Are Chinese Investments in Africa Creating Jobs for Locals?

China’s growing presence in Africa has drawn increasing attention from both the academia and popular press. China’s trade flows with Africa increased from $12 billion in 2002 to $216 in 2014 and China surpassed the United... [ view full abstract ]

China’s growing presence in Africa has drawn increasing attention from both the academia and popular press. China’s trade flows with Africa increased from $12 billion in 2002 to $216 in 2014 and China surpassed the United States to become the largest trading partner with the continent in 2009. During 2000-2014, China has committed $354.3 billion in official finance, second only to that of the US, $394.6 billion. However, Chinese official finance does not usually qualify as “aid” as defined by the Organization for Economic Cooperation and Development (OECD). Unlike Western donors, China does not take recipient regime type and governance into consideration and use aid as a tool to push for policy change towards free market and democracy. The "no-string-attached" approach of Chinese investments has grown increasingly contentious as China expands its clout in the developing world. How have the massive inflows of Chinese official finance affected local labor market in Africa? China often claims that its development projects create jobs in Africa, but anecdotal evidence frequently suggests otherwise. The limited existing literature on the employment effect of Chinese official finance usually relies on case study and lacks research using data and quasi-experimental research designs. Focusing on employment effect and using empirical evidence, my thesis seeks to inform the ongoing debate over the effect of Chinese official finance and shed some light on the reality.