Africa in the New Trade Environment

Assessing the Global Value Chain Links between Asia and Sub-Saharan Africa 217

Table 5.6 Correlation between Asian Economic Engagement and Capital Intensity of Exports from Sub-Saharan Africa Dependent variable

Export-weighted capital intensity (1)

(2)

Imp from Asia/ 0.399 Tot Imp (1.473) Exp to Asia/ Tot Exp

(3)

(4)

(5)

(6)

(7)

(8)

(9)

0.422 (1.471) 0.386** 0.395** (2.640) (2.556)

Imp from Asia-5/ Tot Imp

0.685* (1.864)

Exp to Asia-5/ Tot Exp

0.724* (1.889) 0.317* (1.720)

0.344* (1.839)

Imp from China/ Tot Imp

1.144** (2.056)

Exp to China/ Tot Exp

1.051* (1.879) 0.506** 0.516** (2.610) (2.607)

Year FE

Y

Y

Y

Y

Y

Y

Y

Y

Y

Country FE

Y

Y

Y

Y

Y

Y

Y

Y

Y

N

710

710

710

710

698

698

710

687

687

R2

0.855

0.857

0.858

0.856

0.866

0.869

0.858

0.873

0.878

Source: World Bank data.

Note: All regressors are lagged one year. t-statistics, based on standard errors clustered at the country level, are in parentheses. A sector’s factor (capital, skilled) intensity measures are constructed on the basis of the Manufacturing Industry Database for US firms of the National Bureau of Economic Research (NBER) and US Census Bureau’s Center for Economic Studies (CES). Out of 96 possible HS 2-digit sectors, 94 sectors have the sector factor intensity measures. The sample covers 46 Sub-Saharan African countries over 2000–15 (listed in annex 5A, table 5A.1). The “Asia-5” countries are Bangladesh, Cambodia, China, India, and Vietnam. FE = fixed effects. * p < 0.10; ** p < 0.05; *** p < 0.01.

Patterns of GVC Participation This subsection examines whether China’s economic engagement has changed the way Sub-Saharan African nations participate in GVCs. To this end, we consider three value chain measures that are commonly used in the literature: upstreamness, the DVA ratio, and the average length of production. Although each measure captures a distinct concept of the extent of a country’s GVC participation, each measure is also an indicator for whether a country has been participating in GVCs in a way to benefit the most from globalization.

As noted earlier, upstreamness captures how far a sector is from finalgoods consumers. The DVA ratio captures how much of a country’s GDP is generated by domestic content. The higher the DVA ratio, the more export revenue, proportionally, will be paid to domestic owners of factors or