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Asian Drivers

Complementary and Competitive Effects

The impact of China and India on other economies may involve a combination of complementary and competitive effects.

Complementary effects

Complementary effects lead to win-win outcomes. Gains reaped by Asian Driver actors are also felt by local actors, although these may be different in nature.

For example, focusing on the trade channel and Africa:

  • Consumers in Africa may gain from the low prices of manufactures imported from China
  • African garment exporters to the US gain from using cheap and high quality fabrics imported from India
  • African commodity exporters may gain from the high prices realised on the back of enhanced demand from China and India
  • African agricultural producers may gain from the future demand for food imports by the Asian Drivers.

Competitive effects

In other cases, the rise of the Asian Drivers may be at the cost of other economies, a win-lose outcome. For example:

  • Producers of manufactures (workers and owners) may lose out to competition from low cost imports from China; they may also lose out when trying to compete in foreign markets
  • Local and Western construction firms may be squeezed out by competitive Chinese construction firms
  • Persecuted minorities and human rights activists may lose a source of protection when China’s conditionality-free aid allows majorities or despotic governments to ignore external pressures for good governance.