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Chinese Foreign Direct Investment in Africa

Author

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  • Carike Claassen
  • Elsabé Loots
  • Henri Bezuidenhout

Abstract

The eyes of the world have, in recent years, been steadfastly focused on China’s economic progress. As China has in recent years emerged as a major player on the world economic stage, its growing relations with other developing regions received much attention. Of particular note is the way in which Sino-African relations have increased since 2000. This paper aims to put Chinese FDI in Africa into perspective and provide some answers on the nature and possible impact of these flows to the continent. The research discloses that China’s outward FDI to Africa is concentrated in diversified, medium growth economic performers, with Southern Africa being the most popular regions for Chinese outward FDI. A literature survey on Chinese investment deals concluded in Africa demonstrates a definite Chinese interest in mining, oil and infrastructure in Africa. The empirical analysis of Chinese FDI in Africa reveals that agricultural land, market size and oil are important determinants of Chinese FDI. Though agricultural land and oil conform to the general notion of resource-driven Chinese FDI in Africa, the fact that market size is important indicates that Chinese investment is not solely resource-driven. As regards the possibility that Chinese FDI could positively contribute towards economic growth in Africa, causality tests conclude that the relationship between African GDP and Chinese FDI is bi-directional, while uni-directional relationships were established between Chinese FDI and African infrastructure and corruption, respectively.

Suggested Citation

  • Carike Claassen & Elsabé Loots & Henri Bezuidenhout, 2011. "Chinese Foreign Direct Investment in Africa," Working Papers 261, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:261
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    Cited by:

    1. Akhtaruzzaman, Muhammad & Berg, Nathan & Lien, Donald, 2017. "Confucius Institutes and FDI flows from China to Africa," China Economic Review, Elsevier, vol. 44(C), pages 241-252.
    2. Ehouma Jacques Allou & Bosede Ngozi Adeleye & Jianhua Cheng & Rehman Abdul, 2020. "Is there a nexus between China outward foreign direct investment and welfare in Côte dʼIvoire? Empirical evidence from the Toda–Yamamoto procedure," African Development Review, African Development Bank, vol. 32(3), pages 499-510, September.
    3. Li Shen, 2012. "What Makes China'S Investment Successful In Africa: The Entrepreneurial Spirit And Behavior Of Chinese Enterprises In Transitional Times," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 17(04), pages 1-25.
    4. Mourao, Paulo Reis, 2018. "What is China seeking from Africa? An analysis of the economic and political determinants of Chinese Outward Foreign Direct Investment based on Stochastic Frontier Models," China Economic Review, Elsevier, vol. 48(C), pages 258-268.
    5. Yeboah Evans & Agyeiwaah Vivian Antwi, 2019. "China’s Outward Foreign Direct Investment in Africa: How are Ghana Benefiting and its Issues on the Economy?," Economy, Asian Online Journal Publishing Group, vol. 6(1), pages 34-40.
    6. Henri Bezuidenhout & Ewert P. J. Kleynhans, 2018. "Modern Trends in Chinese Foreign Direct Investment in Africa: An OLI Approach," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 16(3 (Fall)), pages 279-300.
    7. Udi Joshua, 2019. "An ARDL Approach to the Government Expenditure and Economic Growth Nexus in Nigeria," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(3), pages 152-160, September.

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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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