An empirical analysis of Chinese outward foreign direct investment in Africa

Ross, Andrew

doi:10.1108/jcefts-12-2014-0025

Cited by 36 publications

(41 citation statements)

References 30 publications

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“…Reiter and Steensma (2010) argue that FDI inflows are more strongly positively related to improvement in human development. According to Ross (2015), China FDI in African countries is driven by access to natural resources and factors related to infrastructure quality and the regulatory environment enforced by host governments. Also, Yanxia and Meibo (2015) investigate the effect of China FDI on poverty reduction and reveal that China FDI and poverty reduction exhibit an inverted U-shaped relationship which implies that when China FDI is insignificant in the host economy it has a negative effect on poverty reduction but as FDI increases, poverty level declines.…”

Section: Fdi and Social Welfarementioning

confidence: 99%

“…The index of Côte dʼIvoire increased from 0.4 in 2003 to 0.492 in 2017, though the country is still considered as having a low index given the classification thresholds. As a result, China FDI presents itself as an instrument of economic growth and thus improves the general welfare of the population by providing employment opportunities, facilitating technology and management benefits, as well as economic opportunities (Ross, 2015). Therefore, the question of whether these FDI inflows from China have significant welfare effects on the citizens of Côte dʼIvoire gives justification for this research.…”

Section: Introductionmentioning

confidence: 99%

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Is there a nexus between China outward foreign direct investment and welfare in Côte dʼIvoire? Empirical evidence from the Toda–Yamamoto procedure

Allou

Adeleye

Cheng

et al. 2020

African Development Review

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Foreign direct investment (FDI) plays an important role in the socioeconomic advancement of developing countries. In the last decade, FDI inflows from China into Côte dʼIvoire have grown rapidly. Using quarterly time series data from 2003Q1 to 2017Q4, this study probes if China FDI has any significant welfare impact on the citizens of Côte dʼIvoire vis-à-vis if a causal relationship exists. The policy outcome is to stimulate further discourse that will reduce poverty and enhance the living standard of the population. The study uses vector autoregressive (VAR) and the Toda and Yamamoto (1995) modification of the non-Granger causality test to determine if a causal relationship exists and the direction of causality. The empirical analysis provides evidence of a unidirectional causality from China FDI to social welfare (proxied by the human development index [HDI]) but no indication of causality between China FDI to economic welfare (proxied by real gross domestic product per capita [GDPPC]). This study, which is borne out of empirical curiosity, fills a lacuna in the FDI literature. To the best of our knowledge, this paper is a novel contribution that examines the FDI-welfare nexus between China and a developing economy like Côte dʼIvoire. Thus, policies that will further stimulate FDI inflows from China must be carefully crafted to attract funding to the most productive sectors of the economy in order to improve both social and economic welfare. By extension, the policies may be adapted by developing economies with similar characteristics to Côte dʼIvoire. 1 | INTRODUCTION The "One Belt and One Road" initiative of the Chinese government allows Chinese firms to invest in Africa with a view to promoting a "win-win and multi-win cooperation" in host countries in the form of foreign direct investment (FDI). This ingenuity made Africa one of the main economic and commercial partners of China in the Sino-Afro cooperation (Yanxia & Meibo, 2015). For a successful implementation, the Chinese governmentthrough the Forum on China-Africa Cooperation (FOCAC)-implemented strategies to help African countries

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Section: Fdi and Social Welfarementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Is there a nexus between China outward foreign direct investment and welfare in Côte dʼIvoire? Empirical evidence from the Toda–Yamamoto procedure

Allou

Adeleye

Cheng

et al. 2020

African Development Review

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show abstract

“…Zhang et al (2013) using MOFCOM OFDI flow data find that the same holds true for Africa, although they only study the number of approved projects, not the value of projects or how many actually materialized. Ross (2015) using a panel of UNCTAD data for eight large African recipients of Chinese FDI over a short period, finds that investment is correlated with natural resource endowments, as well as infrastructure and fewer days required to import/export.…”

Section: Determinants Of Chinese Investment In Africamentioning

confidence: 99%

Russia and China in Africa: Competition or Cooperation?

Dikarev¹

2020

WEIR

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There is a widespread belief that China plays a fundamental role in African economies, but few rigorous empirical studies to back up this view. Many reports describe China's engagement with Africa as "neo-imperialism" and "authoritarian capitalism", exploiting natural resources and local labour while undermining democracy. A growing demand for natural resources in China is also credited with boosting growth across the continent, especially in Africa's resource-rich countries.In this paper, we present a more balanced and data-driven view on what we know about Chinese investment in Africa and what it means for growth. We use official Chinese data to examine the patterns of Chinese engagement in Africa for the period 1998 to 2015. Importantly, these data show large gaps between planned and realised investment. We distinguish between these, and focus only on realised investments.The data indicate that China's influence in Africa is much smaller than is generally believed, though its engagement on the continent is increasing. Chinese investment in Africa, while less extensive than often assumed, has the potential to generate jobs and development on the continent.

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“…In fact, the two most common criticisms of Chinese OFDI are that: First, it is primarily resource seeking, especially in developing countries (as found in Cheung and Qian (2009) and Kang and Jiang (2012)) and more specifically in countries with poor quality of institutions (Kolstad and Wiig, 2012) and particularly in Africa (Cheung et al., 2012; Ross, 2015). Second, Chinese OFDI contributes little, if anything, to knowledge transfer, technology transfer, value added, export earnings, human capital development, employment or capacity building in the receiving economy.…”

Section: Literature Reviewmentioning

confidence: 99%

Local employment additionality impacts of Chinese overseas foreign direct investment in selected African economies

Miniesy

Adams

2016

Local Economy: The Journal of the Local Economy Policy Unit

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Many empirical studies have focused on the macroeconomic impact of Chinese Outward Foreign Direct Investment on African economies. However, the results are rarely consistent and often contradictory. This paper approaches the ‘impact’ question from a different perspective using the ‘net additionality’ methodology to test, at the micro level, if Chinese Outward Foreign Direct Investment does positively impact one dimension, employment, at the local level. The data set comprises 80 Chinese investment projects over the 2003–2013 period in seven African economies. Net additionality, as a concept, is much wider than standard multiplier analysis and is more suited to analysing project impacts at the local level in both developed and developing economies. The results demonstrate that Chinese Outward Foreign Direct Investment can have substantial indirect employment effects and induced employment effects can be significant under certain conditions. These include a local supply chain infrastructure, reasonable human capital levels, availability of locally produced goods and local wages spent on such goods. The policy implications arising from the study suggest a dire need for local government action in the areas of training, education, local content minima and enabling policies that encourage small and medium enterprises' (SME) development.

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An empirical analysis of Chinese outward foreign direct investment in Africa

Cited by 36 publications

References 30 publications

Is there a nexus between China outward foreign direct investment and welfare in Côte dʼIvoire? Empirical evidence from the Toda–Yamamoto procedure

Is there a nexus between China outward foreign direct investment and welfare in Côte dʼIvoire? Empirical evidence from the Toda–Yamamoto procedure

Russia and China in Africa: Competition or Cooperation?

Local employment additionality impacts of Chinese overseas foreign direct investment in selected African economies

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