Comparative Effects of Foreign Direct Investment from China and Other Sources on Africa’s Economic Growth

Marvellous Ngundu and Nicholas Ngepah
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Marvellous Ngundu: Marvellous Ngundu (corresponding author) is a PhD Candidate (Economics), University of Johannesburg, College of Business and Economics, South Africa.

Margin: The Journal of Applied Economic Research, 2020, vol. 14, issue 4, 382-408

Abstract: This study examines comparatively the growth effects of FDI from China, the European Union, the US and the rest of Asia in Sub-Saharan Africa for the period 2003–2012. We develop theoretical arguments from the existing literature to show that differences in FDI data sources, methodological and econometric approaches may be part of the explanation for mixed findings of previous empirical studies, precisely on the growth effects of Chinese FDI in Africa. Our results using bilateral FDI data compiled by UNCTAD, the FDI-augmented version of the Solow growth model and the 2SLS estimator indicate a significantly negative direct impact of Chinese FDI on growth in Sub-Saharan Africa while the impact of other FDI sources is statistically insignificant. JEL Classification: B22, E22, F43

Keywords: Africa; China; Economic Growth; Foreign Direct Investment (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:14:y:2020:i:4:p:382-408

DOI: 10.1177/0973801020953399

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