Tag: globalization

Russia in Africa: What the Literature Reveals and Why It Matters

Posted on September 23, 2024 | Policy Brief

Industrial oil factory in Africa symbolizing Russia’s influence on Africa's resources and economy.

Following the full-scale invasion of Ukraine in February 2022, Russia has become increasingly isolated. In an attempt to counter Western powers’ efforts to suppress its economy and soft power impacts, Russia has tried to increase its influence in other parts of the world. In particular, Russia is increasingly active in Africa, having become a key partner to several African regimes, typically operating in areas with weak institutions and governments. Additionally, Russia’s approach has a different focus and objectives compared to other foreign actors, which may have both short and long term consequences for the continent’s development. Deepening our understanding of Russia’s distinct approach alongside those of other global actors, as well as the future implications of their involvement on the continent is, thus, of crucial importance.

Introduction

The new Foreign Policy Concept, adopted by the Russian government in March 2023, dedicates, for the first time, a separate section to Africa. The previous versions of the policy grouped North Africa with the Middle East and contained only a single paragraph, kept unchanged over time, about Sub-Saharan Africa. In the midst of its war against Ukraine, Russia is getting serious about Africa. What do we know about the reasons for and implications of this trend?

A relatively large literature in economics, political science, international relations, and other related fields has dealt with the Soviet Union’s engagement with African regimes (see overviews in Morris, 1973 and Ramani, 2023). However, the number of studies following the evolution of these relations since the collapse of the Soviet Union is significantly smaller, reflecting Russia’s strategic withdrawal from the region between 1990 and 2015. Following the full-scale invasion of Ukraine, Russia’s increased interest in and engagement on the African continent has been increasingly discussed by security analysts and think tanks (see for instance Siegel, 2021; Stanyard, Vircoulon and Rademeyer, 2023; Jones, et al., 2021). Primarily highlighted are Russia’s interest in mineral deposits, its large-scale arms’ exports to African regimes, its dominance on the nuclear energy market with resulting dependency on Russian nuclear fuels, and its ambition to undermine Western capacities by the spread of Russian propaganda and anti-Western sentiments (Lindén, 2023). Each of these dimensions carries potentially profound and far-reaching implications for the continent’s development, as underscored by various strands of literature. Research contributions on this specific new trend are however still very limited and predominantly of a qualitative and exploratory nature.

There is, however, substantial general knowledge about the various forms that foreign interests can take, including trade, investment, development aid, propaganda, election interference, and involvement in conflicts, and their potential consequences for development. This brief presents an overview of selected literature that most closely relates to foreign influence in Africa.

Background: Theories of Foreign Policy

Two contrasting approaches are used to describe the way countries engage with the international community. The first one is the so-called realist perspective, which emphasizes the role of power, national interests, and security in shaping foreign policy (Mearsheimer, 1995). In this model, countries act in their self-interest, and often in competition or even conflict with other countries. Strategic alliances and a willingness to use force to advance one’s interests are contemplated under this perspective. The second approach is the idealist perspective, in which foreign policy is used to promote democratic values, human rights, and international cooperation, prioritizing tools such as diplomacy, international law, and multilateral institutions (Lancaster, 2008). For countries at the receiving end of major powers’ foreign policy agendas, and particularly for developing countries, the implications from the contrasting approaches will be widely different. While even a realist foreign policy may ostensibly incorporate concerns about the welfare and development of its allies, these are often not more than a thin disguise for the ultimate objective of buying political support and commercial advantages. A genuine interest in the welfare and development of receiving partners only finds a place under the idealist perspective, although even idealism is at times claimed to “greenwash” state actors’ own interests (Delmas and Burbano, 2011). While this claim has some substance to it, such accusations can also stem from the anti-western rhetoric typically pursued by Russia and aimed at undermining the credibility of actors with good intentions.

In practice, most countries’ foreign policies incorporate elements of both realism and idealism, although the balance between the two may vary. Some countries may have a predominantly realist approach, while others may prioritize idealist goals. Additionally, the same country may shift its approach over time, depending on changing circumstances and priorities. Idealism may be more prominent during periods of stability and prosperity, when countries have the resources and political will to pursue more ambitious foreign policy goals. Realism tends to become more prominent in times of crisis, when countries face serious threats to their national security or economic well-being. Historical examples of the latter are the aftermath of World War II, the Cold War, and even the 2008 global financial crisis (Roberts, 2020).

