Does Chinese investment affect Sub-Saharan African growth?

Abstract

Purpose

The purpose of this paper is to examine the impact of foreign direct investment (FDI) on GDP growth in Sub-Saharan Africa (SSA) with particular emphasis on Chinese FDI.

Design/methodology/approach

Based on the growth accounting model, a dynamic GMM estimation is used. To compare the results with previous findings, the paper also uses OLS and fixed effect estimates.

Findings

The paper finds that neither FDI net inflows in SSA nor Chinese FDI has a significant effect on economic growth in SSA. By testing other economic growth determinants in SSA countries based on growth accounting theory, the paper finds the change in capital stock per labor has a persistent and significant positive impact on growth in SSA.

Originality/value

This study provides new evidence on the influence of Chinese FDI on the growth of the SSA economies. There are very few empirical studies that analyze the growth of the SSA economies from a macroeconomic perspective using a partial equilibrium model. This paper tests the determinants of GDP growth using key macroeconomic variables and provides new insights into the determinants of GDP growth in the SSA countries.

Citation

Zhang, J., Alon, I. and Chen, Y. (2014), "Does Chinese investment affect Sub-Saharan African growth?", International Journal of Emerging Markets, Vol. 9 No. 2, pp. 257-275. https://doi.org/10.1108/IJoEM-10-2013-0171