A Panel Data Analysis of the Impact of Chinese Foreign Direct Investment (FDI), Remittances and Foreign Aid on Human Capital Growth and Brain Drain in Africa

Odette Tougem Tasinda,Tian Ze,Sunday Adiyoh Imanche

doi:10.4236/jdaip.2021.93012

Odette Tougem Tasinda, Tian Ze + Show 1 more

Open Access

https://doi.org/10.4236/jdaip.2021.93012

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Abstract

The main purpose of this research was to analyze the impact the Chinese foreign direct investment (FDI), remittances, and foreign aid have had to human capital growth (HCG) and brain drain. The study data were collected from five African countries (Nigeria, Kenya, Ghana, South Africa, and Morocco) from 2009 to 2018. Secondary sources were used in data collection, then autoregressive distributed lag (ARDL) modeling was used in the analysis. Before modelling was done, co-integration tests and panel unit were applied. The results revealed that Chinese FDI, remittances, and foreign aid had a significant and positive impact on HCG in the long but not the short-run. Besides, remittances, Chinese FDI, and foreign aid demonstrated significant negative impacts on brain drain in the long term, not in the short term. This study makes important practical and theoretical contributions about the roles of Chinese FDI, remittances, and foreign aid in the reduction of brain drain and the growth of human capital.

Highlights

Brain drain is referred to the depleting of the highly skilled individuals from developing countries to the other countries
The results revealed that Chinese foreign direct investment (FDI), remittances, and foreign aid had a significant and positive impact on human capital growth (HCG) in the long but not the short-run
As a means to address this gap in the literature, the third objective of this study was to analyze the influence of Chinese FDI, remittances, and foreign aid on HCG

Summary

Introduction

Brain drain is referred to the depleting of the highly skilled individuals from developing countries to the other countries Recent study has shown that over the past 25 years, most of the highly skilled and best trained individuals from Africa have migrated to the developed counties [1]. There are societal, institutional, economic, and financial costs that come along with Brain Drain These costs end up increasing the pressure on African nations since these nations are working towards overcoming the shortage of well-equipped. To fill this gap, African counties spend a huge part of their economic resources on developing human capital and the employment of individuals.

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