Effect of Chinese foreign direct investment on economic growth in Africa

Isaac Doku, John Akuma and John Owusu-Afriyie

Journal of Chinese Economic and Foreign Trade Studies, 2017, vol. 10, issue 2, 162-171

Abstract: Purpose - This study aims to examine the quantitative effect and direction of Chinese Foreign Direct Investment (FDI) on economic growth in Africa using a sample of 20 African countries from 2003 to 2012 with data obtained from United Nations Conference on Trade and Development and the World Bank. Design/methodology/approach - The study used panel least squares regression, specifically fixed effect model to examine the quantitative effect of Chinese FDI on economic growth in Africa. The study also used Granger causality test to examine whether a causal relationship exists between economic growth and China’s FDI in Africa. Findings - The study finds that a 1 per cent increase in China’s FDI stock in Africa significantly increases Africa’s gross domestic product (GDP) growth by 0.607 per cent, all things being equal. Furthermore, the study finds that a causal link exists between GDP growth in Africa and China’s FDI and the nature of causality is unidirectional. Practical implications - The study recommends that to stimulate Chinese FDI in Africa, free visas must be given to Chinese investors coming into the continent, low tariffs should be imposed on inputs and intermediate goods from China and grant of business operation permit to Chinese investors must be made less bureaucratic. Originality/value - This research has not been presented to any journal for publication and is originally written by the authors.

Keywords: FDI; GDP; Economic growth (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jcefts:jcefts-06-2017-0014

DOI: 10.1108/JCEFTS-06-2017-0014

Access Statistics for this article

Journal of Chinese Economic and Foreign Trade Studies is currently edited by Dr Yixiao Zhou

More articles in Journal of Chinese Economic and Foreign Trade Studies from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().