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INSIGHT: Have Chinese investment projects directly impacted local economic activities in SSA countries?

In sub-Saharan Africa (SSA) and many other developing regions, infrastructure investment serves as a critical catalyst for development. This is particularly true given the region's weak and uneven recovery from the COVID-19 pandemic, compounded by multiple instances of capital flight resulting from monetary tightening in developed countries.

Until recently, spatial analysis on the spillover effects of Chinese investments in SSA was limited due to a lack of project-level transparency from the Chinese financiers, among other challenges. Building on the findings of a previous study on the bottleneck-releasing effects of infrastructure investment and building in SSA, a new working paper further investigates whether Chinese infrastructure projects have spatial spillover effects across micro-regional borders.

To what extent do Chinese infrastructure projects contribute to economic growth in Sub-Saharan Africa?

To assess the spillover effects of Chinese infrastructure projects in sub-Saharan Africa (SSA), the authors utilized nighttime luminosity as a proxy indicator of economic activity. Their findings suggest that the presence of at least one Chinese infrastructure project in a different sub-national region (or an equivalent administrative region) within SSA is associated with a direct increase in nighttime luminosity of approximately 5 percentage points. Furthermore, there is an indirect impact of about 10-15 percentage points in the region due to the spillover effects.

To what extent does Chinese infrastructure development in Sub-Saharan Africa (SSA) contribute to reducing the infrastructure deficit in the region?

Chinese infrastructure projects play a critical role in narrowing gaps in SSA countries’ urban development, unlocking further development potential and sustaining economic growth in the long term. To accurately gauge the impact of Chinese infrastructure projects in recipient countries it is crucial to consider spatial spillovers.

How can China enhance its participation in infrastructure development projects in Sub-Saharan Africa (SSA) to maximize impact and ensure sustainable outcomes?

As a development partner, China continues to learn and enhance its ability to deliver high-quality development cooperation projects. To achieve this, China needs to establish and strengthen its institutions and capacity in managing high-quality cooperative projects.

The government and development finance institutions (DFIs) of China should collaborate with established multilateral development banks (MDBs) to strengthen monitoring and evaluation mechanisms. They should also develop awareness and technical capacity for independent evaluation.


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