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Better the Devil You Know? Chinese Foreign Direct Investment in Africa

Better the Devil You Know? Chinese Foreign Direct Investment in Africa What are the dominant motives behind China's increasing financial presence in Africa in recent years? In this article, the authors present new quantitative evidence on Chinese outward foreign direct investment flows to 29 African countries in the period 2003–2006. They find that Chinese foreign direct investment is attracted to countries with large natural resources, and more so the worse the institutional environment of host countries. This is problematic in terms of development impact, as Chinese investment feeds into the institutional dysfunctions of resource-rich countries. However, China is not different from other investors in this respect; exploiting resources and weak institutions appears to be the name of the investment game in Africa. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal Of African Business Taylor & Francis

Better the Devil You Know? Chinese Foreign Direct Investment in Africa

Journal Of African Business , Volume 12 (1): 20 – Mar 28, 2011

Better the Devil You Know? Chinese Foreign Direct Investment in Africa

Abstract

What are the dominant motives behind China's increasing financial presence in Africa in recent years? In this article, the authors present new quantitative evidence on Chinese outward foreign direct investment flows to 29 African countries in the period 2003–2006. They find that Chinese foreign direct investment is attracted to countries with large natural resources, and more so the worse the institutional environment of host countries. This is problematic in terms of development...
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Publisher
Taylor & Francis
Copyright
Copyright Taylor & Francis Group, LLC
ISSN
1522-9076
eISSN
1522-8916
DOI
10.1080/1536710X.2011.555259
Publisher site
See Article on Publisher Site

Abstract

What are the dominant motives behind China's increasing financial presence in Africa in recent years? In this article, the authors present new quantitative evidence on Chinese outward foreign direct investment flows to 29 African countries in the period 2003–2006. They find that Chinese foreign direct investment is attracted to countries with large natural resources, and more so the worse the institutional environment of host countries. This is problematic in terms of development impact, as Chinese investment feeds into the institutional dysfunctions of resource-rich countries. However, China is not different from other investors in this respect; exploiting resources and weak institutions appears to be the name of the investment game in Africa.

Journal

Journal Of African BusinessTaylor & Francis

Published: Mar 28, 2011

Keywords: Africa; China; FDI; institutions; natural resources

References