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MIAMI UNIVERSITY The Graduate School CERTIFICATE FOR APPROVING THE DISSERTATION We hereby approve the Dissertation of Richard Aidoo Candidate for the Degree: Doctor of Philosophy ____________________________________ Director (Dr. Abdoulaye Saine) ____________________________________ Reader (Dr. Walter Arnold) ____________________________________ Reader (Prof. Cyril Daddieh) ____________________________________ Graduate School Representative (Prof. Ayo Abatan) Abstract CHINA-GHANA ENGAGEMENT: AN ALTERNATIVE ECONOMIC LIBERALIZATION IN SUBSAHARAN AFRICA by Richard Aidoo China’s engagements in Africa have grown exponentially over the past decade leading to some scholars hailing it as one of the most prominent changes in international relations in recent times. Bilateral trade flows, investment projects and developmental assistance mainly characterize this relationship. Trade between China and Africa has grown an average of 30 percent in the past decade, and in 2008 trade and investment activities topped 106 billion US dollars. Comparing these figures with that of 1997 when China was doing 5 billion US dollars in Africa, one can appreciate the rapid increase in economic activities. This momentous increase is buttressed by China’s agenda to expand markets and secure reliable natural resources. This makes China’s economic engagement with Ghana fundamental as well as strategic. Economic cooperation with Ghana is fundamental as this sub Saharan African nation is a useful measure for Africa’s gradual march to economic self-determination. Being the first country to achieve political independence in the sub region, Ghana’s relationship with the Chinese provides a useful political economic base for various discussions. Chinese economic and technical assistance to Ghana mainly in the energy and construction sectors depicts Beijing’s seriousness to ‘do business’ with Ghana, which has recently joined the ranks of oil producing nations on the African continent. Strategically, as Beijing strengthens economic ties with Ghana – clearly one of Africa’s stable democracies, China’s ‘image’ of doing business in Africa is greatly helped as some of its critics point to its trading activities with authoritarian and rogue regimes on the continent. This dissertation explores China’s engagement in Ghana from a wider framework of the politics of economic liberalization. First, it aims to look at the relationship between China and Ghana which has progressed from a more political and diplomatic approach to an economic nature. Through the investigation of this relationship, the differences between the Western approach to economic reform, represented by the Washington Consensus and what is now referred to as the “Beijing Consensus”, China’s approach to aiding economic development are discussed. As this study contributes to the much needed nuanced discussion of China’s engagement in Sub Saharan Africa by providing a good country case study, it also furthers our understanding of the “alternative” economic model that Beijing is couching vis-à-vis Washington’s neoliberal policies. It also generates the conversation as to whether economic liberalization in the case of Ghana (and SSA) is imbued with some Chinese characteristics. CHINA-GHANA ENGAGEMENT: AN ALTERNATIVE ECONOMIC LIBERALIZATION IN SUBSAHARAN AFRICA A DISSERTATION Submitted to the Faculty of Miami University in partial fulfillment of the requirements for the degree of Doctor of Philosophy Department of Political Science by Richard Aidoo Miami University Oxford, Ohio 2010 Dissertation Director: Dr. Abdoulaye Saine © Richard Aidoo 2010 Table of Contents List of Tables v List of Figures vi List of Maps vii List of Abbreviations viii Dedication x Acknowledgments xi Chapter One: Introduction 1.1 Rationale of the Study 7 1.1.2 Dynamism of state institutions 7 1.1.3 Diversity of economic approaches to development 8 1.2 Historical Background: “A tale of Three Phases” 9 1.2.1 The Bandung Phase (1955-1960) 12 1.2.2 Post-Bandung Phase (1961- early 1980s) 13 1.2.2 Age of Business (early 1980s – 2008) 15 1.3 Liberalization as a framework 17 1.4 Research Methodology 19 1.4.1 Data Sources and Sampling 19 1.5 Dissertation Outline 20 Chapter Two: A Conceptual Approach for Understanding Ghana’s Economic Liberalization 2.1 Related Concepts 25 2.1.1 Varieties of Capitalism 25 2.1.2 The Dynamism between the State and Private Enterprises 27 2.1.3 The Centripetal Nature of Globalization 28 2.2 Ghana’s Economic Liberalization-A Literature Review 30 2.3 Towards a more Contextual and Institutional Analysis 40 2.3.1 Weakness in Current Research 40 2.3.2 Institutional Change 42 2.4 Conclusion 44 Chapter Three: China in Ghana: The Benefits of the Liberalization Agenda 3.1 China-Ghana: Major Forum on Cooperation Agreements 48 3.2 Ghana-China Economic Engagements: The Benefits of Liberalization 49 iii 3.2.1 Trade 49 3.2.1.1 Exports 50 3.2.1.2 Imports 52 3.2.2 Investments 56 3.2.3 Aid & Infrastructure/ Technical Assistance 59 3.3 Conclusion 66 Chapter 4: From Washington to Beijing: Liberalization from the West, or Liberalization with Chinese Characteristics? 