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Collection Highlights

Economic Growth and Development: Chinese Agribusiness

Enterprises Development Lei Sun

Sustainable Growth and Development of Economic Systems

Contradictions in the Era of Digitalization and
Globalization Svetlana Ashmarina

Determinants of Economic Growth in Africa Almas Heshmati

Supporting Inclusive Growth and Sustainable Development in

Africa - Volume II: Transforming Infrastructure
Development 1st Edition Elena G. Popkova
Sustainable Economic Development: Green Economy and Green
Growth 1st Edition Walter Leal Filho

Doing Business in Africa: From Economic Growth to Societal

Development Suzanne M. Apitsa

Physical Limits to Economic Growth Perspectives of

Economic Social and Complexity Science 1st Edition Roberto
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China's Economic Growth: Towards Sustainable Economic

Development and Social Justice: Volume I: Domestic and
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International Political Economy Series

Development Aid and Sustainable

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The Limits of Western and Chinese Engagements

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 Simone Raudino

Development Aid and

Sustainable Economic
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The Limits of Western and Chinese Engagements
Simone Raudino
GAP Consultants
Hong Kong

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 To Coco,
For what lies ahead is far better than anything we leave behind
 PREFACE

The core ideas developed in this book matured during professional stints
with the United Nations (Angola, 2005–2006) and the European Union
(South Africa, 2006–2008). Institutional field work allowed first-hand
access to analyses, databases, reports and other sources of structured
information from the Italian government, the United Nations and the
European Union.9 References to government and international organiza-
tions’ information which are not properly referenced in the text should be
understood as being elaborated or accessed in the exercise of past profes-
sional duties.
These ideas have been further elaborated during my doctoral research
at The University of Hong Kong (2010–2013), which has run parallel to
the experience of founder and director of GAP Consultants Ltd, a Hong
Kong registered limited company providing business advisory services
and engaging in commodity trade between China, Europe and Africa.
The private sector has proven fertile ground to develop ideas contained
in this book, since it provided real-life exposure to a number of economic
variables—including commercial regulations; local administrative policies;
fiscal, financial and banking provisions; company rules; informal business
practices; and local socio-anthropological features—that have played a key
role in the Asian economic miracle. Many of these variables would have
easily slipped under my academic radar had I not been obliged to face
(and sometimes fight against) them in daily business practices—including
the Chinese government control over the currency exchange market or
Chinese standard business practices in dealing with foreign competitors.

vii
viii PREFACE

Since September 2013, research for this book has also been comple-
mented with new field experience as a project officer at the European
Union Delegation to Afghanistan. Although Afghanistan is not touched
by many of the dynamics discussed here—including massive Chinese
investments from the early 2000s onwards and large export volumes of
natural resources—, it nonetheless maintains a number of similarities
with most Sub-Saharan African countries. As a Least Developed Country,
Afghanistan and the average Sub-Saharan country have a high percent-
age of their populations depending upon subsistence agriculture, little to
no manufacturing capacity, a virtually useless right of industrial access to
OECD markets at zero import duties, high official development assis-
tance levels, limited amounts of inward foreign direct investments and
large capital flight outflows.
In this respect, it is interesting to notice how Ashraf Ghani replied to
a question on the risk of Chinese involvement in Afghanistan and the
meaning of his Beijing trip right after being sworn in as President of
Afghanistan: “[…] we are not going to be an African country, because we
are going to determine our fate […]”, while also pointing out that “[…]
mining companies in the West did horrors everywhere in the world and
we are learning from those”. President Ghani concluded that “ODA has
not made a single country rich—it’s investment and trade and getting the
institutions right that [entail] change”—a line that could also represent
the summa of this book.10

