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A comparative analysis of the efficiency and influencing factors of China and the USA’s FDI in ECOWAS

Author

Listed:
  • Priscilla Nyamekye Abban

    (Hohai University)

  • Tian Ze

    (Hohai University)

  • Josephine Elom Baham

    (Hohai University)

  • Chris Jojo Obi

    (Jiangsu University)

Abstract

Foreign direct investment (FDI) has been essential to the Economic Community of West African States’ (ECOWAS) economic growth in recent decades. A substantial knowledge gap in the comparative analysis of FDI efficiency and influencing factors from China and the USA within this region is filled by this study. With the use of a stochastic frontier model, the study analyzes FDI data from 2007 to 2022 and focuses on the distinct approaches taken by both countries. The results show that although FDI inflows from both nations have increased, their effectiveness differs significantly because of different aspects such as market size, governance, and degrees of corruption. In particular, Chinese investments are more concentrated on resource acquisition, which frequently results in major infrastructure impacts but places less emphasis on long-term economic stability. In contrast, USA investments prioritize market opportunities and governance structures, which tends to yield higher efficiency. The study advises regional authorities to use these insights to establish customized plans that optimize the advantages of both Chinese and American investments in order to improve the investment climate and advance sustainable economic development in ECOWAS. Stakeholders may promote a more favorable climate for foreign investment and ultimately aid in the region’s economic development by comprehending the unique dynamics of these FDI flows.

Suggested Citation

  • Priscilla Nyamekye Abban & Tian Ze & Josephine Elom Baham & Chris Jojo Obi, 2025. "A comparative analysis of the efficiency and influencing factors of China and the USA’s FDI in ECOWAS," SN Business & Economics, Springer, vol. 5(9), pages 1-30, September.
    • Handle: RePEc:spr:snbeco:v:5:y:2025:i:9:d:10.1007_s43546-025-00876-x
    DOI: 10.1007/s43546-025-00876-x
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    References listed on IDEAS

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    1. Marie M. Stack & Geetha Ravishankar & Eric J. Pentecost, 2015. "FDI performance: a stochastic frontier analysis of location and variance determinants," Applied Economics, Taylor & Francis Journals, vol. 47(30), pages 3229-3242, June.
    2. Song, Wenfei & Han, Xianfeng, 2022. "The bilateral effects of foreign direct investment on green innovation efficiency: Evidence from 30 Chinese provinces," Energy, Elsevier, vol. 261(PB).
    3. Shiro Armstrong, 2011. "Assessing the Scale and Potential of Chinese Investment Overseas: An Econometric Approach," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 19(4), pages 22-37, July.
    4. John Bbale & John Bosco Nnyanzi, 2016. "Institutions and Foreign Direct Investment: Evidence from Sub-Saharan Africa Regions," Journal of Sustainable Development, Canadian Center of Science and Education, vol. 9(4), pages 1-11, June.
    5. Elitsa R Banalieva & Charles Dhanaraj, 2019. "Internalization theory for the digital economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1372-1387, October.
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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages

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