Chinese imports, industrial production and inflation in Zimbabwe
| Published date | 01 January 2018 |
| Pages | 2-14 |
| DOI | https://doi.org/10.1108/JCEFTS-05-2017-0011 |
| Date | 01 January 2018 |
| Author | Richard Makoto,Leonidas Ngendakumana |
| Subject Matter | Economics,International economics |
Chinese imports, industrial
production and inflation
in Zimbabwe
Richard Makoto
Department of Economics, University of Zimbabwe, Harare, Zimbabwe, and
Leonidas Ngendakumana
Department of Economics, Africa University, Mutare, Zimbabwe
Abstract
Purpose –The purpose of thisstudy is to investigate the impact of Chinese import penetrationon industrial
productionand inflation in low income countries, specifically, the impact on textile,wood and furniture, paper
and chemicalin Zimbabwean industries.
Design/methodology/approach –The study adopted bounds test of co-integration advocated by
Pesaran et al. (2001) to distinguishbetween short- and long-run impacts. A sector-specific regression models
were specifiedfor textile, wood and furniture, paper and chemical industriesand the other one on inflation
Findings –The effect of Chinese importsvaries across industry. A negative impact on wood and furniture
and paper industries is confirmed and rejects an anticipated negative effect on textile industries. However,
import penetrationhad a negative effect on inflation.
Practical implications –The study recommends that the countryshould consider the trade-off between
industrial shrinkage and low prices when formulating trade policy, especially import restrictions, as trade
protectionism has failed in most African countries. Temporary trade restriction measures should be
implementedand this will encourage dynamic efficiencyin domestic industries.
Originality/value –The study identified the need for sector-specificimpact of Chinese import penetration
on manufacturingsector and the dynamics on inflation.
Keywords Co-integration, ARDL, Industrial production, Inflation, Chinese imports
Paper type Research paper
1. Introduction
The rapid economic growth in China has receivedenormous attention the world over, with
concerns raised in both developed and developing countries. Developing countries are
viewing Chinese economic growth as a tale of both dark and light. This is because with
trade, consumers enjoy lower prices; however, domestic products facing direct competition
from Chinese imports may be crowded out in the market. Traditional trade models predict
that labour-abundant countrieslike China will export labour-intensive goods; these threaten
developing economies infant industries. Worse-still, China produces an export bundle very
similar to that of the developing countries like Zimbabwe (Morrissey and Zgovu, 2011;
Schott, 2008). Low-cost competition from China threatens African suppliers in
manufacturing. Depending on the considered country, this applies particularly to textiles,
furniture, footwear and ceramic products. Chinese imports have also displaced developing
countries’exports in international markets. Giovannetti and Sanfilippo (2009) argue that
JEL classification –C22, D24, E31, F14
JCEFTS
11,1
2
Journalof Chinese Economic and
ForeignTrade Studies
Vol.11 No. 1, 2018
pp. 2-14
© Emerald Publishing Limited
1754-4408
DOI 10.1108/JCEFTS-05-2017-0011
The current issue and full text archive of this journal is available on Emerald Insight at:
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