Comparative Analysis of Foreign Influence

A few studies, recent enough to encompass Russia’s renewed interest in Africa post-2015 but not enough to cover the current day resurgence, explicitly compare the strategy of different actors and their long-term influence. Trunkos (2021) develops a new soft power measure for the time-period 1995–2015, to test the commonly accepted claim in the political science literature that American soft power use has been declining while Russian and Chinese soft power use has been increasing. In the author’s own words, “the findings indicate that surprisingly the US is still using more soft power than Russia and China. The data analysis also reveals that the US is leading in economic soft power actions over China and in military soft power actions over Russia as well.”

Castaneda Dower et al. (2021) take a longer-term perspective and categorize African countries into two blocs one Western-leaning and one pro-Soviet, based on a game-theoretical model of alliances. This categorization aligns well with UN voting patterns during the Cold War, but it does not predict alignment as effectively in the post-Cold War period. The study finds no significant difference in average GDP growth between the two blocs for the period from 1990 to 2016. However, the bloc with Western-like characteristics shows higher levels of inequality and greater reliance on the market economy – as opposed to the planned one. It also has higher human capital, more gender parity (in education), and better democracy scores, but lower infrastructure capital compared to the other bloc.

Another strand of literature has looked into the deep changes that have occurred over time within the global development architecture, highlighting changes in donor and partner motivations after the end of the Cold War (Boschini and Olofsgård, 2007; Frot, Olofsgård and Perrotta Berlin, 2014), through the Arab Spring (Challand, 2014), and more recently under the emergence of new actors, chiefly China (Blair, Marty and Roessler, 2021). Studies in this area aim to highlight what implications the varying ideologies and motivation for cooperation in the donor countries have for countries at the receiving end. Competing aid regimes generate soft power through public diplomacy, often in the form of branding (for instance through putting origin “flags” on aid projects or investments). This type of positive association has been shown to generate ‘positive affect’ toward donors (Andrabi and Das, 2010), and to strengthen recipients’ perceptions of the models of governance and development that such donors promote – liberal democracy, for example, or free market capitalism (Blair, Marty and Roessler, 2021).

Emerging Players on the African Stage

An extensive literature has examined the various facets of established power actors’ presence on the continent, spanning foreign aid, diplomatic relations, and military involvement, revealing significant impacts on local economic development through multiple channels. The United States, along with other former colonial powers and major Western donors, plays a particularly prominent role in this context. Against this background, recent research has increasingly focused on the rise of new actors, and in particular China’s expanding role as a donor and investor in Africa (Bluhm, 2018; Brautigam, 2008; Brazys, Elkink and Kelly, 2017; Dreher et al. 2018). While the consensus is still unclear on whether China’s approach to aid attracts support among African citizens (Lekorwe et al. 2016; Blair, Marty, and Roessler, 2021), recent research also shows that Chinese aid exacerbates corruption and undermines collective bargaining in recipient countries (Isaksson and Kotsadam 2018a; 2018b).

As mentioned, there are as yet very few recent articles concerned with the reasons for Russia’s renewed interest in Africa (see Marten, 2019; Akinlolu and Ogunnubi, 2021; Ramani, 2023), and even fewer analyzing the potential impacts from it. One working paper, not citable due to the authors’ wishes, has quantitatively mapped and explicitly analyzed the impact of Russian military presence (in particular, of the Wagner Group) in Africa. The study found that the infamous paramilitary group faces fewer repercussions for human rights violations and commits more lethal actions than the state actors that employ them. In another recent study on the Central African Republic (CAR), Gang et al. (2023) found not only mortality levels in CAR to be four times higher than what estimated by the UN but also that Wagner mercenaries have contributed to “increased difficulties of survival” for the population in affected areas. Pardyak, M. (2022) explores the communication strategies employed by the key actors in the war, specifically focusing on how these strategies are received in African societies. Based on the analysis of over 140 media articles published in several African countries up to 15 October 2022, complemented by street surveys in Cairo, and in-depth interviews with Egyptians and Sudanese migrants, the study concludes that Russia’s multipolar perspective on the international order is more widely supported in Africa than Western strategies.

