Industrial Policy, the State, and Late Industrialisation in Africa

The chapter reviews the literature and develops an analytical framework—theoretical, conceptual, and empirical perspectives to examine new empirical evidence and comparative analysis of Chinese foreign direct investment (FDI) in the light manufacturing sector. The chapter draws on three competing yet intersecting strands of literature that are particularly relevant to the subject. First, the literature on industrialisation and industrial policy serves as a framework for examining the role of manufacturing and exports as drivers of structural transformation and the government’s policies. Second, the theory of FDI and its contribution to industrialisation through global value chains (GVCs) aids in understanding and interpreting patterns of Chinese FDI and their different effects on industrialisation dynamics. An important observation is that outcomes of FDI and GVCs are not automatic, and the benefits and risks are shaped to a significant extent by government policies in promoting productive investment and managing firms. Third, the international political economy on Africa’s economic development and China-Africa relations, views from an African economic transformation lens, provides the historical legacy, geopolitical power relations, and nature of engagement that influenced progress. The chapter reviews the various perspectives and evolving debates around Africa’s industrialisation and economic transformation. This chapter provides the framework for establishing empirical evidence and analytical insights.