Chinese foreign direct investment and business start-ups in Africa

Philip Akrofi Atitianti and Samuel Kofi Asiamah

African Journal of Science, Technology, Innovation and Development, 2023, vol. 15, issue 6, 661-670

Abstract: In recent decades, Chinese FDI has become an integral investment source for African countries and has, therefore, engendered studies seeking to understand the determinants of these flows. In a quest to identify the factors that stimulate these flows, this paper assesses whether the ease of starting a business induces Chinese FDI flow to Africa. The analysis is based on panel data for 46 African countries between 2004 and 2018. The results from fixed-effects estimations suggest that Chinese FDI is attracted by the ease of starting a business in African economies. This finding also holds for sub-Saharan Africa (SSA) and is robust across all estimations. The results also provide corroborating evidence that identifies Chinese FDI as market and resource-seeking, attracted to large markets and economies with abundant natural resources. The findings suggest that improving business regulations could be a stimulant for Chinese FDI flow to Africa. In evaluating the nexus between Chinese FDI and business start-ups, this paper provides new evidence to complement the dated studies on this theme.

Date: 2023
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DOI: 10.1080/20421338.2023.2176612

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