Modern Trends in Chinese Foreign Direct Investment in Africa: An OLI Approach

Abstract

This study evaluates the subtle differences that the various types of foreign direct investment (FDI) of China in Africa offers, as revealed by the data, using the ‘Ownership, Location and Internalisation Advantages’ OLI approach. Chinese FDI is analysed using source country comparisons, sectoral comparisons and an investigation of Chinese fdi practices. Data visualisation techniques and analyses infer similarities and differences between Chinese and other investors in Africa. These alternativ emethods are driven by the nature of the available data and its resulting statistical possibilities. The significance of this study is that it disambiguates the available data and compares along theory. Many stylised facts are assumed concerning Chinese FDI; this study, however, quantifies and tests these assumptions. The results show that China follows investment patterns of other investors, although heavily skewed towards oil, coal and gas, and other resource sectors. China otherwise tends to invest in medium growth, diversified economies, predominantly Nigeria and Egypt; except in Ethiopia where investment in communications dominates;Cameroon where chemicals dominate; Angola where investments in real estate outperform investment in the coal, oil and gas; and in South Africa and Tanzania that have a more even spread between sectors compared to the rest of the continent.