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Understanding China's move into Africa: an empirical analysis

Author

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  • Mario Biggeri
  • Marco Sanfilippo

Abstract

An important new issue on the international scene is the upsurge in market and non-market South-South relations. The aim of this paper is to understand the dynamics that lie behind the recent Chinese move into Africa by empirically exploring the determinants of Sino-African relationships. In order to have a comprehensive picture, the analysis takes into consideration the main channels of commercial and political interactions: outward foreign direct investment (OFDI), trade and aid (international economic cooperation). The empirical analysis utilises a panel data set, from 1998 to 2005, for 43 African countries. The econometric estimates for three simultaneous equations are based on an instrumental variables method. Results show that the Chinese move into Africa is driven by strategic interaction among the three channels (FDI, trade and economic cooperation) as well as by pull factors, i.e. the characteristics of the receiving countries in terms of natural resource endowments and their market potential.

Suggested Citation

  • Mario Biggeri & Marco Sanfilippo, 2009. "Understanding China's move into Africa: an empirical analysis," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 7(1), pages 31-54.
  • Handle: RePEc:taf:jocebs:v:7:y:2009:i:1:p:31-54
    DOI: 10.1080/14765280802604714
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    References listed on IDEAS

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    1. Rosa Forte, 2004. "The relationship between foreign direct investment and international trade. Substitution or complementarity? A survey," FEP Working Papers 140, Universidade do Porto, Faculdade de Economia do Porto.
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    Cited by:

    1. Simplice Asongu & Jacinta C. Nwachukwu & Gilbert A. A. Aminkeng, 2014. "China’s Strategies in Economic Diplomacy: A Survey of Updated Lessons for Africa, the West and China," Working Papers 14/036, African Governance and Development Institute..
    2. Matthias Busse & Ceren Erdogan & Henning Mühlen, 2016. "China's Impact on Africa – The Role of Trade, FDI and Aid," Kyklos, Wiley Blackwell, vol. 69(2), pages 228-262, May.
    3. Simplice A. Asongu & Gilbert A.A. Aminkeng, 2013. "The economic consequences of China--Africa relations: debunking myths in the debate," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 11(4), pages 261-277, November.
    4. Franklin Allen and Giorgia Giovannetti, 2010. "Fragile Countries And The 2008-2009 Crisis," EUI-RSCAS Working Papers 13, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    5. Asongu, Simplice A, 2014. "Sino-African relations: a review and reconciliation of dominant schools of thought," MPRA Paper 66597, University Library of Munich, Germany.
    6. Liu, Ailan & Tang, Bo, 2018. "US and China aid to Africa: Impact on the donor-recipient trade relations," China Economic Review, Elsevier, vol. 48(C), pages 46-65.
    7. Daniel Agyapong, 2014. "Macroeconomic Spillover and Single Currency Adoption: An Inter-regional Analysis," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 64(3), pages 73-93, July-Sept.
    8. Giorgia Giovannetti & Marco Sanfilippo, 2009. "Do Chinese Exports Crowd-out African Goods? An Econometric Analysis by Country and Sector," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 21(4), pages 506-530, September.
    9. repec:eee:ememar:v:33:y:2017:i:c:p:1-18 is not listed on IDEAS
    10. repec:fdi:wpaper:1786 is not listed on IDEAS
    11. repec:eee:chieco:v:46:y:2017:i:c:p:180-207 is not listed on IDEAS
    12. repec:fdi:wpaper:1785 is not listed on IDEAS
    13. Simplice Asongu & Jacinta C. Nwachukwu & Gilbert A. A. Aminkeng, 2018. "Lessons from a Survey of China’s Economic Diplomacy," Working Papers 18/009, African Governance and Development Institute..
    14. Simplice Anutechia Asongu, 2014. "A Development Consensus reconciling the Beijing Model and Washington Consensus: Views and Agenda," AAYE Policy Research Working Paper Series 14_025, Association of African Young Economists, revised Dec 2014.
    15. Szalavetz, Andrea, 2009. "Feltörekvő transznacionális társaságok - a kínai példa a klasszikus elmélet tükrében
      [Ambitious transnational corporations - the example of China in the light of classical theory]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1125-1137.
    16. Simplice Asongu & John Ssozi, 2016. "Sino-African Relations: Some Solutions and Strategies to the Policy Syndromes," Journal of African Business, Taylor & Francis Journals, vol. 17(1), pages 33-51, January.
    17. Kaushik Basu, 2010. "Asian Century: A Comparative Analysis of Growth in China, India and other Asian Economies," Working Papers id:3277, eSocialSciences.
    18. Broich, Tobias, 2017. "Do authoritarian regimes receive more Chinese development finance than democratic ones? Empirical evidence for Africa," MERIT Working Papers 011, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    19. NGUENA Christian-Lambert, 2014. "External Debt Origin, Capital Flight and Poverty Reduction in the Franc Zone: Does the Economic Consequences of Sino-African Relationship matter?," Working Papers 14/016, African Governance and Development Institute..

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    Keywords

    China; Africa; FDI; trade; aid;

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