China’s role in mitigating poverty and inequality in Africa: an empirical query

Abstract

Using data from 1995 to 2017, this article shows that China plays a positive role in mitigating poverty and inequality in Africa. Namely, imports from China, especially imports of machinery and equipment but not manufactured goods, alleviate substantially poverty in the region. In addition, China’s foreign direct investment (FDI) and China’s engagement in infrastructure projects in the continent help not only eradicate poverty, but also narrow income inequality. However, total exports or exports of raw materials and fuels to China are irrelevant to income distribution. We also compare these impacts with the impacts of economic links with the United States (US) and find insignificant effects of the US’s imports and FDI on income distribution but some positive effects of exports to the US on poverty in Africa. Our findings are robust when both the fractional nature of poverty and inequality indices and their correlation are taken into account.

Keywords:

• China
• inequality
• poverty
• Africa
• fractional probit

JEL classification codes:

• F63
• O11

Acknowledgments

We are grateful to two anonymous referees, Guanghua Wan, Leong Liew, Christian Pfeifer, Deniz Örsal, Boris Hirsch, Thomas Wein, and participants of the “China’s Development Experience and Enlightenment” workshop at Chongqing, August 2018, and a seminar at the Institute of Economics, Leuphana University of Lueneburg, July 2018, for their useful suggestions on early draft versions of this paper.

Disclosure statements

No potential conflict of interest was reported by the authors.

Notes on contributors

Tam NguyenHuu is a research fellow, Institute of Economics and Center for Methodology, Leuphana University of Lueneburg, Germany.

Jöorg Schwiebert is a professor, Leuphana University of Lueneburg, Germany.

Additional information

Funding

This work was supported by the [Deutsche Forschungsgemeinschaft (DFG, German Research Foundation)] under Grant [number 328106833].