Assessing the Impact of COFDI on Economic Growth in African Belt and Road Initiative Countries: An Empirical Two-step System GMM and DID Analysis

Houlda Fambo, Jane Nchekwube Aleke, Eugene Misa Darko, Gleb Aksenov and Shunqi Ge

Global Journal of Emerging Market Economies, 2025, vol. 17, issue 3, 356-374

Abstract: This study examines the impact of Chinese outward foreign direct investment (COFDI) on economic and industrial growth across 35 African Belt and Road Initiative (BRI) economies from 2005 to 2020, utilizing panel data and econometric methods such as a two-step system generalized method of moments (SGMM) and difference-in-differences (DID). The findings confirm that COFDI stock positively influences economic and industrial growth, although its impact varies significantly across regions. A comparative analysis of pre- and post-BRI periods highlights the initiative’s role in enhancing COFDI’s effectiveness, reinforcing its contribution to Africa’s development. Subregional analysis further reveals diverse effects, emphasizing the need for tailored policy approaches. The study underscores COFDI’s crucial role in Africa’s economic transformation, demonstrating that BRI participation amplifies its benefits. Given the complexity of these impacts, region-specific policies are essential to maximize the advantages of foreign investments and ensure sustainable economic and industrial growth. JEL Classification F21, O55, F63, O40

Keywords: Belt and Road Initiative; Chinese outward foreign direct investment; Africa; economic growth; pre–post Belt and Road Initiative (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:sae:emeeco:v:17:y:2025:i:3:p:356-374

DOI: 10.1177/09749101251336280

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