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Attracting Chinese Foreign Direct Investment (FDI) to Africa: Determinants and Policies - The Case of Guinea

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  • Diallo Mamadou Saliou Kokouma
  • Kaning Xu

Abstract

This study examines the determinants and policies for attracting Chinese FDI to Africa by specifically analyzing major characteristics, trends and developments in the economic engagement between Guinea and China. Guinea¡¯s selection as the case study is justified by the country's experience of macroeconomic instability and social policy since independence. By considering mechanisms that play important roles in attracting FDI; market size, economic growth, employment, degree of trade openness and trade policy of the recipient country, the results show positive R-squared- a valid regression. However, all of these coefficients of determination are still not significant enough. The disparity to attract investment is assessed from geographical location, infrastructure, corruption levels, and income yields to implementation of the policies by the governments. It recommends policies at both national and bilateral levels in order to increase large Chinese FDI inflows towards Guinea and improve the forecast for macroeconomic and its constant development.

Suggested Citation

  • Diallo Mamadou Saliou Kokouma & Kaning Xu, 2013. "Attracting Chinese Foreign Direct Investment (FDI) to Africa: Determinants and Policies - The Case of Guinea," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 4(4), pages 52-71, October.
  • Handle: RePEc:jfr:ijfr11:v:4:y:2013:i:4:p:52-71
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    References listed on IDEAS

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    2. Hosseini, Hamid, 2005. "An economic theory of FDI: A behavioral economics and historical approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 34(4), pages 528-541, August.
    3. Dupasquier, Chantal & Osakwe, Patrick N., 2006. "Foreign direct investment in Africa: Performance, challenges, and responsibilities," Journal of Asian Economics, Elsevier, vol. 17(2), pages 241-260, April.
    4. Ronald Findlay, 1978. "Relative Backwardness, Direct Foreign Investment, and the Transfer of Technology: A Simple Dynamic Model," The Quarterly Journal of Economics, Oxford University Press, vol. 92(1), pages 1-16.
    5. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    6. Katheryn N. Russ, 2009. "The New Theory of Foreign Direct Investment: Merging Trade and Capital Flows," International Finance, Wiley Blackwell, vol. 12(1), pages 107-119, May.
    7. Cushman, David O, 1985. "Real Exchange Rate Risk, Expectations, and the Level of Direct Investment," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 297-308, May.
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