “Cooperative Joint Venture Law” of 1988, which allowed China to compete globally by adopting the rules and laws of a market economy (Chen et al. 1995). An acceleration of attracting foreign direct investment (FDI) eventually took place from the mid-1980s on, with its principal financial sources coming from Hong Kong & Macau, Japan and the United States. Ultimately, the objective of Deng’s policy was to establish a moderately prosperous society (‘xiaokang shehui’), an age-old conception that originated from China’s deep-rooted ethical and philosophical system Confucianism (Lee et al. 2012). In the following years, this cultural foundation for China’s market reforms inspired the Chinese government’s efforts in the pursuit of the reduction of social inequalities (Hanlong 2010).
The 1979 joint-venture law was quickly followed by the creation of SEZs. China’s first four SEZs arose in Shenzhen, a then sleepy fishing village which borders with Hong Kong, the neighbouring prefectural-level city Zhuhai, port city Shantou in Guangdong province and Xiamen in the also southeastern Fujian province. All lying within the beeline distance of seven hundred kilometres of each other, these initial four SEZs served as testing grounds for experimental economic and social reforms, while simultaneously facilitating China’s eventual reunification due to their location close to Hong Kong, Macau and Taiwan (idem: 692; Harding 1987). The SEZs differed from the
rest of the country through liberal governmental administrative rules and tax incentives (Chu 1987). Despite a slow start, the four zones proved to be “incubators for structural transformation” (Bräutigam and Xiaoyang 2011a: 30). China was able to gradually expand the amount of SEZs to over hundred today, contributing to its industrialization, construction of infrastructure and eventually the extraordinary economic progress the country made in the post-1978 period. Next to that, SEZs were also considered as being crucial for reducing poverty and creating jobs, due to increased FDI and the industrial investment from foreign enterprises (UNDP 2015).
2.5 A brief history of SEZ research
As briefly mentioned in the introduction, there are lively debates on the role, efficiency and also the underlying intentions of SEZs. For over forty years various academics are contesting over a wide range of aspects to determine the effects SEZs have on host countries. This started with the pioneering work of Hamada (1974) who for the first time captured SEZ foreign investments in a single trade model. His neoclassical analysis formed the cautious, but pessimistic conclusion that the potential consumption possibility does not necessarily improve with more investments in what was then called duty-free zones. Following notable research was critical towards this and looked at trade barriers effects (Hamilton and Svensson 1982) and unemployment (Young and Miyagiwa 1987). Warr (1989) constructed a conceptual framework for looking at costs and benefits for the inhabitants of host countries, while looking at multiple Asian countries. Although excluding factors such as FDI and the import of equipment and technology, his ‘enclave model’ shows that the zones in these developing countries could provide limited welfare gains, but are “definitely not engines of development” (Warr 1989: 85).
Due to the explosive growth in the number of SEZs in the last decades, SEZ research grown simultaneously. After Hamada’s ground work, four sets of stakeholders that have contributed to this debate can be distinguished (Baissac 2011). They are (1) economists and policy analysts; (2) policy practitioners; (3) business communities; and (4) labour, social, and environmental activists and nongovernment organizations (NGOs), with the first set contributing the lion’s share of the key policy debates. Numerous and divergent
contributions from case studies to formal theoretical analyses have been made, by using variables such as economic growth, trade, employment, state capacity, taxes and management costs. Such studies often highlighted the potential catalytic effect of SEZs in emerging markets in Asia and South America (Kusago and Zafaris 1998; Cling and Letilly 2001). Here, it is argued that to unlock the potential of SEZs they should be connected to wider national economic strategies to promote linkages, training, and therefore economic upgrading (Farole 2011).
On the other hand, there are also many arguments made against setting up SEZs. As Aggarwal (2006) sums up, owners of companies could only be interested to relocate their business to SEZs to take advantage of tax concessions or misuse the cheaply acquired land for real estate. Also, SEZs could cause revenue loss to local businesses, displace farmers and lead to a loss of agricultural land or lead to uneven growth between SEZ- and non SEZ investors (Aggarwal 2006: 4535-4536). During roughly the 1980s and 1990s, the debate is thus best illustrated by “a simple statement of opposition”: at worst circumstances SEZs can turn into welfare-reducing enclaves with negative effects on the liberalization of a country, but at best circumstances they can turn into catalytic exclaves with positive liberalization effects (Bassaic 2011: 53-54).