Simone Raudino
GAP Consultants, Hong Kong
 ACKNOWLEDGEMENTS

This book is the result of multidisciplinary work carried out at the cross-
roads of academia, government and business. People from different walks
of life have contributed to it—it is an honour and a pleasure acknowledg-
ing their influence and assistance.
There are persons to be thanked for this remarkable journey even
before it started. I am grateful to Julia Strauss from School of Oriental and
African Studies (SOAS) and Barry Sautman from Hong Kong University
of Science and Technology (HKUST) for pointing me to the European
Study Department at the University of Hong Kong (HKU), which pro-
vided the perfect combination of multidisciplinary expertise and flexibility
needed for this research.
My major debt of gratitude goes to Wayne Cristaudo from Charles
Darwin University and Roland Vogt from HKU for having believed in
an unorthodox project. Useful ideas and generous words of advice came
from HKU academic staff and researchers. I would like to particularly
thank Ian Holliday, Stephan Auer, Andreas Leutzsch, Tim Gruenewald,
Denis Meyer, Üner Daglier, Martin Chung, Uzma Ashraf, Kristina
Tolinsson and Erick Komolo for their availability to engage in discussions
on topics relating to politics, national cultures and international relations.
I am indebted to Xianming Zhou and Larry Qiu at the HKU Faculty of
Business and Economics for discussion on macroeconomic and interna-
tional trade issues.
The original project proposal benefited from exchanges with authors,
diplomats and civil servants working on development, including Robert

ix
x ACKNOWLEDGEMENTS

Calderisi, David Sogge, Carlo Cibó, Pier Forlano, Tembi Tambo and
Eunice Rendón Cárdenas. Heartfelt thanks for earlier draft revisions and
comments also go to Adams Bodomo, Arlo Poletti, Emily Winterbotham,
Shraddha Mahapatra and Kenichi Masamoto.
Former and present EU colleagues have added valuable criticisms and
insightful perspectives to original ideas relating to Europe’s interests,
belief systems and political vision in its work with developing countries;
they include Patrick Simonnet, Andrea Rossi, Milko van Gool, Martina
Spernbauer, Gabriel Moyano Vital and Gaël Griette.
A number of ideas contained in this book are the result of creative
discussions and business initiatives that owe much to the entrepreneurial
communities in Hong Kong and the Guangdong region. In economics
as in other fields, there is nothing that can impress learning processes as
much as hands-on experience—not the seduction of sophisticated narra-
tive, nor the elegance of theories or the solidity of water-tight logic. For
their availability in sharing entrepreneurial experiences, their passion and
their resoluteness to engage in the never-ending trial-and-error reality of
business life, I thank, among others, Zumin Luo, Sidney Yankson, Andrew
Kwok, Ron Hevey, Connie Han and Juan Carlos Sanchez.
I must extend many thanks to my editors and Proofreader at Springer—
Timothy Shaw, Judith Allan and Baghyalakshmi Jagannathan—for their
generous support, useful advises and patient work in the long revision
process that made this book eventually see the light of day.
Last but not least, I am grateful to all those who made this book pos-
sible through their emotional and logistic support, with special gratitude
to Jill and Maya for their unfaltering welcoming presence even during the
rainy days of this long journey.
 CONTENTS

1 A Practitioner’s Perspective on Development Aid 1

2 The Theory of Economic Development 43

3 The Praxis of Economic Growth: Lessons from History 79

4 A Quantitative Assessment of Africa’s International

Economic Relations 129

5 A Qualitative Analysis of Africa–West Economic

Relations 165

6 A Qualitative Analysis of Africa–China Economic

Relations 209

Conclusions 245

Index 257

xi
 ABBREVIATIONS

ACP African Caribbean Pacific

AD Anti-Dumping
AfDB African Development Bank
AGOA African Growth and Opportunity Act
AIS African Investor Survey
ASEAN Association of South-East Asian Nations
AU African Union
BENELUX Belgium, the Netherlands and Luxemburg
BIT Bilateral Investment Treaties
BOP Balance of Payments
BRICS Brazil, Russia, India, China and South Africa
CA Current Account
CABC China Africa Business Council
CADF China Africa Development Fund
CARICOM Caribbean Community
CCP China Communist Party
CDB China Development Bank
CEMAC Economic and Monetary Community of Central Africa
CEPGL Economic Community of the Great Lakes Countries
CIC China Investment Corporation
COMESA Common Market for Eastern and Southern Africa
CPC Communist Party of China
CSP Country Strategy Papers
CSR Corporate Social Responsibility
DAC Development Aid Committee
DC Domestic Company
DDA Doha Development Agenda

