The impact of Chinese FDI in Africa: evidence from Ethiopia

Riccardo Crescenzi and Nicola Limodio

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We exploit exogenous variation in China’s export taxes to investigate the impact of Chinese foreign direct investment (FDI) in Ethiopia. Higher sector-specific export taxes in China lead to more Chinese FDI in Ethiopian districts specialized in those sectors and generate highly heterogeneous effects. Domestic firms competing with Chinese FDI reduce their sales, investment, inputs and prices, while firms in upstream and downstream sectors expand. We build a 20-year district panel of night lights and observe that Chinese FDI leads to no instantaneous impact on local growth, but significant and persistently positive effects after 6-12 years.

Keywords: foreign direct investment; domestic investment; growth (search for similar items in EconPapers)
JEL-codes: F23 O16 O47 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2021-01-01
New Economics Papers: this item is included in nep-afr, nep-cna, nep-fdg and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:108455

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