Chinese Investment in Ghana's Manufacturing Sector
This case study illustrates the extent to which Chinese manufacturing firms are driving manufacturing in an African country
This paper by Xiaoyang (2016) uses Ghana as a case study to illustrate the extent to which Chinese manufacturing firms are driving manufacturing in an African country.
Through the combination of desktop and field research, the author finds that the total number of Chinese manufacturing investments in Ghana indeed has been increasing during past decade, but quite a few projects were abandoned or not implemented due to concern over the unfavorable investment environment.
Small and large manufacturing projects can be found in different sectors, from plastic, steel to pharmaceuticals and others. All the manufacturing investments target at the local and regional market, either taking advantage of local raw materials or seeing opportunities in the market of little competition. “From trade to invest” and clustering are identified as the main patterns for Chinese investors to settle down in Ghana.
Chinese firms have local suppliers of simple raw materials, but the industrial supplies are all imported from abroad. Learning from Chinese business models, a few local businessmen start their own manufacturing projects, mostly in the sector of plastic recycling, but lack of capital appeared to be the main obstacle keeping local players from moving up the value chain.
The weak economic environment of Ghana itself proved to be limiting the technology transfer and local linkage between Chinese firms and Ghanaians.
This research was funded under the Private Enterprise Development in Low-Income Countries (PEDL) Programme
Tang, X. 2016. Chinese Investment in Ghana’s Manufacturing Sector, Working Paper No. 2016/8. China-Africa Research Initiative, School of Advanced International Studies, Johns Hopkins University, Washington, DC.