xiii
xiv ABBREVIATIONS

DE Domestic Entrepreneur
DG Director General
DRC Democratic Republic of Congo
EAC East African Community
EBA Everything But Arms
EC European Commission
ECA Economic Commission for Africa
ECCAS Economic Community of Central African States
ECOWAS Economic Community of West African States
EDF European Development Fund
EIB European Investment Bank
EP European Parliament
EPA Economic Partnership Agreements
EU European Union
ExIm China Export Import Bank
FA Financial Account
FAO Food and Agriculture Organization
FDI Foreign Direct Investment
FE Foreign Entrepreneur
FOCAC Forum on China-Africa Cooperation
FTA Free Trade Agreement
GATT General Agreement on Tariff and Trade
GDE Gross Domestic Expense
GDP Gross Domestic Product
GNI Gross National Income
GNP Gross National Product
GVC Global Value Chain
HDI Human Development Index
HIPC Highly Indebted Poor Countries
H-O Heckscher-Ohlin
IBRD International Bank for Reconstruction and Development
IBSA India, Brazil and South Africa
ICT Information and Communication Technology
IDA International Development Association
IFC International Finance Corporation
IFI International Financial Institutions
IMF International Monetary Fund
IMP Investment Monitoring Platform
IO International Organization
IOM International Organization for Migration
IPA Investment Promotion Agency
ISI Import Substitution Industrialization
 ABBREVIATIONS xv

ISIC International Standard Industrial Classification

JV Joint Venture
LAD Least Absolute Deviations
LDC Least Developed Countries
M&A Merger and Acquisition
MAI Multilateral Agreement for Investment
MDG Millennium Development Goals
MENA Middle East and North Africa
MERCOSUR Mercado Común del Sur
MIGA Multilateral Investment Guarantee Agency
MIP Multiannual Indicative Programme
MOFA Chinese Ministry of Foreign Affairs
MOFCOM Chinese Ministry of Commerce
NAFTA North America Free Trade Association
NAMA Non-Agricultural Market Access
NAO National Authorizing Officer
NDRC National Development and Reform Commission
NGO Non-Governmental Organization
NIE Newly Industrialized Economies
OCT Overseas Countries and Territories
ODA Official Development Assistance
OECD Organisation for Economic Co-operation and Development
O&M Operations and Maintenance
OOF Other Official Flows
OPEC Organization of the Petroleum Exporting Countries
PF Private Flows
PISA Program for International Study Assessment
PRSP Poverty Reduction Strategy Papers
PTA Preferential Trade Agreement
R&D Research and Development
REC Regional Economic Community
RMC Regional Member Countries
RTA Regional Trade Agreement
SADC Southern African Development Community
SAP Structural Adjustment Program
SASAC State-Owned Assets Supervision and Administration Commission
SDR Special Drawing Rights
SG Secretary General
SME Small- and Medium-Sized Enterprises
SOE State-Owned Enterprise
SPX Subcontracting and Partnership Exchange
SSA Sub-Saharan Africa
xvi ABBREVIATIONS

TFP Total Factor Productivity

TIFA Trade and Investment Framework Agreement
TNC Transnational Corporation
TRIPS Trade-Related Aspects of Intellectual Property Rights
UAE United Arab Emirates
UK United Kingdom
UN United Nations
UNDP United Nations Development Programme
UNIDO United Nations Industrial Development Organization
USA United States of America
VC Venture Capital
WB World Bank
WDI World Development Indicators
WFOE Wholly Foreign Owned Enterprise
WOE Wholly Owned Enterprise
WTO World Trade Organization
 LIST OF FIGURES

Fig. 1.1 Conceptual box of Western development aid:

how institutional discourse presents ODA 10
Fig. 1.2 Institutional view of development aid’s production cycle 12
Fig. 1.3 Stock of ODA inflows to Africa (1960–2010) compared
to the cost of major USA financial operations, 2011
constant prices, billion USD (Source: OECD) 23
Fig. 1.4 Inward ODA (billion USD) and GDP growth per
capita (constant prices 2005, constant exchange rate
2005) in India, China, Brazil and Africa, over the
period 1970–2010 (Source: OECD, UNCTAD) 25
Fig. 1.5 GDP per capita of Sub-Saharan Africa excluding South Africa,
constant prices (2000) and constant exchange rate (2000),
USD, 1970–2012 (Source: UNCTAD) 27
Fig. 1.6 Total ODA to Sub-Saharan Africa, constant prices
(2000) and constant exchange rate (2000),
million USD, 1970–2012 (Source: OECD) 27
Fig. 1.7 Africa’s economic relations with the EU, USA and China:
relative proportions of ODA, trade FDI, and capital flight
(estimate) (Source: European Commission, OECD, Global
Trade, USA Census Bureau) 29
Fig. 4.1 Sum of current accounts of non-oil exporting, non-mineral
exporting Sub-Saharan African countries except South Africa,
1980–2014, million USD at current prices and
current exchange rate (Source: UNCTAD) 133
Fig. 4.2 Sum of current accounts of all Sub-Saharan African countries
except South Africa, 1980–2014, million USD at current
prices and current exchange rate (Source: UNCTAD) 133

