Working Paper
The dynamics of state–business relations between the Ethiopian state and Chinese private firms

Despite the Ethiopian government’s commitment to attracting foreign direct investment to its emerging manufacturing sector and its shared interests with Chinese private businesses in building profitable investments, relations between Chinese private businesses and the Ethiopian government are not always amicable. ‘Win–win’ narratives tend to oversimplify the reality of Chinese investments in Ethiopia’s manufacturing sector, despite shared interests.

This paper takes the Chinese-financed Eastern Industrial Park in Ethiopia as a case study to explore the dynamics of state–business relations between the host country government agencies (the Ethiopian Investment Commission in particular) and Chinese private businesses.

It argues that the institutions led by Chinese government agencies serve only limited purposes and are led by the interests of certain kinds of firms, and that private firms tend to locally improvise and create their own bargaining mechanisms, even when the Chinese state has built official channels for bargaining.

Relations between Chinese private businesses and host country governments therefore do not fit simple ‘win–win’ narratives but are highly complex, context-specific, diverse, and fluid.