Today, the political-economic perspective on these circumstances has received a growing amount of attention. This gradually led to more convergence between the opposing arguments, due to greater understanding of the factors and conditions of SEZs in specific countries (ibid.). While applying such a political-economic framework to explain how SEZs are able to successfully contribute to economic development, Moberg (2015) and Hartwell (2018) argue that the institutional context is a crucial factor. If this context is firm and benign, as is the case in China, such contributions to economic development can be made. But in case of a weak institutional context, the privileges that SEZs contain could lead to rent-seeking, corruption and resource misallocation (Moberg 2015: 170-179). Others, including Alkon (2018) point towards the necessity of the right incentives for (local) politicians for SEZ’s developmental success.
In sum, research on the effects of SEZs has been conducted with a wide range of approaches and therefore shows mixed results. As Bassaic (2011) concludes, these
widely divergent approaches in theory and methods highlight the differences that exist in perspective on the ideal role of SEZs or how the economic policy objectives of SEZs could be measured. On the other hand, there seems to be a consensus that political guidance and established institutions are pivotal.
2.6 China’s developmental model goes abroad
The cases used in this research are all SEZs of Chinese origin and are modelled after successful predecessors in China. Under the flag of its wider going out strategy and to decrease trade friction, MOFCOM in 2006 announced that it will establish fifty foreign SEZs (Bräutigam 2009: 97). As part of this plan, potential companies would tender to receive special funding from the Chinese government (Farole and Akinci 2011; Zeng 2015). These funds were intended to stimulate Chinese companies in relocating mature factories offshore and create economies of scale for overseas investment (Bräutigam et al. 2010). In an era of increasing globalization, Chinese companies are expected to benefit through new production locations with the presence of relatively cheap labour, resources and additional export markets. Next to that, the Chinese government also claims that the foreign zones are a way “to transfer one element of China’s own success to other developing countries” (Bräutigam and Xiaoyang 2011b: 71). This strategy of so-called South-South cooperation was supposed to benefit both China and the recipient countries, as economic activity could be transferred from country to country, stimulating industrialization.
Since the MOFCOM plan became known, there has been a debate about recipient countries being able to benefit from the Sino-founded SEZs. An eye-catching discussion is the potential effects for African countries, as nineteen of the fifty zones were approved to be set up in Africa. Here, critics argue that all increased Sino-African relations are part of China’s attempt to establish a neocolonial relationship. Therefore, China’s overall strategy in Africa is supposed to be predominantly resource-seeking (Tull 2006; Taylor 2006; Biggeri and Sanfilippo 2009). Another claim is that China’s intentions are a geostrategic effort to weaken the bargaining position of the western OECD-donors (Woods 2008; Flores-Macías and Kreps 2013). Others highlight that the investments are part of China’s so-called dept-trap diplomacy or point to the danger for host countries to
concede parts of their territory to foreign powers, as there will be “no guarantee that the interests and ambitions of that foreign power will always converge with their own” (Pairault 2019). In regard to Sino-founded SEZs, such critical accounts would thus form the expectation of marginal or completely absent effects on African development.
Contrarily, more optimistic scholars emphasize the potential benefits of African host countries. In line with the claims of the Chinese government, they consider the potential economic activity as highly valuable for African host countries. For instance, the construction of long neglected infrastructure projects contribute to economic take-off (Alves 2013). Next to that, focused and applied economic research shows that exports and FDI have a significant impact on economic growth in African countries (Ahmed et al. 2010). Also, the long-term Chinese investments in African joint ventures are “intended to yield economic benefits for both China and the host country” (Bräutigam and Xiaoyang 2012: 816). A particular interesting parallel was first drawn by Alden (2007) between the rise of Asian-African business networks in African countries and the earlier production cycle model of Japan, known as the ‘flying geese’ paradigm. In this theoretical perspective, Japan as a leading developed country shifts some industries to less developed countries (‘latecomers’) due to increased factor costs including labour. The developing countries can in turn benefit in terms of jobs, scaling up knowledge and technology. Alden therefore argues that like Chinese offshore labour-intensive production networks have benefited from Japanese investment, African countries could in the future benefit from the rise of China, due to these newly established Sino-African business networks. This argument also largely matches the promises made by both the Chinese government and local African politicians regarding the SEZs studied in this thesis (Schröppel and Mariko 2003).
