Are you under the impression that China hasn’t seen salary growth in the past few decades and thus can outcompete them? China’s median salary today is a third of the US and China’s median salary in tier 1 cities is almost on par in some fields.
There’s a limit because it means that these less-developed countries can’t leapfrog the Chinese economy while depending solely on Chinese support, but that’s a problem for after economic independence and consistent economic growth are achieved.
Manufacturing output from sub-Saharan Africa grew from $58B in 2000 to $201B in 2019 (this is, of course, after decades of no growth prior to 2000 under Western exploitation). China first initiated the strategic partnership with African countries in 2000 at FOCAC. Objectively and quantitatively, Africa’s manufacturing output has grown and that growth has coincided with China’s focus on the region.
Salaries are only a part of the total cost. China obviously has much higher salaries, but their supply chains are a lot more efficient. Also cheap imports can prevent the growth of domestic manufacturing in the first place, since the initial investment can be quite high.
Salaries are an extremely significant proportion of costs in low- and medium-skill manufacturing. Sure, Africa might not be producing semiconductors this decade, but labour share is still something like 40-50% in China. This is despite China’s shift towards high-skill manufacturing and high value-add products. For low-skill manufacturing and low value-add products, China is simply no longer cost-competitive to the alternatives because human labour is the primary productivity driver and automation is incredibly expensive.
Africa isn’t going to be dumping tens of billions of dollars on semiconductor foundries and nobody is suggesting that. What people are suggesting is that Africa can move into categories like auto and appliances instead of textiles.
Are you under the impression that China hasn’t seen salary growth in the past few decades and thus can outcompete them? China’s median salary today is a third of the US and China’s median salary in tier 1 cities is almost on par in some fields.
There’s a limit because it means that these less-developed countries can’t leapfrog the Chinese economy while depending solely on Chinese support, but that’s a problem for after economic independence and consistent economic growth are achieved.
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Manufacturing output from sub-Saharan Africa grew from $58B in 2000 to $201B in 2019 (this is, of course, after decades of no growth prior to 2000 under Western exploitation). China first initiated the strategic partnership with African countries in 2000 at FOCAC. Objectively and quantitatively, Africa’s manufacturing output has grown and that growth has coincided with China’s focus on the region.
Salaries are only a part of the total cost. China obviously has much higher salaries, but their supply chains are a lot more efficient. Also cheap imports can prevent the growth of domestic manufacturing in the first place, since the initial investment can be quite high.
Salaries are an extremely significant proportion of costs in low- and medium-skill manufacturing. Sure, Africa might not be producing semiconductors this decade, but labour share is still something like 40-50% in China. This is despite China’s shift towards high-skill manufacturing and high value-add products. For low-skill manufacturing and low value-add products, China is simply no longer cost-competitive to the alternatives because human labour is the primary productivity driver and automation is incredibly expensive.
Africa isn’t going to be dumping tens of billions of dollars on semiconductor foundries and nobody is suggesting that. What people are suggesting is that Africa can move into categories like auto and appliances instead of textiles.