Chinese Manufacturing Investments and Knowledge Transfer: A Report from Ethiopia

Image: Flickr, ILO Asia- Pacific
Image: Flickr, ILO Asia- Pacific

This study aims to shed light on the knowledge transfer effects of Chinese investment in Africa’s manufacturing sector with a concrete case study of Ethiopia.

As of January 2015, 117 firms were registered with the Chinese Ministry of Commerce (MOFCOM) as investing in Ethiopia, reporting to have manufacturing activities. Since 2010 the Ethiopian government has put great emphasis on boosting the manufacturing sector and developing local technological and marketing capabilities, consciously guiding FDI from China and other Asian countries to the manufacturing sector. Such efforts offer a remarkable case to explore how African agents play an active role in shaping the dynamics and outcomes of engagements with China, which thus far has been seriously under-investigated. This study finds that the effectiveness of knowledge transfer by foreign investors is largely decided by industrial conditions in the host country and forming manufacturing clusters is a helpful approach to improve learning. This paper examines knowledge transfer mechanisms between Chinese investments and Ethiopian firms, institutions, and individuals at four different levels in the manufacturing sector. The lessons learned from this case may provide insights into China-African cooperation and Africa’s development process in general.

1 Mar 2019