Effects of Chinese Foreign Direct Investment in Africa
Journal of Finance and Accounting
Volume 4, Issue 3, May 2016, Pages: 131-139
Received: Mar. 21, 2016; Accepted: Apr. 29, 2016; Published: May 20, 2016
Views 11403      Downloads 453
Authors
Roquia Fane Madouka Koumou, Department of Finance, Capital University of Economics and Business, Beijing, China
Wang Manyi, Department of Finance, Capital University of Economics and Business, Beijing, China
Article Tools
Follow on us
Abstract
Over the past twenty decades, countless studies both empirical and theoretical have attempted to study the effect of Foreign Direct Investments (FDI) on the economy. A great majority of these studies reached the conclusion that FDI accounts for technology transfer across countries, which in turn increases the total investment in the economy of the host countries. These studies seem also to suggest that FDI contribute relatively more to growth than domestic investment. However, with regard to studies about the Chinese investments in Africa, many authors claimed that Chinese investments in Africa bring more harm than good to the economy. They go even far to claiming that Chinese are predators of the African raw materials, and most authors remain very cautions when it comes to listing the positive effects of these investments. The goal of this paper was thus to weigh out effects (both negative and positive) of the Chinese investments in Africa. The conclusion drawn at the end of this investigation was that far from being all negative, Chinese investments are setting the African economy on the road to achieving economy development. This is because they allow African countries to go towards the modernization, industrialization and strong economic growth. It was however also observed that the claims as to which Chinese are predators of the African raw materials is slightly true. Furthermore, this hanger of raw materials leads to the closing of many local companies. Hence, it was concluded that the harmonization and the improvement of Chinese investments in Africa should pass by the respect for rules dictated by the governments (institutions) and the respect for the international standards.
Keywords
Foreign Direct Investment, Economic Growth, Trade, Africa, China
To cite this article
Roquia Fane Madouka Koumou, Wang Manyi, Effects of Chinese Foreign Direct Investment in Africa, Journal of Finance and Accounting. Vol. 4, No. 3, 2016, pp. 131-139. doi: 10.11648/j.jfa.20160403.15
Copyright
Copyright © 2016 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
References
[1]
Ademola, O., Bankole and Adewuyi A. O (2009), “China-Africa trade relation: insight from AERC Scoping Studies”, European Journal of development research, A. O Vol. 21, № 4, PP. 485-505.
[2]
Alaya, M. (2004), «L’Investissement Direct Etranger contribue-t-il réellement à la croissance économique des pays du Sud et de l’Est de la méditerranée?», C. E. D, Université Montesquieu-Bordeaux IV.
[3]
Alden, C. (2007) China in Africa, David Phillip, South Africa and zed Books Ltd, London and New-york, 157p.
[4]
Asiedu E (2006). “Foreign Direct Investment in Africa: the role of natural resources, market size, government policy, institution and political stability” World economy 29 (1): 63-77.
[5]
Blomström M and Wang H (1992), “Foreign investment and technology transfer”, European Economic Review, Volume 36, Issue (3), Juin (1992), pp 45-70.
[6]
Brewer T. L., (1991), “Foreign Direct Investment In developing Countries: Patterns, policies, and prospects” PRE Working paper № 34.
[7]
Chaponnière, JR (2008) «Un demi siècle de relation Chine-Afrique. Evolution des analyses” (“A Half-Century of Sino-African Relation: Trend and Analysis’’), Afrique Contemporaine, Vol. 4 № 228, pp. 35-48.
[8]
Chaponnière, J. R (2009) “La dérive des continents: l’Asie et l’Afrique” («The drift of continents: Asia and Africa”), № 350 mars 2009, pp. 5-26.
[9]
Chen Z and Jian J (2009). “Chinese provinces as foreign policy actors in Africa”, occasional paper № 22, South African institute of international affairs, Johannesburg.
[10]
Fine B and Jomo KS (2009) in Sautman, B and Hairong. Y (2007). “Friends and Interests: China’s distinctive links with Africa”, African studies review, 50 (3): 75-115.
[11]
Gaye Adama, (2006), Chine-Afrique; le dragon et l’Autriche, Coll. Etudes Africaine, Paris, Harmattan, 286p.
[12]
Giovannetti, G. and Sanfilippo, M. (2009) “Do Chinese exports Crowd-out African Goods? An Econometric Analysis by country and sector”, The European Journal of Development Research Vol. 21, № 4, pp. 506-530.
[13]
Hermes N and Lensink R (2000). “Foreign direct investment, financial development and economic growth”. SOM Research report 00E27. University of Groningen, the Netherlands
[14]
Larkin, BD. (1971) China and Africa, 1949-1970: “The Foreign Policy of the People’s Republic of China” California University Press, 266p.
[15]
Loots E (2009). “Foreign direct investment to Africa: Trends, dynamics and Challenges. Paper presented at the sixth African finance journal conference: Research and development in development finance”. Cape Town, 16 and 17 July.
[16]
Morisset J (2000). “Foreign Direct Investment in Africa: Policies also Matter”. Transnational corporations 9 (2): 107-253.
[17]
Pfefferman GP and Madarassy A (1992). “Trends in private Investment in developing countries, international finance corporation, and discussion” paper N0. 14. Washington D. C
[18]
Ramos JC (2004). “The Beijing Consensus”. The Mezzanine Elisabeth House. String information services; the foreign policy centre, 1-79.
[19]
Richer, Ph. (2008) “L’offensive Chinoise en Afrique (Then Chinese offensive in Africa)”, Karthala Paris.
[20]
Saltz, I. (1992). “The Negative Correlation between Foreign Direct Investment and Economic Growth in the Third World: Theory and Evidence,” Rivista Internazionale di Scienze Economiche e Commerciali Vol. 39, pp. 617-633, July.
[21]
Wenping H (2007). “The balancing act of China’s African Policy”. China security, 3: 23-40.
[22]
Yin-Wong Cheung, Xing Wang Qian and Shu Yu (2010), “China’s Outward Direct Investment in Africa” available at http//www.hkimr.org/uploads/publication/66/ub full 02277 wp; № 13 2011-final.pdf.
[23]
Zafar A (2007). “The growing relationship between China and Sub-Saharan Africa: macroeconomic, trade, investment and aid links”. Oxford j Economics &social sciences, World Bank research observer, 22 (1): 103-130.
[24]
Zhibiao L. (2007), “Contemporary Economic and Trade Relations between China and Africa”, in Prah K. K. (Ed). Afro-Chinese Relations: Past, Present and Future, Cape Town, the Centre for Advanced Studies of African Society.
ADDRESS
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
U.S.A.
Tel: (001)347-983-5186