A comparative analysis of the efficiency and influencing factors of China and the USA’s FDI in ECOWAS

Priscilla Nyamekye Abban (), Tian Ze (), Josephine Elom Baham () and Chris Jojo Obi ()
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Priscilla Nyamekye Abban: Hohai University
Tian Ze: Hohai University
Josephine Elom Baham: Hohai University
Chris Jojo Obi: Jiangsu University

SN Business & Economics, 2025, vol. 5, issue 9, 1-30

Abstract: Abstract Foreign direct investment (FDI) has been essential to the Economic Community of West African States’ (ECOWAS) economic growth in recent decades. A substantial knowledge gap in the comparative analysis of FDI efficiency and influencing factors from China and the USA within this region is filled by this study. With the use of a stochastic frontier model, the study analyzes FDI data from 2007 to 2022 and focuses on the distinct approaches taken by both countries. The results show that although FDI inflows from both nations have increased, their effectiveness differs significantly because of different aspects such as market size, governance, and degrees of corruption. In particular, Chinese investments are more concentrated on resource acquisition, which frequently results in major infrastructure impacts but places less emphasis on long-term economic stability. In contrast, USA investments prioritize market opportunities and governance structures, which tends to yield higher efficiency. The study advises regional authorities to use these insights to establish customized plans that optimize the advantages of both Chinese and American investments in order to improve the investment climate and advance sustainable economic development in ECOWAS. Stakeholders may promote a more favorable climate for foreign investment and ultimately aid in the region’s economic development by comprehending the unique dynamics of these FDI flows.

Keywords: Stochastic frontier model; Investment efficiency; ECOWAS; China; USA; Foreign direct investment (search for similar items in EconPapers)
JEL-codes: F14 F21 P45 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43546-025-00876-x

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