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Comparative Effects of Foreign Direct Investment from China and Other Sources on Africa’s Economic Growth

Author

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  • Marvellous Ngundu

    (Marvellous Ngundu (corresponding author) is a PhD Candidate (Economics), University of Johannesburg, College of Business and Economics, South Africa.)

  • Nicholas Ngepah

    (Nicholas Ngepah is Associate Professor and Coordinator of PhD and M.Com RD Programmes, University of Johannesburg, College of Business and Economics, South Africa.)

Abstract

This study examines comparatively the growth effects of FDI from China, the European Union, the US and the rest of Asia in Sub-Saharan Africa for the period 2003–2012. We develop theoretical arguments from the existing literature to show that differences in FDI data sources, methodological and econometric approaches may be part of the explanation for mixed findings of previous empirical studies, precisely on the growth effects of Chinese FDI in Africa. Our results using bilateral FDI data compiled by UNCTAD, the FDI-augmented version of the Solow growth model and the 2SLS estimator indicate a significantly negative direct impact of Chinese FDI on growth in Sub-Saharan Africa while the impact of other FDI sources is statistically insignificant. JEL Classification: B22, E22, F43

Suggested Citation

  • Marvellous Ngundu & Nicholas Ngepah, 2020. "Comparative Effects of Foreign Direct Investment from China and Other Sources on Africa’s Economic Growth," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 14(4), pages 382-408, November.
    • Handle: RePEc:sae:mareco:v:14:y:2020:i:4:p:382-408
    DOI: 10.1177/0973801020953399
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    References listed on IDEAS

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    Cited by:

    1. Awad, Atif & Albaity, Mohamed, 2022. "ICT and economic growth in Sub-Saharan Africa: Transmission channels and effects," Telecommunications Policy, Elsevier, vol. 46(8).

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    More about this item

    Keywords

    Africa; China; Economic Growth; Foreign Direct Investment;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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