China-Africa Investments and Economic Growth in Africa

Isaac Abekah-Koomson

A chapter in Regional Development in Africa from IntechOpen

Abstract: China-Africa's economic cooperation has existed for decades. In this chapter, we observed the significance of China's FDI on economic growth, using two decades of FDI data. In the last decades, the economic growth of Africa has been impressive despite recurrent structural and technical issues. China's FDI stock relative to other economies has been growing, rapidly. How does it affect the performance of key macroeconomic indicators, particularly unemployment and export? Using the Pesaran Autoregressive Distributive lag (ARDL) model, there was a negative growth link between China's FDI to Africa and growth. However, the impacts of US FDI to Africa, China Export, and Imports from Africa were insignificant. The long-run effect of World FDI inflow to Africa reported a positive effect on growth. There was no evidence of Okun's law as unemployment increases with growth. For the Granger causality test, all macroeconomic indicators reported a uni-directional link with economic growth, except human capital and unemployment. It is recommended to shift FDI resources toward promoting labor-intensive programs because it has high employability compared to capital intensive programs. Pursuing the Pull Growth Model (PGM) technique will pull enough funds to support the growth of infrastructures and technical capacity development in the region.

Keywords: China; Africa; foreign direct investment (FDI); economic growth; macro-economic policy (search for similar items in EconPapers)
JEL-codes: Q01 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ito:pchaps:194270

DOI: 10.5772/intechopen.89444

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