Following Alden, several scholars have elaborated on the pertinency of this flying geese model for the growth path of developing countries in the 21st century. Only regarding African countries this so far has happened based on preliminary analysis, often using tentative figures and solely pronounced business commitments (Ozawa and Bellak 2011; Bräutigam and Xiaoyang 2014) or mainly theoretically (Friedman 2009; Thorborg 2017). Moreover, these contributions overlook the necessary five to ten years start-up phase which SEZs need in practice to grow at least moderately (Farole 2011). Thorborg
(2017) compares different development theories for Africa. As regarding the flying geese model she points out the expected importance of bureaucratic institutions that follow a national agenda to establish industrial growth and employment. Regarding SEZs Thorborg also finds that China encounters many obstacles with successfully setting zones up in Africa and thus would need “concentrated investment in infrastructure synchronised with compatible laws and a stable enough regime for at least the medium term in order to get something back on its investment” (Thorborg 2017: 64). The latest study related to this debate provides a preliminary analysis of the nature of Chinese manufacturing investments in Africa, drawing on fieldwork in 2014 and 2015 mostly outside industrial parks and economic zones (Bräutigam et al. 2018b). While exclusively looking at manufacturing firms registered in a MOFCOM database in the four most registered sub-Saharan African countries, several investors are found do fit the model of Akamatsu’s model, especially those connected to “large export-oriented firms seeking new locations for production as part of global networks and value chains” (Bräutigam et al. 2018b: i30).
2.7 Conclusion
In sum, the question of whether African countries could profit from the so-called East Asian or Chinese model through such a flying geese pattern of development is raised, but has only been examined in theoretical or premature analyses and limited sectors outside SEZs. Now that we have reached a point in time where these zones and their established businesses have been able to grow a minimum of ten years, it is time to more closely scrutinize what effects are empirically observable. As previously presented in section 1.2, the research question that is raised within this thesis therefore is: what is the impactof Sino-founded special economic zones as part of global production networks on development in Africa? By answering this question this thesis simultaneously tries to
extract valuable lessons for the (potential) implementation of SEZs in other developing countries and regions.
3. Theoretical framework and hypotheses
3.1 Introduction
For centuries political economists have been fascinated by the origin and nature of different development paths. Why do some countries prosper, while others lag so far behind? From the first edition of Adam Smith’s magnum opus The Wealth of Nations, a fundamental work which inspired generations of philosophers and other scientists, to the latest economic development debates on topics such as institutions, geography, globalization and the Sustainable Development Goals (SDGs). As Clift (2014) emphasises, within these debates the insights of classical political economists such as Karl Marx, David Ricardo and Friedrich List are of great significance. Their fundamental assumptions on state/market relations and the characteristics of capitalism are fruitful starting points and analytical tools for the comparative study of economic development strategies. As their insights conflicted in many ways, they did agree on the conceptualisation of political economy as a holistic field of study (idem 29-31). Zooming in on global capitalism today, my research applies the same building blocks of these classical economists. In this way the potential economic development of multiple African countries will be studied through the lens of comparative political economy (CPE) by scrutinizing the interrelationship between politics, economics and societies.
To explain the rapid development of the East Asian countries mentioned in chapters 1 and 2, scholars of CPE and international political economy (IPE) developed new theoretical concepts. This research applies three of those concepts in order to analyse what is happening in current Sino-founded SEZs in Africa, namely what is known as the developmental state and a more contemporary concept in the developmental literature labelled as a global production network (GPN). The insights of these two theories are merged into a modern version of the flying geese model, that has been briefly introduced in the previous chapter and will be elaborated on in this chapter. Altogether they will form the basis of the theoretical framework that will then be applied to selected cases of Sino-founded SEZs in Africa.