When viewed in a historical context, however, Russia’s actions reflect a longstanding adherence to a realist approach in its foreign policy endeavors. Throughout its trajectory, Russia has consistently prioritized national security and economic interests, frequently leveraging military and economic means to safeguard these interests (Tsygankov and Tsygankov, 2010). Presently, amid mounting pressures from the Western democratic world following the full-scale invasion of Ukraine in February 2022, Russia finds itself increasingly reliant on a realist approach. While the Chinese engagement in Africa is also characterized by realist principles, it’s important to emphasize that the Russian approach diverges from that of China. China is focused on a long-term presence, infrastructure building and investments. It has no interest in democracy and human rights, is efficient and cheap though not always loved (Isaksson and Kotsadam, 2018b). Russia’s interest is more short term and opportunistic, seeking out countries rich in natural resources with unstable governments and weak institutions, such as Libya, Sudan, Mozambique, the Central African Republic, Mali, Burkina Faso and Madagascar. Russia typically targets undemocratic elites or military juntas, offering political support, military equipment sales, and security cooperation (in particular through the Wagner Group) in exchange for access to natural resources, concession rights and influence. State of the art research on a previous period (Berman et al., 2017, spanning 1997 to 2010), although not exclusively focused on Russia, finds that rents from mineral contracts, captured by swings in global mineral prices for a causal interpretation, lead to a higher likelihood of local conflicts, and furthermore that the control of mining areas by rebel groups can escalate violence beyond the local level.

Russia is pursuing a range of strategic goals that include diplomatic legitimization, media influence, military presence, elite influence, arms export, and shaping voting patterns in international organizations (Lindén, 2023). Like China, Russia is uninterested in democracy or human rights. Moreover, what Russia stands for is in stark contrast to the Western model. Russia embodies autocracy and backward revisionist values (for instance in areas such as attitudes to gender equality and the sustainability agenda) while the West generally promotes democracy and progressive inclusive solutions (Lindén, 2023). What also especially characterizes Russia is the particular attraction towards the presence of anti-West sentiment, which it fuels through populistic anti-colonial disinformation and propaganda. This approach has been criticized for potentially weakening democratic norms and sidelining African agency (Akinlolu and Ogunnubi, 2021). Additionally, Russia’s disregard for the socio-political realities in Africa, typically associated with a self-interested realist approach, can lead to ineffective engagement and unintended negative consequences, undermining the long-term sustainability of both social and economic developments in the region.

Conclusion

Many African countries find themselves in a delicate balancing act, as they cannot afford to push away Russia nor displease their historical Western partners. This attempt to balance between actors poses several risks and potentially detrimental consequences, including reduced development cooperation, slower democratization, limited progress on human rights, and increased conflicts. Additionally, Russia’s growing presence in Africa can have implications for the interests and policies of the European Union (EU) and its member states as well as global actors, including impacts on migration, terrorism, the energy sector as well as on trade and aid flows.

In light of the diverse strategies foreign powers use in their relations with African countries and the significant impact these strategies have, it is crucial to deepen our understanding of foreign engagements in Africa. By examining Russia’s distinct approach alongside those of other global actors, we can gain valuable insights into the complex dynamics shaping the continent’s political, economic, and social landscape, both now and in the future. Expanding research in this area is not only desirable but essential for informing policy and development strategies.

References

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Trade Induced Technological Change: Did Chinese Competition Increase Innovation in Europe?

Posted on April 29, 2019 | Policy Brief

20190428 Trade Induced Technological Change Image 01

The last 30 years has witnessed a shift of the world’s manufacturing core from Europe and North America to China. A key question is what impact this has had on manufacturing workers in other developed economies, and also on innovation, patenting, IT adoption, and productivity growth. While a rigorous data analysis on these variables for developing economies, particularly in Eastern Europe, is not yet available, this brief examines the impact of the rise of China on innovation in Western Europe, and also reviews the evidence on the impact of the rise of China generally. Recent research by Bloom, Draca, and Van Reenen (2016) found that Chinese competition induced a rise in patenting, IT adoption, and TFP by 30% of the total increase in Europe in the early 2000s. Yet, we find numerous problems with the Bloom et al. analysis, and, overall, we do not find convincing evidence that Chinese competition increased innovation in Europe.

