Max Rebol

Factor Endowments in a South- South Relation: Trade Preferences, Migration and Inequality for China in Africa Max Rebol

China¿s new partnership with Africa has created one of the most interesting South- South relationships. Through its growing demand for natural resources, China has turned into one of the largest investors in Africa; some patterns indicate a vested North- South relation with China in the role of the USA. The different endowments of the regions lead to different outcomes, most notably in migration and inequality. The labour abundance of China in combination with its capital abundance in relation to Africa creates a pattern of migration of unskilled labour which is relatively unprecedented in this form. This on the other hand has also effects on unskilled labour in Africa. As for inequality, trade based on different endowments benefits different parts of the society. Only because of being labour abundant, China could achieve a significant reduction of poverty through openness to investment and trade. Africa is in a different position. The continent¿s land abundance benefits mainly the land owning elite with further implications for trade preferences or migration.