Technological progress, worker efficiency, and growth in Africa: Does China's economy matter?

Abstract

In the 21st century, the Sino–Africa relations are characterized by increasing levels of trade and investment. Additionally, African governments consider China a vital stakeholder in their plans to transform their economies through technology. This study empirically examines whether China's exports of information and communication technology and high-technology goods and foreign direct investment outflows stimulate growth in Africa. The results demonstrate that China's engagement in trade could lead to a positive and negative shift of steady-state position of real gross domestic product and technological progress, respectively, in Africa. These results predict that China's engagement will contribute to economic growth in African countries through increasing capital per worker efficiency but cause stagnation in their technological progress. Finally, one of the choices that African countries could make as they create policies to increase their technological progress is discussed.