Where Africa Meets Asia: Chinese Agricultural and Manufacturing Investment in Madagascar

Chinese investment remains small in scope and is also constrained by a problematic policy environment

Abstract

Madagascar’s abundant natural resources, low labor costs, and geographic location make it a potentially attractive destination for Chinese outward investment as rising wages in China and domestic competition increasingly drive firms to “go out.” The current wave of Chinese investment in the country may have significant implications for the development and potential transformation of the Madagascan economy, particularly through the agriculture and manufacturing sectors. Having generated its own economic boom with the help of foreign investment, can Chinese overseas investment play a similar role in fostering technological spillovers and upgrading in other low-income countries? Our research finds some evidence of limited technology transfer occurring from Chinese firms in Madagascar, yet currently, Chinese investment remains small in scope, and is also constrained by a problematic policy environment.

This work is part of the ‘Chinese foreign direct investment (FDI) and Structural Transformation in Africa: Technology Transfer, Linkages, and Learning’ project

Citation

Yunnan Chen and David G. Landry (2016) Where Africa Meets Asia: Chinese Agricultural and Manufacturing Investment in Madagascar. Johns Hopkins University School of Advanced International Studies. SAIS China-Africa Research Initiative Working Paper 05/July 2016

Where Africa Meets Asia: Chinese Agricultural and Manufacturing Investment in Madagascar

Published 1 July 2016