The growing economic influence of China in a large number of African countries becomes tangible in these SEZs. At the time of their initiation, the zones were presented by politicians with a lot of optimism and promising visions of the future for the inhabitants of their host countries. Therefore this theoretical framework attempts to provide explanatory power to what extent this economic cooperation actually impacts local development in Africa. This stems from the fact that these theories, in particular the GPN model and the flying geese model of development, will provide insights which I will use in this study to form four hypotheses which serve as a basis for answering my research question. It is helpful to first crystallise those theories in-depth in the next three sections, to then empirically analyse what is currently happening in the SEZs.
3.2 The developmental state and its evolution
As outlined in chapter 2, the idea that the state plays a decisive role in development slowly came to fruition through the Asian success stories. This eventually resulted in a thorough outlined concept called the ‘developmental state’ which was introduced in the early 1980s by Asian studies scholar Chalmers Johnson. His ground breaking 1982 book “MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975” contradicted conventional wisdom of free market development by emphasising the coordinating role of the state in Japans rapid and successful industrialization process after World War II. MITI is the abbreviation for the Japanese Ministry of International Trade and Industry, the pilot agency which Johnson considered as being a key element in the developmental process (Tonami 2018). By forming this concept, Johnson made an important contribution for subsequent studies on the development paths of several other late industrializing Asian countries. This gradually led to the formation of the East Asian model of economic development, that has been introduced in the previous chapter of this thesis. Essentially, CPE comparisons were made by Johnson as he puts Japan’s development in a broader context by stating:
“The very idea of the developmental state originated in the situational nationalism of the late industrializers, and the goals of the developmental state were invariably derived from comparisons with external reference economies” (Johnson 1982: 24).
Johnson’s concept is built upon three institutional characteristics. First, a developmental state makes uses of a relatively small and efficient bureaucracy for the central coordination of industrial development. As mentioned earlier, MITI took that role in 20th century Japan. Secondly, this agency should get the authority and legitimacy of the most powerful interest groups of a country to be able to achieve its “long-range industrial priorities” (Johnson 1982: 44). Thirdly, bureaucrats should be given the right policy tools by the state to effectively and uncontestably intervene in the economy. In this way bureaucrats can directly influence the direction and pace of development of a country, without relying on market forces to allocate the economy’s resources (Johnson 1982: 319-320). As such, Johnson built on prominent theoreticians of late development before him, such as Friedrich List (1841) and more recently, Alexander Gerschenkron (1962) whom also formed developmentalist ideas for latecomers to economically ‘catch up’.
After Johnson’s introduction of the term, different scholars embraced the developmental state concept and further enhanced it (Meyns and Musamba 2010; Haggard 2018). Especially since the rapid growth of other Asian NIEs in the late 20th century received growing attention, including China, India, Vietnam and the Four Asian Tigers (Haggard 2018). Subsequently, this introduced related concepts and ideas to emphasize the role of the state in modern markets, including the ‘embedded autonomy’ (Evans 1995) and the ‘institutional political economy’ approach by Ha-Joon Chang who argued that contemporary developed countries only became rich by not following a neoliberal path based on free markets (Chang 2002; 2003). Next to that, there was the idea that politics should be considered as the dominant variable which eventually always determines the success of failure of the developmental state (Leftwich 2000). The contribution of Linda Weiss (2000) also stands out, as she implements globalization as a variable that turns the developmental state into an adaptive phenomenon, instead of eroding it, as others have argued. In sum, the developmental state proofed to be a multi interpretable concept that has evolved over time. Former prime minister of Ethiopia Meles Zenawi, who was one of the driving forces behind the establishment of the Ethiopian case discussed in this thesis, the Eastern Industry Zone that is discussed in section 5.3, indicated to be directly inspired by the developmental state paradigm. He stated that historically state intervention has been crucial in the developmental process of
countries and that “it is the creation of a political set-up that is conducive to accelerated development that sets the ball of development rolling” (Zenawi 2012: 170).
In that sense the developmental state concept is also applicable within this research. In particular, the idea that development is first and foremost a political process and only then an economic and social process is relevant. The selected SEZs in the empirical analysis of this thesis are all built upon this argument. Thus, such political steering in these zones should lead to the expected outcome of empirically demonstrable effects of economic development. Which specific effects can be expected, will be explained in the next sections based on two theories in developmental literature; the GPN concept and the flying geese model.
