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The role of China's aid and ODI in the economic growth of African countries

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  • Dong, Yan
  • Fan, Cijun

Abstract

Has external capital, such as foreign aid and foreign direct investment (FDI), been able to help the economic growth in host countries? Our paper examines the effects of China's aid and its overseas direct investment (ODI) on economic growth in 47 African countries from 2003 to 2013. We find that China's aid has significant positive effects on African economic growth. However, China's ODI plays no major role in African countries' economic growth. In addition, the relationship between aid and growth varies according to the different categories of aid, and its marginal contribution is nonlinear.

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  • Dong, Yan & Fan, Cijun, 2020. "The role of China's aid and ODI in the economic growth of African countries," Emerging Markets Review, Elsevier, vol. 44(C).
    • Handle: RePEc:eee:ememar:v:44:y:2020:i:c:s1566014119305205
    DOI: 10.1016/j.ememar.2020.100713
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    2. Nugent, Jeffrey B. & Lu, Jiaxuan, 2021. "China's outward foreign direct investment in the Belt and Road Initiative: What are the motives for Chinese firms to invest?," China Economic Review, Elsevier, vol. 68(C).
    3. Gong, Do Young & Kim-Leffingwell, Sanghoon & Shen, Shuyuan & Yang, Yujeong, 2024. "Money backfires: How Chinese investment fuels anti-China protests abroad," World Development, Elsevier, vol. 178(C).
    4. Tan Li & Qing Liu & Lihe Xu, 2024. "Whose Aid is Beneficial to Firms' Exports? Evidence from a Post‐disaster Aid Experiment in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 32(2), pages 73-96, March.

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    More about this item

    Keywords

    Economic growth; Aid; Overseas direct investment (ODI); Africa;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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