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
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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
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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.
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
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