3.3 Global production networks and development
The second theory that I would like to elaborate on is called global production networks (GPNs). This framework also derived from the developmental literature and was introduced in the early days of the 21st century by Henderson et al. (2002) to better suit the dynamic global context in which modern transnational corporations (TNCs) emerge, operate and create impact on economies. It is a broader conceptual framework and successor of the earlier and linear ‘chain concepts’ known as global commodity chains (GCCs) and global value chains (GVCs). These concepts also tried to explain linkages in global economic activities, albeit focussing more narrowly on the governance of inter-firm transactions (Coe et al. 2008). However, the GPN approach is an attempt to understand contemporary complexity in the globalized economy. As a conceptual framework it integrates not only firms, but also the implications for the prosperity of national economies. In that sense the framework accord a certain amount of relative autonomy to other economic actors, such as domestic firms, governments and trade unions, as their actions potentially have “significant implications for the economic and social outcomes of the networks in the locations they incorporate” (Henderson et al. 2002: 445-446).
The GPN approach is therefore also a fruitful framework from a development perspective. Coe et al. (2004) argue that complementary effects between GPNs and
specific regions are necessary for the emergence of regional development. In that sense, for development to take place in a region it must benefit from economies of scale and economies of scope (Coe et al. 2004: 470). Here, economies of scale stand for the economic advantages that firms can obtain if knowledge, skills and expertise are concentrated within specific regions. And with economies of scope they point to ‘spillover effects’ that can arise when these firms cooperate and learn from each other within these agglomerations. Such benefits can only be achieved if these regions can “complement the strategic needs of trans-local actors situated within global production networks” (idem: 471). Nevertheless, for a region to be plugged into a GPN is no guarantee for positive developmental effects. The latter requires institutions that promote regional advantages to make a specific region fit into the strategic needs of GPNs. By attracting both domestic and foreign investment and allow local actors in a region to capture the subsequent value that is being created, regional development could be enhanced. This was theoretically set out by Coe et al. (2004) in a framework for analysing regional development [see Figure 1]. These institutions are not limited by that specific region, but could also be national or even supranational institutions that potentially have impact on the activities that are being engaged in that region.
Summarizing, within this framework for analysing regional development and GPNs there are three interrelated sets of conditions which are necessary before regional development can take place “at any particular historical moment” (idem: 470). 1. The existence of economies of scale and scope within specific regions; 2. The possibility of localization economies within global production networks;
3. The appropriate configurations of ‘regional’ institutions to ‘hold down’ global production networks and unleash regional potential.
SEZs are considered by different scholars to play a paramount role within GPNs. Within the current geography of international trade and production, a GPN touches down in multiple agglomerations and enclaves within countries (Phelps 2017). Also, the GPN framework is considered to have explanatory power regarding the aforementioned rapid proliferation of SEZs. As Farole and Akinci (2011) illustrate, the rapid expansion of these economic zones around the world and their contribution to export-led growth through industrialization was “enabled by the vertical and spatial fragmentation of manufacturing into highly integrated ‘global production networks’” (Farole and Akinci 2011: 5). Furthermore, through GPNs economically powerful countries such as China are able to expand or relocate their business from higher coast regions to cheap production locations that are often abroad in less developed countries (Wang et al. 2017).
Thus, the GPN framework is used to explain both how SEZs arise and how these zones distribute production worldwide. Within the scope of this thesis, that leads to the assumption of an increasing number of production locations within Sino-founded SEZs in African countries. If these production locations are properly embedded in GPNs, this should in turn lead to indications of surplus value creation through bureaucratic institutions that promote regional advantages and attract (external) investment capital. This then leads to the first two hypotheses: H1. Sino-founded SEZs in Africa benefit from global production networks by the agency of bureaucratic institutions that promote regional advantages.
H2: Sino-founded SEZs in Africa ensure increased amounts of investment money to their host countries.