xvii
xviii LIST OF FIGURES

Fig. 4.3 EU–African ACP countries trade structure: EU imports (red),

2011 (Source: European Commission). 135
Fig. 4.4 EU–African ACP countries trade structure: EU exports (blue),
2011 (Source: European Commission). 136
Fig. 4.5 EU–African ACP countries trade balance
by industry, 2011 (Source: European Commission) 137
Fig. 4.6 FDI towards Sub-Saharan Africa excluding South Africa:
countries having received more than 5 billion USD in
FDI stock + rest of Sub-Saharan Africa, excluding
South Africa (Source: UNCTAD) 152
 LIST OF TABLES

Table 1.1 Key economic and financial indicators in Africa–EU, Africa–USA

and Africa–China relations, current prices (2011) and
current exchange rate (2011), billion USD (Source:
European Commission, OECD, Global Trade, USA
Census Bureau) 30
Table 1.2 USA–Africa, EU–Africa and PRC–Africa 2010 trade
balances, current exchange rates, billion USD (Source:
European Commission, Global Trade, USA Census Bureau) 31

xix
 INTRODUCTION

What do we know about Africa’s economic relations with its international

partners? Can these relations be audited—in the same way we audit, for
example, business relations between two companies—to determine what
the involved parties are, respectively, gaining from their relation? If so,
what shall be the yardstick of measurement to determine the “costs” and
“benefits” of each party? Once we have chosen such yardstick, can we
resolve whether one of the parties is benefiting more than the others?
“Development Aid and Sustainable Growth in Africa” strives to answer
these questions by investigating economic relations between Africa and its
most important politico-economic partners: the European Union and the
USA (as a proxy for the West)1 and China. It provides a bird’s-eye view
of these relations and their role—if any—in Africa’s traditional economic
backwardness. It answers fairly neat research questions, thus renouncing
a comprehensive inquiry into the reasons and responsibilities for today’s
division of wealth between “haves” and “have-nots” nations. To draw a
metaphor, if the object of inquiry was cancer (poverty), the book does not
try establishing a comprehensive list of cancer’s causes or prioritizing these
causes by order of importance; what it does instead is studying one spe-
cific variable—say diet (international economic relations)—to understand
whether it can be correlated to cancer. The study remains acutely aware
of the fact that many other variables have already been positively corre-
lated to cancer: smoke (corruption), genetic predisposition (geography),
air pollution (population density) and electromagnetic exposure (culture),
to name but a few.

xxi
xxii INTRODUCTION

Out of metaphor, this book does not suggest that Africa’s international
relations can be taken as the only reason for the socio-economic situation
of African countries, nor does it try establishing a hierarchy between the
different mechanisms behind poverty. Similarly, it does not seek a com-
prehensive explanation of Africa’s socio-economic standing, nor does it
propose a general theory of what Thomas Malthus considered “the grand
object of all inquiries in political economy”2: the causes of the wealth
and poverty of nations. Instead, it tries establishing a positive correlation
between Africa’s international economic relations and the continent’s
lack of endogenous development mechanisms, to subsequently provide
an interpretative analysis of the mechanisms linking the two phenomena.

SCOPE, EPISTEMOLOGY AND KEY SOURCES

The book engages with wide conceptual geographical units, including
“Africa”, “West” and “China”. Over and beyond the issue of a neat opera-
tionalization of these concepts,3 it is legitimate to question whether these
areas have enough in common to be part of single conceptual units. Many
an international scholar question the meaningfulness of putting under the
same conceptual umbrella geopolitical regions as fragmented and het-
erogeneous as Africa’s multiple subregions, or even countries pertaining
to different continents as those grouped under the concept of “West”.
Africa is a geographically, culturally, ethnically and, even, economically
fragmented continent: grouping these realities under a single conceptual
unit, the argument goes, is an oversimplification of a more complex reality.
Similarly, the concept of “West” is blurred: from a cultural perspective, we
can neither say that countries such as Turkey, post-Apartheid South Africa
or Brazil outright pertain to the West—nor can we say the contrary. From a
geopolitical and military perspective, even the clear-cut demarcation oper-
ated by the Cold War—which understood the West as an area of homoge-
neous political, military and economic interests, stretching across countries
pertaining to the North Atlantic Treaty Organization (NATO) and its key
allies—has, since 1989, expanded to include areas of Central and Eastern
Europe that were formerly under the influence of the Soviet Union, as well
as countries hitherto pertaining to the Non-Aligned Movement. From
an economic perspective, borders are even more blurred: the traditional
conceptualization of the West as a wealthy centre (including non-Western
cultural realities such as Japan) plus a few client states on the one hand and
the rest of the world—the so-called “underdeveloped” periphery—on the
 INTRODUCTION xxiii

