Foreword xix Acknowledgments xxi Acronyms and Abbreviations xxiii Overview T Connecting Two Continents 1 Conclusions and Policy Implications 33 Endnotes 40 1Connecting Two Continents 41 Historical Context 41 Scope and Methodology of the Study 43 Structure of the Study 47 Annex 1A: Data Sources 52 Annex IB: Diagnostic Trade Integration Studies 57 Endnotes 58 2Performance and Patterns of African-Asian Trade and Investment Flows 59 Introduction 59 Africa and Asia in the Global Economy 60 Patterns of Merchandise Trade Flows Between Africa and Asia 69 Africa's Pattern of Merchandise Trade with China and India 79 Trade in Services Between Africa and Asia 88 Foreign Direct Investment Between Africa and China and India 91 Key Elements Shaping African-Asian Trade Flows 104 Conclusions and Policy Implications 112 Annex 2A 114 Endnotes 126 Challenges At the Border: Africa and Asia's Trade and Investment Policies 129 Introduction 129 Domestic Trade and Investment Policy Regimes 130 International Trade and Investment Agreements 165 Conclusions and Policy Implications 179 Endnotes 183 Behind-the-Border Constraints on African-Asian Trade and Investment Flows 187 Introduction 187 Performance of Firms Behind-the-Border 188 Role of Domestic Competition in Promoting International Integration 191 Role of Chinese and Indian Firms inAffecting Africa's Competition and International Integration 203 Sources of Competition in Africa's Market 209 Conclusions and Policy Implications 226 Annex 4A 230 Endnotes 231 Between-the-Border Factors in African-Asian Trade and Investment 235 Introduction 235 Remedies for Imperfections in the Market for Information 237 Trade Facilitation in African-Asian Commerce: Transport, Logistics, and Finance 256 Transfers of Technology and Skills 272 Conclusions and Policy Implications 282 Annex 5A 286 Endnotes 287 6Investment-Trade Linkages in African-Asian Commerce: Scale, Integration, and Production Networks 289 Introduction 289 Determinants of Linkages Between Trade and Foreign Direct Investment 292 Evidence on FDI-Trade Linkages ofChinese and Indian Firms in Africa 308 Meeting the Challenge of Network Trade: What Are Africa's Export Opportunities Presented by Chinese and Indian Foreign Investment? 328 Conclusions and Policy Implications 349 Endnotes 357 Bibliography 361 Index 377 Boxes 2.1 China and India's Oil Imports from Africa 82 2.2 Increasing Chinese Trade in Services x 90 2.3 Prospects of FDI Flows to Africa 94 2.4 Patterns of Chinese Investment in Africa from Outward Chinese FDI Survey 98 2.5 Dynamic Sectors in Chinese Outward FDI 101 2.6 Summary of Characteristics of Africa's Trade and Investment Patterns with China and India 103 3.1 The South's Escalating Tariffs Against African Exports: The Case of an Indian Cashew Processing Business in Tanzania Trying to Export to India 141 3.2 Export Incentives in India 152 3.3 Special Economic Zones in China 156 3.4 Four EPZs in Madagascar, Mauritius, Senegal, and Tanzania 160 3.5 Presidential Investors'Advisory Councils in Africa 164 3.6 China's Africa Policy 171 4.1 Informal-Sector Competition and Chinese and Indian Firms in Africa 211 4.2 Competition and Complementarities in the Construction Industry in Africa: Chinese and African Firms 212 4.3 Firms' Perceptions of the Domestic Investment Climate 214 4.4 Shortage of Skilled Labor in Africa 224 5.1 The Uganda Export Promotion Board and the Role of Exporters' Associations 240 5.2 Benchmarking FDI Competitiveness 242 5.3 Private Companies Promoting China-Africa Trade and Investment 244 5.4 Local Standards in Africa and Chinese Construction Firms 247 5.5 Using Chinese Ethnic Networks to Help African Firms Find Suppliers in China 250 5.6 The General Agreement on Trade in Services (GATS) 253 5.7 Trade Facilitation, Customs, and Logistics Barriers in Africa 258 5.8 Logistics and Transport Issues in East African Countries 261 5.9 Promoting Competition in Air Transport Services in Mauritius 264 5.10 The Availability of Political Risk Insurance for Trade and Investment with Africa 268 5.11 Access to Trade Finance in Africa: Experiences of African, Chinese, and Indian Firms 270 5.12 Chinese Government-Sponsored Economic Support to Africa 274 5.13 Foreign Firms in Africa Use International Standards to Boost Higher-Value Exports from the Continent 277 5.14 Construction and Engineering Services and Foreign Workers: China in Africa 280 5.15 India's Contribution to the Pan-African E-network Project 282 6.1 Building African Competitiveness and Value-Added from Natural Resources: Aluminum and Diamonds 296 6.2 Producer-Driven Network Trade: The Case of East Asia 299 6.3 The Africanization of Indian-Owned Businesses 303 6.4 Barriers to Regional Integration Are Barriers to Africa's Export Prospects: Evidence from Chinese and Indian Business Case Studies 309 6.5 International Evidence on Spillovers from Foreign Direct Investment 325 6.6 Reverse Technology Transfers: Africa as a Capital Goods Source Market for China and India 327 6.7 Benefits of Supermarkets as Direct Buyers in the Supply Chain: African Cut Flowers 333 6.8 Kenyan Kale Farmers Upgrade Physical and Human Capital to Supply Supermarkets 335 6.9 South Africa's Automotive Industry Policy 341 6.10 Lessons for Africa from the East Asian Miracle344 6.11 Developing Services Supply Chains: Tourism in Mozambique 347