China's Presence in Developing Countries' Technology Basket: The Case of Furniture Manufacturing in Kenya

Atta-Ankomah, Richmond (2014). China's Presence in Developing Countries' Technology Basket: The Case of Furniture Manufacturing in Kenya. PhD thesis The Open University.

DOI: https://doi.org/10.21954/ou.ro.0000a9f4

Abstract

China has emerged as the leading source of capital goods for Kenya and Sub Saharan Africa as a whole, which before the noughties depended largely on advanced countries for capital goods. Thus, there is a disruption of the pattern of technology transfer to Sub Saharan Africa including Kenya. A significant aspect of this disruption is that the capital goods are being produced within a developing country context (China) and for other developing countries. This issue motivated this research, which contributes to the literature by exploring the potential impact of Chinese technologies (capital goods) on the development of other developing countries vis-à-vis the impact of technologies from advanced countries and the domestic economy. The study used both qualitative and quantitative research approaches and data from Kenya’s furniture manufacturing firms, including both formal and informal sector firms.

It was found that the technologies from China (and also Kenya) are more amenable for inclusive industrial development especially with respect to employment creation and poverty reduction. These technologies are more labour intensive, compared to the advanced country technologies. They allow poor entrepreneurs to start their own businesses with a relatively high degree of automation, which they would not be able to afford if the only available technology were the technology from advanced countries. They are also pro-poor in terms of producing goods to meet the consumption needs of the poor. It was also found that the diffusion of the Chinese technology is higher among informal sector firms than among formal sector firms. However, the Chinese technology is less common than the Kenyan technology in the informal sector while the formal sector firms mainly rely on the advanced country technology. All the three technologies are transferred/ diffused mainly through arm’s length trade.

The fact that the Chinese and Kenyan technologies yield a more inclusive development outcome than those from advanced countries indicates that industrial policies for developing countries should take into consideration the critical issue of technology choice.