other, has come under multiple challenges by the reality of international

economics, with “old rich clubs”, such as the Organization for Economic
Cooperation and Development (OECD), progressively accepting mem-
bers from the periphery and “new rich clubs”, such as the Organization
of the Petroleum Exporting Countries (OPEC) or the BRICS (Brazil,
Russia, India, China and South Africa) group of countries, being in con-
stant formation.
Borders between neatly organized clusters of countries are artificial and
naturally imply some form of oversimplification. In fact, any generalization
entails an oversimplification. Yet, as this book argues, history does show
a number of recurrent patterns laying common ground beneath regions
that could otherwise be superficially read as significantly different. Why
a desertic, land-locked, sparsely populated, poor in natural resources and
prone to drought country such as Niger knows today similar economic
fundamentals and social figures to a coastal, green, rich-in-commodity
country such as Sierra Leone is something that can be explained on differ-
ent levels. It would reasonably be possible to delve into the peculiarities
of each country’s climate, history, social traditions, agricultural systems,
access to commercial routes and more, to eventually establish that all these
factors contributed in pushing both countries towards independent but
similar economic fates. Conversely, it would be possible engaging a simi-
lar analytical process by beginning from these countries’ similarities first,
including the political role that colonialism and globalization originally
assigned them between the eighteenth and the nineteenth century, to
conclude that such analogies might have contributed in shaping their cur-
rent politico-economic role within the world order. Similar considerations
could be replicated when it comes to identify the common variables that
shaped these countries’ economic histories.
In his seminal work, “Theory of International Politics”, Kenneth Waltz
famously distinguished between “reductionist” and “systemic” theories,
defining the former as theories dealing with the behaviour of parts and
explaining “[…] international outcomes through elements located at
national or subnational level” (Waltz 1979: 60), and the latter as theo-
ries conceiving of causes operating at the international level, including an
anarchical structure affecting behaviour through socialization and com-
petition among its actors. The difference between the two theories is not
only in the object of analysis, if not in the way of arranging their materi-
als and causes. Kenneth Waltz’s landmark distinction is not only impor-
tant for defining two levels of customary analysis in international relations
xxiv INTRODUCTION

(national and subnational vs. international), but also for introducing the
idea that states’ behavioural patterns can be studied either by beginning
from their differences (specific features of each state) or by beginning from
their commonalities (the most important being their embeddedness in an
international anarchical system rewarding specific behaviours while pun-
ishing others).
Every theory claims its own domain and the one used in this book is
no exception, being inspired by Waltz’s understanding of systemic the-
ory. A study on the impact of international economic relations upon the
African continent alone will not explain the role of domestic corruption
upon widespread poverty in the continent, or why Botswana, contrary to
some of its neighbours, has managed to engage in a successful expansion
of its middle class from the 1980s onwards. It will not, for a number of
reasons, including the fact that it is not intended to do so. Any study has
to accept the physiological limitations that epistemology imposes upon
social research, including the depth versus breadth; qualitative versus
quantitative; and inductive versus deductive trade-offs. This book wilfully
renounces to explain variables that either lie outside its research question
or impact the research object in the way Waltz describes as “reductionist”.
Nonetheless, by shedding light on the centrality of some structural eco-
nomic variables in international relations, the study invites scrutiny on the
role of these same variables also at national and subnational level.4
This work is interested in showing structural patterns of economic
engagement rather than explaining how specific economic variables have
worked in specific countries within specific periods. The research dissects
Africa’s economic dynamics to analyse that particular bit which relates
to its international economic relations and their effects upon domestic
dynamics. It ignores domestic variables such as domestically nurtured cor-
ruption, autochthon cultures, local diseases, traditional social structures,
religions and more. Because of this, the phenomena under scrutiny cannot
represent the whole set of variables that contributed in shaping the situa-
tion in which African economies are today. In line with a number of theo-
ries in political science, international economics and law, this book assigns
to the “international component” a fundamental weight in determining
the politico-economic path that many formerly colonized countries have
eventually undertaken.
Within the “international component”, variables considered having
logical and ontological priority in determining Africa’s economic relations
have been given priority. These variables are, by and large, captured by
 INTRODUCTION xxv

