Economic Development in Africa Report 2010

South-South Cooperation - Africa and the New Forms of Development Partnership

image of Economic Development in Africa Report 2010
The increasing role of large developing countries in global trade, finance, investment and governance, coupled with their rapid economic growth, has stimulated debate on the implications for Africa’s development. The Report examines recent trends in the economic relationships of Africa with other developing countries and the new forms of partnership that are animating those relationships. The report discusses the variety of institutional arrangements that are guiding and encouraging these new economic relationships. It provides up-to-date information on African trade with other developing countries outside Africa, as well as on official financial flows and foreign direct investment into Africa from those countries. It places the new relationships and multiplying partnerships within the context of South–South cooperation. Finally, it assesses important policy issues that arise from the new relationships in each of these areas.

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Southern foreign direct investment to Africa

African countries can use significant inflows of FDI to supplement domestic savings, create employment, access new technology and enhance prospects for meeting the MDGs by the 2015 target date. Before the onset of the financial and economic crisis, several countries in the region made significant progress in attracting FDI, resulting in an increase in inflows from $2.4 billion in 1985 to $87.6 billion in 2008. There has also been an increase in inward FDI stock from $42.9 billion to $510.5 billion over the same period (UNCTAD, 2009b). As a result of these positive developments, Africa’s share of global FDI inflows increased from 4.4 per cent in 1985 to 5.2 per cent in 2008. The recent surge in FDI to the region was driven largely by favourable commodity prices, high economic growth and a better investment climate.

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