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Export Determinants of China’s FDI in Africa: Empirical Evidence from Oil/Minerals Exporting African Countries

Author

Listed:
  • Kafilah Lola GOLD

    (Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur Malaysia.)

  • Rajah RASIAH

    (Asia-Europe Institute, University of Malaya, 50603, Kuala Lumpur, Malaysia.)

  • Kian Teng KWEK

    (Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur Malaysia.)

  • Murtala MUHAMMAD

    (Faculty of Arts and Social Sciences, University of Malaya, 50603 Kuala Lumpur, Malaysia.)

Abstract

This paper investigated the determinants of China’s FDI flow towards Africa’s oil/minerals exporting countries from 2003 to 2017 using the UN-Comtrade Harmonized System (HS) nomenclature trade data and UNCTAD China’s FDI data to examine the extent to which sector trade, institution and other variables determine China’s FDI. The econometric approach employed for the outlined model is random effects, generalized least squares and instrumental variable two-stage least squares. For the trade variables, the findings indicate that oil/minerals have higher magnitude and a positive significance to support the effect on the FDI flow. In other words, China’s FDI flow in Africa is inclined towards the extractive sector. Furthermore, the institutional quality finding is negative and significant to justify the upsurge of Chinese investment in weak politically stable regions

Suggested Citation

  • Kafilah Lola GOLD & Rajah RASIAH & Kian Teng KWEK & Murtala MUHAMMAD, 2020. "Export Determinants of China’s FDI in Africa: Empirical Evidence from Oil/Minerals Exporting African Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 119-133, September.
    • Handle: RePEc:rjr:romjef:v::y:2020:i:3:p:119-133
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    More about this item

    Keywords

    investment; trade; China; Africa; institutions; instrumental-variable (IV) estimation;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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