the balance of payments (BoP) items of the analysed regions, plus capi-
tal flight and migration. In the interest of avoiding a wild proliferation
of variables, other international factors—which no doubt contributed to
the situation being analysed—have not being considered. Throughout the
text, examples are provided to show how historical instances fit within the
general patterns described by the theory—yet, these examples represent
exemplificatory cases with explanatory purposes rather than rigorously
analysed datasets.5
A second epistemological assumption is based on the idea that the the-
ory of political economy is shaped by a different set of goals and assess-
ment criteria than its praxis.6 This difference reflects a cleavage existing
between academia on the one hand and political or business institutions
on the other hand. Whereas theoretical contributions in academia need to
abide by scholarly standards of novelty and originality of thought, political
and business practices are guided by rather contingent factors, including
pragmatic interests and power relations between the involved social actors.
What is contingent is not necessarily novel and what is novel is not neces-
sarily contingent. International economic policies serving the interests of
specific social actors are unlikely to be dismissed on the argument of hav-
ing been implemented for “too long” or for failing to say anything new.
Institutions such as serfdom, indenture and economic monopolies have
not been challenged because they had been used for “too long”; they
have been challenged—and reversed—because of a change of power rela-
tions between different social classes: under new circumstances, formerly
disadvantaged socio-economic actors have muscled up and took on the
privileges of a minority. The difference with the life cycle of social theories
is stark: academic theories, as other intellectual products, operate under
the constant requirement of innovation for innovation’s sake—the self-
justifying need for originality of thought being a legitimate propeller of
change across academic theories.
Mainstream economic circles consider a number of charges against
neoliberal policies as out of fashion, because they have long been discussed
with little results in mainstream thinking or policy praxis. In the Western
world, normative perceptions on the democracy-liberal nexus are deeply
engrained in the public opinion, to such an extent that in many intellectual
environments it is considered in between the tedious and the intellectu-
ally shabby to point out that Europe has regularly sustained gruesome
dictators in Africa and the Middle East—Muammar Gheddafi, Ben Ali
and Hosni Mubarak being the most recent examples, the list including
xxvi INTRODUCTION

however dozens of other cases—in exchange for their geopolitical alliances

and open market policies. Considerations on Latin American authoritarian
regimes propped by the USA are typically met with similar attitudes. This
research assumes that development theory can contribute towards public
policy only by avoiding a detachment from economic and political praxes,
something that necessarily entails posing old questions that have already
elicited a wealth of theoretical answers. Although many would see struc-
tural economic theories as thoroughly refuted, the econometric analysis
offered in this book suggests that many aspects of these theories still hold
their relevance in describing West–Africa and China–Africa policy praxes
and that to explore these praxes does not mean to exclude or downplay
other explanations of poverty.
The discussion developed in the book remains mindful of the fact that
in ontological reality there is little separation between the analytical and
the normative spheres. A “benign reading” of current international politi-
cal relations necessarily implies a problem with the domestic management,
culture or institutional setting of underdeveloped countries. An approach
that places the locus of Africa’s problems upon the lack of domestic
reforms takes attention away from the international structure, suggests
that the international economic system needs no fundamental reform and
shifts the locus of responsibility towards the people and governments of
African countries. Conversely, an approach positing West–Africa–China
international relations as a key element in determining a disparity of
wealth distribution among these regions necessarily suggests a revisiting
of international rules—something that has been claimed in international
development circles since the 1970s at least.

STRUCTURE AND SOURCES

Chapter 1 offers some anecdotal evidence on official development assis-
tance (ODA) which invites scrutiny on its inconsistencies and questions
whether Western aid—and the broader politico-economic cooperation
framework it is embedded in—is really assisting Africa in achieving sus-
tainable economic growth. Following an unsuccessful hunt for consistent
answers in the academic literature (Chap. 2), the quest moves into the
history of political praxes in OECD countries and Newly Industrialized
Economies (NIEs) (Chap. 3), in an effort to find a common policy
denominator among graduated economies. The underpinning idea is that,
beyond the different developmental paths followed by different countries
 INTRODUCTION xxvii

