Natural Resources and Foreign Direct Investment in Africa: Evidence from Chinese Firms

Yan Chen, Ruirui Zhai and Kevin H. Zhang
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Yan Chen: College of Management, Beijing University of Post Communication, Beijing 100876, China
Ruirui Zhai: College of Management, Beijing University of Post Communication, Beijing 100876, China
Kevin H. Zhang: Department of Economics, Illinois State University, Normal, IL 61790–4200, USA

Sustainability, 2020, vol. 12, issue 22, 1-18

Abstract: The rise of China’s outward foreign direct investment (OFDI) in Africa has promoted the continent’s economic growth but generated controversy in the West. What drives Chinese investment in the continent with abundant natural resources but poor institutions/governance? While the topic is important, studies on the issue in the literature have been limited. This paper attempts to close the gap by testing hypotheses of the role of resources and institutions with panel data in 2003–2013. Estimates suggest that the Chinese investment is not biased toward resource-rich and institution-poor countries but similar to Western investment, and China’s OFDI is largely profit-driven, just like investors from other countries. Institutional supports from the Chinese government, however, seems to be important to China’s OFDI in Africa.

Keywords: outward foreign direct investment (OFDI); natural resources; institutions; multinational corporations (MNCs) (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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