Foreign Capital in Africa: Theories, Strategies and Novations

Abstract

Historically, foreign capital has played a significantly larger role in the functioning of African economies than in other large developing regions. The past 20 years have been a period of rapid economic growth in Africa, accompanied by a dynamic growth in the continent’s investment attractiveness. The purpose of the article is to provide a political and economic analysis and assessment of the impact of foreign capital on the development of African countries, primarily from the point of view of achieving a difficult balance in their state policy between the interests of overcoming backwardness and ensuring economic growth, on the one hand, and overcoming the rudiments of economic dependence that have persisted since colonial times, on the other. The main attention is paid to the current stage of competition between American, Chinese and European capital in Africa For about thirty years, African countries have been pursuing a policy of encouraging the inflow of private direct investment, which, according to the leadership of these states, should contribute to sustainable growth and diversification of local economies. To a certain extent, these hopes were justified. Average annual GDP growth rates of the continent’s countries in the 21st century turned out to be the highest over long time periods for the entire period of independent development. In addition, there are certain achievements in the field of diversification of African economies and modernization of production facilities, including even the creation of separate facilities and technological production facilities (in South Africa, Kenya, Tanzania). that meet the requirements of the 4th industrial revolution. The negative shifts in the global investment climate stemming from the total sanctions and trade war unleashed by the West seriously complicate the conditions for the development of African countries. Objectively, they lead to a narrowing of the possibilities for attracting foreign capital to their economies and deriving structural advantages from the free use of FDI in their own interests. Prospects for improving the situation, it seems, for African countries today depend more on the possibilities of improving the global situation than on the efforts of national governments to create legal and economic conditions in the domestic capital markets. Otherwise, the decisive factors determining the volume and direction of the inflow of foreign capital to Africa will increasingly be the geopolitical decisions of large external players. The author concludes that at the same time, it is likely that in the medium-and long - term perspective, African countries will not only remain attractive but uneasy market for foreign capital to operate, but will gradually bypass many of the modern investment priority countries and regions in Europe, Asia and Latin America in terms of attractiveness.