at different times in history, there might be a track record of public poli-

cies that have proved to work throughout history.
Chapter 4 retrieves the economic data being analysed: BoP indicators
reflecting relations between Africa–European Union, Africa–USA and
Africa–China. Data presented here integrate preliminary data provided in
Chap. 1, while introducing two variables not included in standard BoP
analysis: capital flight and migration.
Chapter 5 subsequently makes use of the “yardstick” based on success-
ful historical praxes to assess the extent, value and impact of Western poli-
cies in Africa. The analysis is historical and interpretative, while building
upon data presented in Chap. 4. The assessment starts from an analysis
of the actors involved to move towards the interests and governance sys-
tems behind these actors’ policies. In so doing, the research poses straight-
forward questions on the origin and interests behind Western policies in
Africa. Chapter 6 carries out a similar exercise with Chinese policies in
Africa.
The analysis shows that, beyond the institutional narrative on the dif-
ferences between Western and Chinese economic activities in Africa, the
two relations rest on similar policy goals and economic mechanisms. Both
the West and China entertain economic relations with Africa, mainly final-
ized at extracting raw material, accessing market outlets for their manu-
factured goods, promoting a normative environment guaranteeing high
and safe returns on their foreign direct investment (FDI), and, at times,
creating manufacturing zones relying on low-skilled local labour. It is sug-
gested that the main differences are likely determined by the strong influ-
ence of the Chinese government on its national economy, as well as by the
large number of Chinese nationals migrating to Africa and aligning their
personal interests with the African quest for more industrialized, value-
adding and self-relying local economies.
Some words of caution should be expressed on the sources of the book.
This work accesses multiple sources—including government and interna-
tional organizations’ public and non-public primary sources, official data-
sets, and academic literature. Most statistics are updated to 2011, with
only spot updates in 2013 and 2016; although development in China-
Africa relations has happened at breakneck speed, the core arguments of
the book are built upon the structural economic relations that China (and
the West) have built and continue building with Africa, over the medium
to long term. There are no explanations of yearly variations in BoP pay-
ments exchanges or even short-term trends, as these do not contribute in
xxviii INTRODUCTION

explaining the structural features defining West–Africa and China–Africa

economic relations. China and Africa will likely continue expanding their
trade, investment and migratory ties in the years to come, till eventually
levelling off. Such trends will unlikely entail fundamental changes in the
structure of the relationship, which is, by and large, shaped by the mid-
to long-term features of the involved actors, including their respective
economies, demographics, capital and technology stocks.
The primary sources accessed during the research were in English,
French, Spanish, Portuguese or Italian—not Chinese, as relevant Chinese
scholarship has only been accessed in English. Similarly, references made
to Chinese government positions throughout the book are either coming
from secondary sources or were picked from the information that Chinese
government sources—including the Ministry of Foreign Affairs and the
Ministry of Commerce—have selectively made available in English. It
should also be acknowledged that, contrary to Western governmental
sources, the author did not have preferential access to Chinese govern-
mental analyses or reports.
The absence of primary Chinese sources contributes to difficulties
in verifying their authenticity. While Western official sources are mostly
embedded in a network of multilateral institutions and independent
observers offering expert checks and solid counter-factual information,7
Chinese data are, by and large, insulated from international scrutiny.
Beijing is highly secretive about its economic policies and has gained a
reputation for inflating figures on its international economic ventures,
particularly in Africa—yet, international observers are often incapable of
agreeing on alternative and more realistic figures. Consequently, the use
of averages resulting from multiple sources—a technique often used in the
book—cannot fully shoulder the principal risk of having different primary
sources “cookedup” by Chinese authorities.8

NOTES
1. According to the source of data, different group of states from the
European Union and USA (e.g. the Organization for Economic
Cooperation and Development [OECD] group of countries)
might be used as a proxy for the concept of “West”. This is explic-
itly indicated in the text.
2. Thomas Malthus writing to David Ricardo on 26 January, 1817
(Landes 1998, p. 1).
 INTRODUCTION xxix

