Munich Personal RePEc Archive

Chinese and Indian investment in Ethiopia: Infrastructure for ‘debt-trap diplomacy’ exchange and the land grabbing approach

Addis, Amsalu and Asongu, Simplice and Zuping, Zhu and Addis, Hailu (2020): Chinese and Indian investment in Ethiopia: Infrastructure for ‘debt-trap diplomacy’ exchange and the land grabbing approach. Forthcoming in: International Journal of Emerging Markets

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Purpose: The aim of this study is to examine the motive of China’s and India’s engagement in African countries particularly in Ethiopia, and to address the land grabbing and debt-trap diplomacy between Ethiopia and the Asian drivers, which creates challenges across the diverse social, political, economic, and ecological contexts.

Methodology/approach: This study utilises both primary and secondary data. The available literature is also reviewed. The primary data were gathered through semi-structured interviews and discussions from: (i) several authority offices in Ethiopia, sources close to authorities, information-rich informants, employees, and (ii) perspectives, perceptions, and prospects from individual members of society.

Findings: The study unmasks the win-win cooperation strategy from the perspective of the members of society in Ethiopia, evaluates whether China and India have strings attached or land grabbing motives. The study also shows that whether China’s and India’s move was deliberate, the implications of debt-trap diplomacy and exploitation in Ethiopia are apparent. Additionally, this study investigated several considerable potential threats to Ethiopia that will persist unless significant measures are taken to control the relations with Asian drivers.

Limitations: Some of the limitations of this paper pertain to the primary data collection process from the Ethiopian Investment Commission (EIC) and other authorities, which was very challenging because people can be punished for talking to journalists or researchers. Furthermore, some investors were not willing to participate in discussions because they were engaged in areas that are not related to their licenses. Many interviewees were also not willing to disclose their names, and the data are not exhaustive in the number of investment projects covered.

Originality/value: This study provides new evidence on the influence of Chinese and Indian investment, aid and trade on Ethiopia's social, political, and economic spheres. Additionally, this study contributes to the ongoing debate on land grabbing anddebt-trap diplomacy in Ethiopia.

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