3.4 Following the flying geese model
Elaborating on both the developmental state and GPNs in an increased globalized world, a modern assessment of the flying geese model could be formed in relation to SEZs. For this it is fruitful to first set out the original central ideas of the flying geese model. This idea on late development industrialization has the same origin as the developmental state, although the focus is more on the international context in which late developers are forced to operate. Again, the maturation of the Japanese economy in the 20st century is the breeding ground of this model, albeit in its first phase. The flying geese paradigm was developed over the 1930s by Kaname Akamatsu, a Japanese economist who initially analysed Japan’s industrialisation vis-à-vis Europe and the United States in a mere descriptive manner (Haggard 2018). Once translated and published in the English language in 1962, Akamatsu’s first sentence of the article is immediately an explicit statement:
“It is impossible to study the economic growth of the developing countries in modern times without considering the mutual interactions between these economies and those of the advanced countries.” (Akamatsu 1962: 3)
The theoretical model of Akamatsu is divided up into two parts. These are (1) the historical evolution and diffusion of industries from developed countries to less-developed countries to modernity and (2) the gradual diversification and upgrading of those less-developed countries industries from, for instance, basic consumer products to more capital-intensive and technology-advanced goods (Haggard 2018: 15-16). What essentially drives the model is the international division of labour, which according to Akamatsu arises “only after the specialities trade, which has been initiated by heterogeneous interrelationship, has stimulated the production of specialities for export” (Akamatsu 1962: 4).
The implications of the diffusion of industries are potentially beneficial for developing countries. According to the flying geese model of development, the stimulation of production that Akamatsu describes makes it possible for underdeveloped nations in their catch-up strategy to, metaphorically, fly in the slipstream of more developed
nations while upgrading in terms of jobs, investment and scaling up knowledge and technology. Hence the title of the model, as wild geese fly in orderly ranks forming an inverse V to aerodynamically benefit from each other (idem: 11). The steering role of the state is again considered to be relevant. The theories of the flying geese model and the development state are linked in such manner that, according to Akamatsu, every country should make complex decisions “about steering resources toward ‘sunrise’ industries and away from ‘sunset’ ones” (Haggard 2018: 16).
The original flying geese model have been modernized before. Whereas Akamatsu (1962) originally described three wild-geese-flying groups; one led by the United States, one by England and Germany and the comparatively smaller group with Japan as a leader, others applied the model in divergent, though often western, interpretations after him (e.g. Bernard and Ravenhill 1995; Kojima 2000; Edgington and Hayter 2000, Kiyota 2014). However, the model first gained substantial influence in political discourse by the prominent Japanese economist and former foreign minister Saburō Ōkita. In the mid 1980s he emphasized the potential of the flying geese model to, besides Japan, work for more countries in the East Asian region, as they would be able to also profit from Japan’s development [see Figure 2]. In his comprehensive and influential presentation Ōkita stressed how the development of the four leading member states of the Association of Southeast Asian Nations (ASEAN-4 countries; Indonesia, Malaysia, Philippines, and Thailand) should be based upon “industrialization taking advantage of their abundant labour and plentiful resources” (Ōkita 1985: 24) and that the “industrialized countries can do much to speed this process with their capital and technology” (ibid.). Ōkita provided a modern and practical application of the model, which many other scholars have also tried to formally test with regard to the Asian and Pacific economies (Rana 1990; Fukasaku 1992).
As set out in the previous chapter, the rise of China and its fast growing economic involvement in multiple African countries in the 21st century, inspired scholars to connect the flying geese paradigm with Africa. In this contemporary version, China gradually moves up in a value-added production chain towards more advanced technology, while African nations could now “benefit from playing a role in a world economy largely structured by an Asian motor” (Friedman 2009: 13). In line with Akamatsu’s original theory, this Chinese version of the flying geese model could thus create industrialization, employment and eventually contribute to the transfer of knowledge and technology to African countries (Thorborg 2017). Albeit the latter could potentially be limited due to “restricted use of African labour, local suppliers, and subcontracting to Africans firms” (Thorborg 2017: 62).
Thus within the scope of this thesis, this leads to the assumption that African host countries of Sino-founded SEZs are benefiting in practice from diffused Chinese global production. In line with economic development in China, these host countries are thus expected to show an increased number of production locations and enterprises that provide diversified jobs for local African workers. Diversified here means jobs that are not only low-skilled without any form of personal development, but instead offer workers perspective through knowledge transfer. Simultaneously, diffused Chinese
