Publication: Chinese Imports and Industrialization in Africa: Evidence from Ethiopia
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2025-05-12
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2025-05-12
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The rise of China in the global economy has been linked with negative impacts on employment across many high- and middle-income countries. However, evidence for African countries is limited. This paper investigates the causal relationship between Chinese imports and manufacturing employment in Ethiopia. Imports may harm domestic firms through a revenue effect (lower market shares) or benefit them, indirectly if competition spurs innovation or directly through access to better quality or cheaper inputs. The analysis shows that a one unit increase in import penetration leads to a 15.2 percent increase in industry employment. The inputs effect is disentangled from the other two effects by decomposing total Chinese imports by their end-use category using input-output tables. The evidence shows that imported intermediate inputs are driving the employment gains. The findings are consistent with the idea that employment gains are a result of productivity gains and increases in capacity utilization. These employment gains appear to benefit large firms and labor-intensive industries disproportionately.
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“Mavungu, Marina Ngoma. 2025. Chinese Imports and Industrialization in Africa: Evidence from Ethiopia. Policy Research Working Paper; 11118. © World Bank. http://hdl.handle.net/10986/43179 License: CC BY 3.0 IGO.”
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