Impact of china’s outward fdi on sub-saharan africa’s industrialization: Evidence from 26 countries

Ebenezer Megbowon, Courage Mlambo and Babatunde Adekunle

Cogent Economics & Finance, 2019, vol. 7, issue 1, 1681054

Abstract: The growing involvement of China in the African region has continued to stimulate questions on the impact of her involvement in the region. This paper attempt to contribute to this debate and as well pursue a development goal by empirically answering the question that “can China’s FDI in sub-Saharan Africa (SSA) stimulate the sub-region’s industrialization?” Consequently, data used for this study were obtained from China Africa Research Initiative, the World Bank and the Energy Information Administrator (EIA) websites for a sample of 26 economies in the SSA over the period 2003–2016. Panel-Corrected Standard Error (PCSE) was used to achieve the objectives of the study. The PCSE estimate result indicates that China’s FDI in SSA has an insignificant but positive effect on SSA industrialization. Suggesting that China’s FDI is not enough to boost industrialization in SSA. Furthermore, the result shows that the electricity supply in SSA has a significant and positive impact on industrialization in the continent. For SSA to benefit from China FDI significantly, SSA government must prioritize and where necessary modify future agreement to promote or prioritize Chinese investment in sectors with positive linkages with the manufacturing sector and increasing local outsourcing of inputs and intermediate production activities.

Date: 2019
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DOI: 10.1080/23322039.2019.1681054

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