On the importance of Chinese investment in Africa
Ficawoyi Donou‐Adonsou & Sokchea Lim
What the paper says
With the growing presence of China in Africa over the last two decades, this paper investigates the impact of Chinese foreign direct investment (FDI) on economic performance in Africa, which we compare to that of the traditional economic partners of African countries, including the U.S., France, and Germany. Also, we explore whether China’s new relationship with Africa has somehow altered the preexisting relationship between Africa and its traditional partners. Our results, using the fixed-effects and instrumental variable approaches to 36 countries over the period 2003–2012, indicate that Chinese FDI improves income in Africa. We also find that the impact is more pronounced for U.S. and German investment. Moreover, there is evidence that Chinese investment crowds out U.S. investment in Africa, whereas France seems to be competing with China. These results imply that as the Chinese economy grows, the demand for resources has increased its intensive competition with the U.S. rather than with France.
78 citations
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 1.00 × 0.4 = 0.40 |
| M · momentum | 0.80 × 0.15 = 0.12 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.