3. The concept of “Africa” has generally been operationalized in the

book as the fifty-four countries pertaining to the African Union
plus Morocco, “West” as the European Union plus the USA, and
China as the People’s Republic of China (PRC). Different opera-
tionalizations of these concepts have sometimes been used and
made explicit in the text.
4. For example, by underlying the importance of the nature of inter-
national trade in each country’s capacity to produce and retain
wealth, the study suggests that significant variations among
African/G90 countries’ gross domestic products (GDPs) can be
explained not only by the fact that some countries have peacefully
and effectively managed to exploit and trade in their natural
resources, but also by the fact that some of these countries have
managed to do it while overcoming typical investment rules and
trading conditions offered by OECD countries.
5. One reason for this is that even the most rigorous quantitative
studies on the impact of international economic variables, such as
Official Development Aid (ODA) or foreign direct investment
(FDI), upon national economies need accepting very restrictive
assumptions and/or clear-cut frameworks, limiting their explana-
tory scope to specific time periods or geographical regions.
Concerning ODA, these limitations are discussed in more depth in
Chaps. 2 and 4.
6. The term “praxis” is often defined in philosophy as thoughtful
practice or practice that is informed, purposeful and deliberate,
thus representing, in simplified terms, the sum of theory and prac-
tice. Karl Marx suggested that the difference between bees and
architects is that bees build marvellous structures based on prac-
tice, while architects build marvellous structures based on praxis,
the difference lying in the fact that architects are involved in reflec-
tive practices, while bees behave following natural instincts: “[…]
But what distinguishes the worst architect from the best of bees is
this, that the architect raises his structure in imagination before he
erects it in reality”. Following Marx’s reasoning, architects “think”
about what they are doing and constantly re-evaluate their values,
skills, theories and knowledge as they apply them to the structure
they are building. Contrary to “practice”, “praxis” also draws from
the repertoire of past experiences, in order to understand situations
and develop new possibilities for action. Because of their highly
xxx INTRODUCTION

reflective and thoughtful nature, political and economic actions are

referred to as “praxes” rather than “practices”.
7. With important limitations: as a matter of example, in January
2012, the government of Greece was condemned by the European
Commission for falsifying data about its public finances and allow-
ing political pressures to obstruct the collection of accurate statis-
tics (Barber 2010).
8. It should, however, be noted that any data fabrication on the
Chinese side is more likely to strengthen some of the analyses con-
tained in the book: while the Chinese rhetoric on its engagement
with Africa has been moulded on a revolutionary “win-win” con-
cept (diversified trade; high FDI in non-commodity sectors; avail-
ability to leave value-adding activities in Africa; balanced migratory
patterns, etc.), analyses contained here suggest that the interests
and mechanisms underpinning Chinese economic ventures in
Africa do not differ substantially from those underpinning Western
economic ventures.
9. Access to non-public (confidential, restricted or unclassified) docu-
ments was organized in the respect of my employers’ policies, stan-
dards and guidelines on information sensitivity, classification and
handling of information.
10. Lecture by Ashraf Ghani, Chatham House, 4 December 2014.

REFERENCES
Barber, T. (2010). Greece condemned for falsifying data. Financial Times.
Landes, D. S. (1998). The wealth and poverty of nations: Why some are so
rich and some so poor (1st ed.). New York: W.W. Norton.
Waltz, K. N. (1979). Theory of international politics (1st ed.). New York:
Addison-Wesley.
 CHAPTER 1

A Practitioner’s Perspective
on Development Aid

1 OFFICIAL DEVELOPMENT ASSISTANCE TO AFRICA

“We made it”.1 A colleague from the “finance and contract section” of
the European Union (EU) Delegation to South Africa was riding joyfully
through the corridors of our political unit, sharing with us his profes-
sional contentment at having met yet another budgetary deadline: few
extra-million euros had been successfully disbursed that morning. The
payment in case did not relate to any of the Delegation’s internal expenses
or external activities; it related, instead, to a transfer of funds from the EU
Development Cooperation Instrument (DCI) to the South African gov-
ernment. Such operations are technically called “direct budget support”
and have become common currency in the world of development aid; they
consist in net transfers of cash from a governmental body (the European
Union in this case) towards another governmental body (South African
government in this case), usually against a more or less tight promise on
how they will be used. They are not exactly peanuts—at least according to
the laymen’s understanding of money: in the EU–South Africa case, they
represented the large bulk of a 980 million euros financial commitment
made by Brussels over the 2008–2013 period for that country only.
The heavy red tape that entangles every tranche of these payments
and the close sequence of disbursement deadlines certainly justified my
colleague’s euphoria. And yet, something pointed at an anthropological
quiz I was not fully able to grasp. In which other real-life situation had I
witnessed someone cheering at having managed to siphon off a few million

© The Author(s) 2016 1

S. Raudino, Development Aid and Sustainable Economic Growth in
Africa, DOI 10.1007/978-3-319-38936-3_1
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