4.1 Sizing up the Washington Consensus 71 4.1.1 Stage in the SAP towards Economic Reform 74 4.2 Characterizing the Beijing Consensus 76 4.2.1 Beijing’s Policy of “Noninterference” 76 4.2.2 The Advantage of State-Directed Capitalism 86 4.2.3 Importance of South-South Cooperation 87 4.2.4 The Environmental Disengagement 90 4.3 Conclusion 92 Chapter 5: Discussions, Suggestions, and Conclusion 5.1 Providing the needed Context 94 5.2 Discussions 96 5.3 Suggestions for Further Research 100 5.3.1 Ghana 100 5.3.1 Sub-Saharan Africa 101 5.4 Conclusion: A Watershed, not a Sea Change 102 Appendices 103 Bibliography 107 iv List of Tables Table 1.1: Top Ten African Importers from China Table 1.1: Projections for China's Commodity Import Demand Table 2.2: Proven Reserves of Oil in Africa, January 2009 Table 4.1: Ghana’s top 20 foreign investors, September 1994-June 2007 Table 4.1: For Africa, China’s Policy of “Non-interference” is Table 4.2: From the Washington to the Beijing Consensus: What are the consequences? Table 5.1: China’s Influence More Positive Than America’s v List of Figures Figure 3.1: Ghana’s Exports to China (2000-2008) Figure 3.2: Ghana’s Imports from China (2000-2008) Figure 3.3: Chinese share as a percentage of the total textile imports (2000-2005) Figure 3.4: Chinese Registered Projects in Ghana (2000-2008) Figure 3.5: Estimated value of Chinese infrastructure finance commitments in sub-Saharan Africa, 2001-07 vi List of Maps Map1.1: China’s Engagement in Sub-Saharan Africa, 2006-2007 Map 3.1: Ongoing Road Network Constructions by Chinese Contractors vii List of Abbreviations AFRC Armed Forces Revolutionary Council ATL Akosombo Textiles Limited CDB China Development Bank CGE China Geo-Engineering Corporation CNOOC China National Offshore Oil Corporation CPP Convention People’s Party CPPCC China People’s Political Consultative Conference CWE China International Water and Electric Corporation DCPSA Dedicated Communication Project for Security Agencies DIC Divestiture Implementation Committee DIS Destination Inspection Scheme EPRS Export Proceeds Retention Scheme ERP Economic Recovery Programme Exim Bank Export Import Bank FOCAC Forum on China Africa Cooperation GDP Gross Domestic Product GEPC Ghana Export Promotion Council GIPC Ghana Investments Promotion Council GNP Gross National Product GNPC Ghana National Petroleum Corporation GNTC Ghana National Trading Corporation GTMC Ghana Textile Manufacturing Company IMF International Monetary Fund ISSER Institute of Statistical Social and Economic Research JTL Juapong Textiles Limited NAM Non-Aligned Movement NDC National Democratic Congress viii NLC National Liberation Council NPP New Patriotic Party NRC National Redemption Council OECD Organization for Economic Corporation and Development OPEC Organization of the Petroleum Exporting Countries PERP Public Enterprise Reform Program PP Progressive Party PNDC Provisional National Defense Council PRC Peoples Republic of China SAP Structural Adjustment Program SME Small or Medium-Sized Enterprise SSA Sub-Saharan Africa UBA United Bank of Africa VAT Value Added Tax WTO World Trade Organization ix To my Son Joel Ekow Aidoo for his resilience and unconditional love, even when it didn’t make sense to him. You are indeed the best thing that ever happened to me. & In loving memory of my late wife Dorothy Ewurabena Aidoo. Your strength remains my strength. Also, to my late Parents who still look down from above with smiles and cheer. x Acknowledgments This dissertation is, in many ways, a culmination of several efforts. With the long hours of reflection and writing, preceded by months of research by the author, this work represents the test of human endurance as well as a labor of love. I first and foremost give thanks to God whose steadfast love and grace made all the difference in my life, and from whom I have drawn strength throughout my academic life. I thank my late parents, Ransford and Joana Aidoo, for constantly reminding me that “there is no royal way to success.” I, however, owe the completion of this work to my dissertation committee. From the bottom of my heart, I say thank you to Dr. Abdoulaye Saine whose continuous mentorship and inspiration was once again made manifest as my dissertation director, during his busiest period as acting chair of the Department of Political Science. A great debt of gratitude to Professor Cyril Daddieh and Dr. Walter Arnold, for serving as readers of my dissertation, and to Professor Ayodele Abatan, chair and professor of Engineering Technology at both Miami Hamilton and Middletown, for taking time out of his busy schedule to serve as the graduate school representative on my committee. My great admiration goes to Professor Ryan J. Barilleaux, professor and former chair of the Department of Political Science and Professor John Rothgeb former director of graduate studies for their support during my doctoral studies in Miami University.