Industrial Development, Construction and Employment in Africa (IDCEA): A comparative analysis
In recent years research on the effects of foreign direct investment on African economies and labour markets has gained a new focus with the re-emergence of concerns with broad structural transformation, and the development of industry and infrastructure. In this context, the dramatic upsurge of activity by Chinese firms (both investors and contractors) in African manufacturing and construction since the 2000s has sparked both discussion and controversy. However, despite some recent advances in research, empirically grounded and comparative evidence on the effects of foreign direct investment and infrastructure contractors with regards to job creation, skill development, wages and working conditions has remained limited.
Our project focuses on gathering concrete information on the employment effects of firms investing in manufacturing and building infrastructure. The research concentrates on the two sectors in which the employment contributions of Chinese firms are particularly important: industry and construction (for the latter, specifically in road and dam infrastructure). These are also sectors that are contributing to structural change through new job opportunities and skills in countries hitherto dominated by agriculture, services and extractive sectors.
The contribution of both Chinese and non-Chinese investment, finance and construction companies to the development of infrastructure in much of Africa is well-known, but the specific employment linkages are hardly researched. This is important because a major challenge facing many low-income countries in Africa is the creation of much-needed jobs and the upgrading of skills in sectors that are likely to grow in future decades. A successful industrial policy hinges on the availability and development of a skilled and efficient workforce suitable to the needs of emerging non-primary sectors. What is also too often missing from these debates is the effect such newly-available jobs have on the lives and wellbeing of workers, many of whom have no previous work experience in these sectors, as they tend to come from work in agriculture or in informal services.
In order to gauge the employment effects and dynamics of such initiatives, firm-level and worker-focused surveys were conducted in the construction and manufacturing sectors of two countries where the presence of such firms, both Chinese and from other origins, has been substantial since the 2010s, that is, Angola and Ethiopia. These two countries share a very significant presence of Chinese entreprises, state-owned and private, but also differ substantially in terms of their broader economic trajectories and policy priorities.
Though Chinese firms have created more employment in construction in both countries, the recent increase in investment in manufacturing is particularly important because it could portend significant increases in higher-productivity jobs, which are in short supply throughout sub-Saharan Africa. Angola and Ethiopia also facilitate comparative analysis by providing two different contexts in relation to the relative degree of industrial development, the linkages between construction and manufacturing, existing policy frameworks, and the labour market settings.
We hope and intend for this research to help shape the ongoing debate on the development effects of Chinese and other foreign firms located in sub-Saharan Africa. In particular, we would like to see our results being of interest to governments, firms, trade unions, and regional and international development organizations in sub-Saharan Africa. Our other major objectives is to influence the broader debate within the international development community on the employment effects of development cooperation and investment, particularly within the context of the efforts to frame a new and more effective global post-2015 development agenda that puts decent work, fair wages and worker empowerment at the centre of priorities.
Principal investigator
Carlos Oya (SOAS University of London)
Email: co2@soas.ac.uk
Read more about Carlos on the SOAS website