Abstract
This article aimed at analyzing the relationship between foreign direct investments from China and the international trade of African countries. International trade was found to be affected by the degree of openness of the economy, the level of exports and the level of imports. The findings were brought out by using a Vector Error Correction Model in a cylindrical panel of 52 African countries on a period going from 2000 to 2015. The three main findings were: There was a two-way relationship between foreign direct investment and international trade; foreign direct investment had a strong positive influence on international trade; trade exerted a weak and negative influence on foreign direct investment. Thanks to this study, it was indicated to recommend that alternation be sought by African heads of states through transparent elections to guarantee political stability necessary to attract foreign direct investment. Key words: Foreign direct investment, outward Chinese foreign direct investments, international trade, exports, Imports, Africa.
Highlights
In 1955 at the Bandung conference in Indonesia, the first diplomatic contact between China and Africa was made
The results showed a potential development for China: the increase in imports determined the increase in FDI from regions to China and an increase in exports from China to regions or home country
For all 832 observations (52 countries x 16 years), the most dispersed distributions are those related to the governance variables, which have the highest coefficients of variation (CV), 2,927 for the control of corruption, and 0.910 for political stability (Table 3)
Summary
In 1955 at the Bandung conference in Indonesia, the first diplomatic contact between China and Africa was made. Relations have since become tighter and China has become the largest trading partner for Africa. China has continued since this period to support African countries. Chinese investment in Africa has increased dramatically in the last 15 years (MOFCOM, 2017). This increase of investment in Africa is part of a growing social, economic and political cooperation between China and Africa; the relationship is embodied in the Forum on China-Africa Cooperation (FOCAC)
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