Few events have inspired the ire of economists as much as Brexit and the rise of Donald Trump, two events seen as related as both were a seeming reaction to both globalization and slowing economic growth, particularly as some (such as Trump himself) saw the former as a key cause of the latter. Both Brexit and the trade war spawned by Trump do seem to have had negative economic effects – US equities have suffered every time the trade war has escalated, while anecdotal reports and more sophisticated economic analyses seem to suggest that Brexit has cost the UK jobs.

And yet, there is a need for policy makers and economists to hold two ideas in our heads simultaneously: Trump’s trade war and Brexit may be policy disasters, and yet globalization can create both winners and losers, even if it is clear that, generally speaking, the overall gains are likely positive and large. This is likely also true of the rise of China – one of the most dramatic events in international economics in the past 50 years. Figure 1 shows the increase in trade with China from the early 1980s to 2017, a period in which US imports from China grew from 7 to 476 billion dollars.

Figure 1. Chinese Imports (in logs, deflated)

Source: World Bank WITS

The academic literature tends to show that this impact, the rise of China, may have cost the US as much as 2.2 million jobs directly (Autor et al.), and as much as 3 million jobs once all input-output and local labor market effects are included. While approximate, these numbers are large enough for the China shock to have played a role in the initial onset of “secular stagnation” – the growth slowdown which began around 2000 for many advanced nations, including the US and Europe. In addition, Autor et al. (forthcoming) found that Chinese competition also resulted in a decline in patent growth. In the European context, however, other authors have found that although China did do some damage to certain sectors, overall, it does not appear to have been quite as damaging, particularly in Germany, which also benefitted from exporting increased machine tools to the Chinese manufacturing sector. And, in a seminal paper, Bloom, Draca, and Van Reenen (2016) find that Chinese competition actually led to an increase in patents, IT adoption, and productivity in Europe from 1996 to 2005, along accounting for nearly 30% of the increase. This is important, as it implies that without the rise of competition with China, the slowdown in European growth would have been even more pronounced than it was. It also implies that, far from being a source of stagnation, Chinese competition has been a source of strength. It also makes it more likely that the slowdown in growth since 2000 was caused by supply-side factors, such as new inventions becoming more difficult over time, as is perhaps the leading explanation among economists, notably Northwestern University business professor, Robert Gordon (2017), and also supported by others (see this VoxEU Ebook featuring a “who’s who?” among economists). It would also be evidence that contradicts the “Bernanke Hypothesis” that the former US Fed Chair first laid out in a 2005 speech at Jackson Hole, in which he suggested that international factors – particularly the savings glut and US trade deficit – were behind falling interest rates in the US. Since then, Ben Bernanke has followed up with a series of blog posts suggesting that these international factors were the cause of the initial onset of secular stagnation.

Figure 2. European Growth Relative to Trend

Source: World Bank WDI

In this brief, I present new research in which my coauthor and I test the robustness of the research finding that China had a positive impact on innovation in Europe (Campbell and Mau, 2019). We find that these findings are very sensitive to controls for time trends and other slight changes in specification. We also find that the number of patents matched to firms in the sample shrinks over the sample period (from 1996 to 2005). Overall, we conclude that, unfortunately, it is unlikely that the rise led to a significant increase in innovation in Europe, although more research is needed. Our research also sheds light on the so-called “replication crisis” currently gripping the social sciences, as researchers begin to realize that many published findings are not robust.

Trade-Induced Technical Change?

Bloom, Draca, and Van Reenen (2016) – hereafter BDV – tried to isolate the impact of the rise of China on Europe using several methods, using firm-level data for Europe. They placed each firm in a 4-digit sector, where they measured imports from China over time. First, they just looked at changes in patents, IT, and total factor productivity (TFP) at the firm level for sectors in which Chinese imports increased a lot vs. other sectors. But, because economists are always weary of the difficulty of isolating a causal relationship from non-experimental data, the authors, worrying that the sectors which saw increases in Chinese imports might differ systematically from the others, the authors also used what is called an instrumental variable. That is, they used the fact that when China joined the WTO in 2001, they also negotiated a reduction in textile quotas. Thus, BDV reason that textile sectors which had tightly binding quotas prior to removal were likely to have had fast growth in Chinese imports after China’s accession to the WTO. Thus, they end up comparing textile sectors in which the quotas were binding to sectors in which they were not binding. We went back and compared the evolution of patents in these same groups (sectors with binding textile quotas vs. not binding) below in Figure 3.

