Europe and Emerging Africa, part 2 – “China in Africa”

China’s State-Capitalism and US-Shareholder Value Thinking

The economic success story of several African countries over the last 15 years has a lot to do with the emergence of non-Western countries, particularly China, India, Brazil, Turkey, and other Asian and Arabic nations. Today, more and more of these so called “South-South” cooperations are in place and an ever-increasing number of companies from the “South” are doing bigger and better business on the continent.

Besides goods and services, new ideas and concepts are shaping African countries as well. China does not only export its products and services but also its state-capitalistic system. Liberalization of economic activities and at the same time strict control and surveillance of political matters work obviously quite well when it comes to embedding archaic rural structures into the globalized economic system. Ethiopia, for example, is copying this political and economical model.

On the other end, the Anglo-Saxon economic model, particularly in its form of the US-American shareholder value capitalism, has been central for many emerging countries. “Its governing premise is that the purpose of every corporation should be to maximize shareholders’ wealth. If firms pursue this goal, the thinking goes, both shareholders and society will benefit.” (Roger Martin). Alfred Rappaport introduced the term “shareholder value” in 1986 and since then the shareholder value thinking – seeing profit maximizing respectively maximizing the shareholder value of a company as the main purpose of an economic activity – has become mainstream. Countless MBA courses, many of them also in African countries, are still divulging this linear form of thinking. As one of the side consequences, the reckless pursuit of money by the nouveau-riche in many emerging countries gets an extra kick and legitimization.

Although a debate on the downsides of shareholder value thinking has started in the West quite some time ago, the mixture of state capitalism and shareholder value thinking is still working quite well in several African countries. However, a growing middle class is more and more challenging authoritarian state behavior and the enrichment of a few close to the state.

But a development towards a more European-like social welfare state is not on the agenda. Europe instead tries to put forward its “political correct” ideas of gender mainstreaming, climate and environmental concerns, or HIV/Aids education. As it still provides the largest volume of development aid, it ties these ideas up to its aid flows. But when it come to the realm of ideas, “conditions” never work. “Forced” ideas automatically lose their power of getting dispersed. Contrary, often they become rather annoying and provoke contrarian thinking.

See also Europe and Emerging Africa, part 1 – Emerging Africa is on the move