At Africa's expense? Disaggregating the employment effects of Chinese mining operations in sub-Saharan Africa. (June 2019)

• Record Type: Journal Article
• Authors: Wegenast, Tim; Krauser, Mario; Strüver, Georg; Giesen, Juliane
• Is Part Of: World development. Volume 118(2019)
• Page Start: 39
• Page End: 51
• Publication Date: 2019-06
• Subjects: Natural resources -- Sub-Saharan Africa -- China -- Mining -- Unemployment; Economic history -- 1990- -- Periodicals; Economic assistance -- Developing countries -- Periodicals; 330.9
• DOI: 10.1016/j.worlddev.2019.02.007
• Languages: English
• ISSNs: 0305-750X

Abstract

Highlights: In SSA, Chinese-controlled mines are associated with more local unemployment relative to non-Chinese mining operations. Citizens' beliefs that Chinese firms are taking local jobs contribute to a negative image of China within mining regions. Chinese companies' competitive advantage in the use of expatriate labor may explain our findings. Abstract: China's increasing investments in African countries have attracted considerable media attention and are the subject of scholarly debate. However, the socioeconomic impacts of China's presence in Africa remain poorly understood. While some case studies maintain that Chinese projects have an enclave character and have largely failed to promote economic spillovers and local employment, others claim that Chinese activities have in fact encouraged infrastructural development and local economic activity. Focusing on the labor market effects of foreign mining investments in Africa, this article examines whether Chinese-controlled companies generate fewer local jobs compared to non-Chinese mining operations. Theoretically, we argue that—due to a competitive advantage in the employment of expatriate workers and a lower readiness to invest in local skill formation—Chinese firms are less likely to foster regional employment. Relying on novel data on the control-rights regimes of diamond, gold, and copper mines and georeferenced information from Afrobarometer surveys, we test the effect of mining contractors' nationality on local employment rates. Our individual-level logistic models show that respondents living close to Chinese mining areas are more likely to report being unemployed compared to individuals living in the vicinity of non-Chinese mining operations. Times-series cross-sectional estimations employing district-level data from the Demographic and Health Surveys for 20 sub-Saharan countries over the period 1997–2015 corroborate these findings. Furthermore, we find evidence that negative perceptions of China among indigenous populations are largely driven by the belief that Chinese workers are crowding out local employment.