Influence of foreign direct investment from China on achieving the 2030 Sustainable Development Goals in African countries

Abstract

The lack of funding is one of the most important challenges in achieving the 2030 Sustainable Development Goals (SDGs) in African countries. Can foreign direct investment (FDI) from China as an important source of external financing help African countries achieve their SDGs? This study used the panel data random effects model to analyze the influence of China’s direct investment on SDG scores. Then, the study conducted the ordered probit model to examine the influence of FDI from China on the trend of achieving each SDG in Africa, with the SDGs being grouped into social, economic, and environmental dimensions. Results showed that China’s direct investment contributed to the achievement of SDGs in Africa. FDI from China positively influenced the SDG score in general and some of the 17 SDG scores including SDG 7 (Affordable and Clean Energy), SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), SDG 12 (Responsible Consumption and Production), SDG 13 (Climate Action), and SDG 15 (Life on Land). The relationship between FDI from China and the trends for SDG 7, 8, 9, 11 (Sustainable Cities and Communities), and 14 (Life below Water) was significantly positive. However, the SDG scores above belonged to the economic and environmental dimensions, whereas FDI from China had no significant influence on the social-dimension SDG scores and trends. To further expand the scale of China’s direct investment, more investment scopes, particularly those in the social dimension, should be developed. Moreover, China–Africa cooperation should be deepened to create a good investment environment for the achievement of African countries’ SDGs and to facilitate China’s implementation of promoting the development of developing countries as mentioned in the 2030 Agenda of Sustainable Development and building the China–Africa community with a shared future.