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Natural Resources and Foreign Direct Investment in Africa: Evidence from Chinese Firms

Author

Listed:
  • Yan Chen

    (College of Management, Beijing University of Post Communication, Beijing 100876, China)

  • Ruirui Zhai

    (College of Management, Beijing University of Post Communication, Beijing 100876, China)

  • Kevin H. Zhang

    (Department of Economics, Illinois State University, Normal, IL 61790–4200, USA)

Abstract

The rise of China’s outward foreign direct investment (OFDI) in Africa has promoted the continent’s economic growth but generated controversy in the West. What drives Chinese investment in the continent with abundant natural resources but poor institutions/governance? While the topic is important, studies on the issue in the literature have been limited. This paper attempts to close the gap by testing hypotheses of the role of resources and institutions with panel data in 2003–2013. Estimates suggest that the Chinese investment is not biased toward resource-rich and institution-poor countries but similar to Western investment, and China’s OFDI is largely profit-driven, just like investors from other countries. Institutional supports from the Chinese government, however, seems to be important to China’s OFDI in Africa.

Suggested Citation

  • Yan Chen & Ruirui Zhai & Kevin H. Zhang, 2020. "Natural Resources and Foreign Direct Investment in Africa: Evidence from Chinese Firms," Sustainability, MDPI, vol. 12(22), pages 1-18, November.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:22:p:9616-:d:447107
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    References listed on IDEAS

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    6. Deborah Brautigam & Tang Xiaoyang & Ying Xia, 2018. "What Kinds of Chinese ‘Geese’ Are Flying to Africa? Evidence from Chinese Manufacturing Firms," Journal of African Economies, Centre for the Study of African Economies, vol. 27(suppl_1), pages 29-51.
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    Cited by:

    1. Florenca Gjorduni, 2023. "Diaspora Impact on Foreign Direct Investment: State Institutions on Diaspora Engagement," European Journal of Marketing and Economics Articles, Revistia Research and Publishing, vol. 6, January -.
    2. Ernest Nkansah‐Dwamena & Hyunsoo Yoon, 2022. "Why is sub‐Saharan Africa an attractive destination to foreign land grabbers? Evidence from country characteristics," African Development Review, African Development Bank, vol. 34(2), pages 280-292, June.
    3. Xiaoling Zhang & Decai Tang & Brandon J. Bethel, 2021. "Analyzing the Characteristics and Evolution of Chinese Enterprises’ Outward Forward Direct Investment Host Country Network," Sustainability, MDPI, vol. 13(17), pages 1-19, September.
    4. Zhang, Kevin H., 2021. "How does South-South FDI affect host economies? Evidence from China-Africa in 2003–2018," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 690-703.

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