Assessing the impact of China’s economic and trade expansion on poverty in Burkina Faso
|Overall, the results of this analysis show that the expansion of the economic and trade relations with China has a generally positive impact on the economy of Burkina Faso. However, it is with an increase of Chinese investments in Burkina Faso’s stock of productive capital that generates the most beneficial effects for the overall economy, in terms of both economic growth and welfare of the population. Find out more below, or though the PEP Working paper 2015-03 and Policy brief 122 (both publications are in FRENCH)|
Context, issues and objectives
This project aims to analyse the impacts of China’s economic and trade expansion, foreign direct investments and development assistance on Burkina Faso’s national economy, through simulations using a static multi-sector CGE model. More specifically, the PEP-supported research team seeks to assess both direct and indirect effects of this expansion on growth, employment and household welfare in the country.
As in most African countries, and despite that diplomatic relations were severed in 1994, the commercial presence and investments of China in Burkina Faso have grown steadily over the past decade(s) – specially in the telecommunications, infrastructures, hospitality and retailing sectors. On the other hand, China’s aid programs to Burkina Faso are, as for several other countries of the region, bound to the support of the farming sector.
Trade between both countries has also intensified, with a 32 % increase in Burkina Faso’s exports to China (oleaginous plants, ores, farm produces and transport) and 34 % increase of the Chinese exports to Burkina Faso (manufactured goods, food products, transport, pharmaceutical, chemical, etc.) over the year 2011-2012 only.
In 2013, a team of Burkinabe researchers called on PEP’s financial and technical support to conduct a rigorous analysis of the impact of China’s economic and trade expansion on the economic growth and employment in Burkina Faso.
Research method and key findings
To perform this analysis, the research team first built (with support from PEP mentors) the computable general equilibrium (CGE) model of Burkina Faso’s national economy, and used this model to conduct a series of simulations – which can be gathered in two main groups of scenarios. The first group includes scenarios of fluctuations in the levels of exchanges between the two countries and in the prices of various export/import products. The second, scenarios of increases in Chinese investments and transfers to Burkina Faso.
Overall, the analysis of the simulations results show that the expansion of the economic and commercial relations with China has a generally positive impact on the economy of Burkina Faso – where the intensification of one or another aspect of these relations lead to an increase either in production, GDP, demand for labor and/or demand for labor.
However, it is the simulation of an increase in Chinese investments in Burkina Faso’s stock of productive capital that generates the most beneficial effects for the overall economy, in terms of both economic growth and welfare of the population.
Find out more about the research methods and findings, as well as ensued policy implications, through the PEP publications posted below - in particular, the Working paper 2015-03 and Policy brief 122.
Project links and documents
|Find out more about this project - its analytical approach and outcomes - through the following links/documents:||
|PEP Project PMMA-12394||Working paper 2015-03 (PDF - in French)|
|Project proposal (Word)||Policy brief 122 (PDF - in French)|
|Final report (PDF)||Slide presentation (PDF)|
Policy engagement, consultation and dissemination
Throughout the project’s lifecycle, the team has met with several key policy-relevant stakeholders, including key government officials from the Presidency office, the Ministry of Commerce, the Ministry of Economy and Finance and the Ministry of Health. All initially confirmed the relevance of the study, its objectives and collaborated by providing the team with access to relevant data. In fact, following the first initial consultation meetings held at the onset of the project, two senior economists from the Ministry of Health and the Ministry of Economy and Finance decided to join the research team and contribute to the study.
In January 2015, one of the project team members was appointed Director General of the Research and Planning Department of the Ministry of Economy and Finance. He had the chance to disseminate the findings directly with key government officials.
More dissemination activities will be held in 2015, including the organization of a policy conference to communicate their findings and ensuing recommendations to a large and relevant audience of policy makers and stakeholders, as well as the general public, at the national level. More information on the outcomes of those upcoming dissemination activities will be posted when available.
The project described above is one of the several projects selected for support under the PEP research and capacity building initiative for Policy Analysis on Growth and Employment (PAGE) in developing countries. The PAGE program is co-funded by UK's Department for International Development (DFID) and Canada's International Development Research Center (IDRC).
This particular project was selected in June 2013, following the first of three competitive calls for proposals of the PAGE initiative. A total of 65 projects have been selected for support under the three PAGE funding rounds. Find out more