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An Empirical Investigation of Causal Relationship of Chinese FDI to African Economies

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  • Diouf Modou
  • Liu Hai Yun

Abstract

Foreign direct investment (FDI) is frequently viewed as a fundamental component in any nation's given mission for economic development. There is slight uncertainty that the growth of Chinese trade and investment with developing and underdeveloped African states has furnished these countries with a supreme chance to rejuvenate their economies. This study reviewed driving factors of Chinese FDI to African economies utilizing a panel data from 1980- 2016. This study applied Granger causality test, under vector error correction modeling (VECM) to check causality among the factors. Whereas the determinants of FDI inflows were measured utilizing applying ECM and granger causality measurements as proposed by Anyanwu (2012), the dependent variable is FDI inflows to growth, was proxy by the proportion of FDI streams to total national output (GDP). Results showed that factors showing the determinants of FDI inflows have positive influence on development of West African and Monetary Unions economies.

Suggested Citation

  • Diouf Modou & Liu Hai Yun, 2017. "An Empirical Investigation of Causal Relationship of Chinese FDI to African Economies," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(3), pages 199-207, March.
    • Handle: RePEc:hur:ijarbs:v:7:y:2017:i:3:p:199-207
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    References listed on IDEAS

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    1. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    2. John C. Anyanwu, 2012. "Why Does Foreign Direct Investment Go Where It Goes?: New Evidence From African Countries," Annals of Economics and Finance, Society for AEF, vol. 13(2), pages 425-462, November.
    3. John Anyanwu, 2006. "Promoting of Investment in Africa," African Development Review, African Development Bank, vol. 18(1), pages 42-71.
    4. John Dunning, 1981. "Explaining the international direct investment position of countries: Towards a dynamic or developmental approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 117(1), pages 30-64, March.
    5. Xavier Sala-I-Martin, 1997. "Transfers, Social Safety Nets, and Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 81-102, March.
    6. Pantelis Pantelidis & Efthymios Nikolopoulos, 2008. "FDI Attractiveness in Greece," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 14(1), pages 90-100, February.
    7. Sufian Eltayeb Mohamed & Moise G. Sidiropoulos, 2010. "Another Look At The Determinants Of Foreign Direct Investment In Mena Countries: An Empirical Investigation," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(2), pages 75-95, June.
    8. John Anyanwu, 2011. "Working Paper 136 - Determinants of Foreign Direct Investment Inflows to Africa, 1980-2007," Working Paper Series 327, African Development Bank.
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