Alden, C. and F. Aggad-Clerx. 2012. Chinese Investments and Employment Creation in Algeria and Egypt (African Development Bank Economic Brief, February 2012)
China’s presence in North African economies (Algeria, Egypt, Libya, Morocco and Tunisia) is expanding rapidly as both an important trading partner and increasingly as an investor into the region. Chinese involvement can be readily seen in sectors like energy, infrastructure development and retail trade across the region. Less recognised is the growing position of Chinese firms in the manufacturing sectors of selected North African countries. At the same time, like other lower to middle income developing countries, North African industry has experienced the fallout associated with Chinese competitiveness in manufacturing within their domestic market and in third country markets. This has naturally contributed to the underlying structural problems of unemployment facing countries in the region and raised fears in some quarters that greater Chinese involvement would ultimately harm the development aspirations of North Africa
Despite this assessment of China’s trade competitiveness and its negative impact on North Africa industries, there has been little focus on the impact of Chinese investment into sectors of the North African economies and, concurrently, its impact on local employment. Given that a key challenge facing contemporary North African economies is that of job creation for the growing population, it is important to assess exactly where China is investing and whether its investments have affected this pressing concern. In particular, is the rising tide of Chinese investment into manufacturing and assembly plants in North Africa a positive harbinger for the region’s economies? What is the nature of this investment, which sectors does it target, does it create employment and what kind of jobs is being produced? More generally, does this suggest that Chinese led forms of South-South cooperation can produce tangible benefits for recipient countries?
In order to answer some of these questions, this paper will conduct a survey of China- North African trade and investment patterns across the region, assessing the impact of Chinese FDI into creating employment in two case studies in particular, Algeria and Egypt, and provide an analysis of the factors affecting employment generating investment in the region.