Figure 3. Patent Growth in China-Competing Sectors (Quota Group) vs. Other Sectors

Notes: The vertical red lines are dates when textile quotas were removed. The blue line shows the evolution of patents in the sectors without binding quotas (non-competing sectors), and the red line is the evolution of patents in the China-competing sectors. The dotted lines are 2 standard deviation error bounds.

What is immediately obvious in Figure 3 is that patents are declining rapidly over the whole period in both groups. The overall level of patents was falling in both groups for the full period. There is a 95.8% decline in patenting for the China-competing group, vs. a 96.2% decline for firms in the non-competing (“No quota”) group. By 2005, average patents per firm are close to zero in both groups (.04 in the China-competing sectors vs. .11 in the others). However, in the “No quota” group, the initial level of patents – close to three per firm per year – was much larger than in the quota group. Since patents are falling rapidly in both groups but bounded by zero, the level of the fall in patents in the non-quota group is larger, but one can easily see that much of this decline happens before quotas are removed. If we control for simple time trends, the effect goes away. Also, given the tendency of patents to decline, we can also remove the correlation between Chinese competition and patent growth in some specifications by simply controlling for the lagged level of patents. The overall declining share of patents in the BDV data also raises questions about data selection issues, as patents granted in the BDV data in the later years were a smaller share of the total patents actually granted in reality.

BDV also look at the impact of the rise of China on IT adoption. However, here they proxied IT adoption by computers per worker, but they did not collect enough data to control for pre-trends properly in the data, so we cannot be sure whether this correlation is causal or not. (For what it is worth, on the data we do have, from 2000 to 2007, including trends in the data renders the apparent correlation between Chinese import growth and computers-per-worker insignificant.)

Lastly, BDV look at the impact of the rise of China on TFP growth. Here, unlike before, we find that their measure is robust across various estimation methodologies. However, when we look at changes in a commonly used alternative measure of productivity, value-added per worker, instead of TFP (as TFP needs to be calculated using strong assumptions about the functional form of technology), we find no impact (see Figure 4 below).

Figure 4. Value-Added per worker Growth: China-competing sectors vs. others

Figure 4 above compares the evolution of value-added per worker in the most China-competing sectors vs. the others. Trends look similar for firms in either group of sectors (China-competing or otherwise), and we do not find a correlation. We also do not find that Chinese competition led to an increase in profits, nor an increase in sales per worker (in fact, we found a significant decrease in most specifications).

Conclusion

All in all, we find that the BDV findings suggesting that the rise of China had a large impact on innovation in Europe is not robust. However, in most specifications, we also don’t find a negative impact as did Autor et al. (forthcoming) for the US. This might have to do with data quality, although it does seem to be closer to other work, such as Dauth et al. (2014), which suggests that the rise of China had a smaller impact in Germany than in the US.

We also felt it was a bit alarming that a simple plot of  the trends in patents for China-competing and not-competing sectors was enough to seriously question the conclusions of BDV, as their paper was published in the Review of Economic Studies, a top 5 journal in academic economics. If influential articles published in the most fancy journals can exhibit such mistakes, this underscores the extent which the profession of economics may suffer from many published “false-positive” results. The reasons why this could be the case are obvious: researchers are under pressure to find significant results, as top journals don’t often publish null results, and replication is exceedingly rare in a field in which one needs to make friends to publish. However, there are signs that replication is becoming more mainstream, and as it does, we can certainly hope that voters around the world will turn back to science.

References

  • Autor, D., D. Dorn, G. H. Hanson, G. Pisano, and P. Shu. Forthcoming. Foreign Competition and Domestic Innovation: Evidence from US Patents. Forthcoming: AEJ:Insights.
  • Bloom, N., M. Draca, and J. Van Reenen. 2016. “Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity.” The Review of Economic Studies 83 (1): 87–117.
  • Campbell, Douglas and Mau, Karsten. 2019.. Trade Induced Technological Change: Did Chinese Competition Increase Innovation in Europe?”, mimeo
  • Dauth, W., S. Findeisen, and J. Suedekum. 2014. “The Rise of the East and the Far East: German Labor Markets and Trade Integration.” Journal of the European Economic Association 12 (6): 1643–1675.
  • Gordon, R.J., 2017. The rise and fall of American growth: The US standard of living since the civil war (Vol. 70). Princeton University Press.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.