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.
Highlights
The amazing growth1 of China and its capacity to get out of the underdevelopment within thirty years and to become both one of world emergent power, and the main exporter of manufactured goods draws the attention of numerous developing countries
Since 1993 China became the largest recipient of Foreign Direct Investment (FDI) among emerging countries, with an increase of 70% over 2009 and exceeded over 50 billion dollar USD in 2015, while bilateral trade between the Chinese and Africa has exceeded more than 300 billion USD (According to the Standard Bank of South Africa)
In order to understand the effects of Chinese FDI in Africa, the rest of this paper is structured as follows: the second section gives an overview of the presence of China in Africa in a historic context, the third section is to see how was the Chinese FDI in Africa by sector between 1979-2000 and to see Chinese FDI flows to Africa between 2003 - 2011, the fourth section provides an overview literature regarding the relationship between FDI and economic growth in Africa while, the fifth section presents the effects of Chinese FDI in Africa, and the sixth section it’s the conclusion and future prospect
Summary
The amazing growth[1] of China and its capacity to get out of the underdevelopment within thirty years and to become both one of world emergent power, and the main exporter of manufactured goods draws the attention of numerous developing countries. It should be noted that China has been present in Africa since the late 1950s, but with regard to the increase in foreign direct investment Chinese in Africa, is a recent phenomenon dating back in the 2000s with a sharp increase observable in most African countries. This is due to the creation in 2000 of the first forum on Sino-Africa cooperation (FOCAC), which became an important platform for dialogue between China and African countries, which is an effective regime of pragmatic cooperation of the two sides. In order to understand the effects of Chinese FDI in Africa, the rest of this paper is structured as follows: the second section gives an overview of the presence of China in Africa in a historic context, the third section is to see how was the Chinese FDI in Africa by sector between 1979-2000 and to see Chinese FDI flows to Africa between 2003 - 2011, the fourth section provides an overview literature regarding the relationship between FDI and economic growth in Africa while, the fifth section presents the effects of Chinese FDI in Africa, and the sixth section it’s the conclusion and future prospect
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