The Chinese are here: import penetration and firm productivity in sub-Saharan Africa

Christian Darko, Enrico Vanino, Giovanni Occhiali

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Abstract

This study presents the first micro-level analysis of the causal effect of Chinese import penetration on firm productivity in 24 sub-Saharan Africa (SSA) countries. We make key contributions to the literature by examining the heterogeneous effects of Chinese imports on firm productivity using data on transport infrastructure, and by distinguishing between import competition and import of intermediate inputs. Two instrumental variables, one based on exogenous geographic characteristic of ports and transportation technology shock, and the other based on a supply-side shock, are constructed to address the endogeneity of import penetration. The results indicate that imports from China impact positively on firm productivity, mainly through imports of intermediate inputs, and there is significant heterogeneity of these effects in terms of firms’ proximity to ports and initial productivity level. Overall, our findings suggest that Chinese imports could be viewed as an opportunity for Sub-Sahara Africa firms to enhance their productivity. Furthermore, they highlight the need for developing countries to invest in transport infrastructure to effectively promote firms participation in international markets.
Original languageEnglish
Pages (from-to)2112-2135
JournalJournal of Development Studies
Volume57
Issue number12
Early online date4 Aug 2021
DOIs
Publication statusE-pub ahead of print - 4 Aug 2021

Keywords

  • China
  • Import penetration
  • productivity heterogeneity
  • sub-Saharan Africa
  • trade infrastructure

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