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The Impact of Chinese Foreign Direct Investment on employment and economic growth in Sub-Saharan Africa
The recent surge in Chinese Foreign Direct Investments (FDI) in the African continent has brought about much debate and speculation around the potential implications both for the continent as a whole, and for individual African countries. There are mixed sentiments regarding the impact of Chinese FD...
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| Format: | Thesis |
| Language: | English |
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Graduate School of Business (GSB)
2021
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| _version_ | 1867613257710174208 |
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| access_status_str | Open Access |
| author | Dendere, Getrude Paidamwoyo |
| author2 | Alhassan, Abdul Latif |
| author_browse | Alhassan, Abdul Latif Dendere, Getrude Paidamwoyo |
| author_facet | Alhassan, Abdul Latif Dendere, Getrude Paidamwoyo |
| author_sort | Dendere, Getrude Paidamwoyo |
| collection | Thesis |
| description | The recent surge in Chinese Foreign Direct Investments (FDI) in the African continent has brought about much debate and speculation around the potential implications both for the continent as a whole, and for individual African countries. There are mixed sentiments regarding the impact of Chinese FDI in Africa and speculation as to whether the continent has been benefiting more from Chinese investments than it has been losing. Shen (2013) points to two opposing views on China's investment in Africa. On one side China is hailed for bridging the technological and capital gap that has been hampering economic growth in Africa, and for coming to Africa's rescue by being more willing to invest in the continent than the West has been, especially after the financial crisis of 2008. However, the other side sees China as a ruthless investor, intent on plundering the African continent's resources and ultimately taking over its economies (Kolstad & Wiig, 2012). The current research focuses on an area of particular interest and importance for the African continent: specific ways in which Chinese FDI has impacted economic growth and employment in Sub Saharan Africa (SSA). The study employed a panel Autoregressive Distributed Lag model and conducted Granger causality tests on a sample of the top ten SSA recipients of Chinese FDI for the period 2003 to 2017. The results of the analysis revealed that Chinese FDI had a positive effect during this period on both employment and economic growth in Sub-Saharan Africa, with a 1% increase in Chinese FDI resulting in a marginal 0.20% increase in employment, and a 0.17 % increase in economic growth. The findings of the research support the FDI-Led economic growth theory and Robert Solow's neo-classical growth model, which argues that economic growth is achieved through an increase in capital growth, labour force, and technical knowledge (Solow, 1957). Granger causality tests indicated the presence of a bi-directional relationship between Chinese FDI and economic growth. As this was a quantitative study, and significant factors pertaining to Chinese FDI in developing countries in Africa are qualitative in nature, it is recommended that qualitative studies be conducted in order to obtain a more comprehensive picture of the impact of Chinese FDI in African countries. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/32645 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:33:15.376Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2021 |
| publishDateRange | 2021 |
| publishDateSort | 2021 |
| publisher | Graduate School of Business (GSB) |
| publisherStr | Graduate School of Business (GSB) |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/32645 The Impact of Chinese Foreign Direct Investment on employment and economic growth in Sub-Saharan Africa Dendere, Getrude Paidamwoyo Alhassan, Abdul Latif Development Finance The recent surge in Chinese Foreign Direct Investments (FDI) in the African continent has brought about much debate and speculation around the potential implications both for the continent as a whole, and for individual African countries. There are mixed sentiments regarding the impact of Chinese FDI in Africa and speculation as to whether the continent has been benefiting more from Chinese investments than it has been losing. Shen (2013) points to two opposing views on China's investment in Africa. On one side China is hailed for bridging the technological and capital gap that has been hampering economic growth in Africa, and for coming to Africa's rescue by being more willing to invest in the continent than the West has been, especially after the financial crisis of 2008. However, the other side sees China as a ruthless investor, intent on plundering the African continent's resources and ultimately taking over its economies (Kolstad & Wiig, 2012). The current research focuses on an area of particular interest and importance for the African continent: specific ways in which Chinese FDI has impacted economic growth and employment in Sub Saharan Africa (SSA). The study employed a panel Autoregressive Distributed Lag model and conducted Granger causality tests on a sample of the top ten SSA recipients of Chinese FDI for the period 2003 to 2017. The results of the analysis revealed that Chinese FDI had a positive effect during this period on both employment and economic growth in Sub-Saharan Africa, with a 1% increase in Chinese FDI resulting in a marginal 0.20% increase in employment, and a 0.17 % increase in economic growth. The findings of the research support the FDI-Led economic growth theory and Robert Solow's neo-classical growth model, which argues that economic growth is achieved through an increase in capital growth, labour force, and technical knowledge (Solow, 1957). Granger causality tests indicated the presence of a bi-directional relationship between Chinese FDI and economic growth. As this was a quantitative study, and significant factors pertaining to Chinese FDI in developing countries in Africa are qualitative in nature, it is recommended that qualitative studies be conducted in order to obtain a more comprehensive picture of the impact of Chinese FDI in African countries. 2021-01-22T07:09:24Z 2021-01-22T07:09:24Z 2020 2021-01-22T06:09:11Z Master Thesis Masters MCom http://hdl.handle.net/11427/32645 eng application/pdf Graduate School of Business (GSB) Faculty of Commerce |
| spellingShingle | Development Finance Dendere, Getrude Paidamwoyo The Impact of Chinese Foreign Direct Investment on employment and economic growth in Sub-Saharan Africa |
| thesis_degree_str | Master's |
| title | The Impact of Chinese Foreign Direct Investment on employment and economic growth in Sub-Saharan Africa |
| title_full | The Impact of Chinese Foreign Direct Investment on employment and economic growth in Sub-Saharan Africa |
| title_fullStr | The Impact of Chinese Foreign Direct Investment on employment and economic growth in Sub-Saharan Africa |
| title_full_unstemmed | The Impact of Chinese Foreign Direct Investment on employment and economic growth in Sub-Saharan Africa |
| title_short | The Impact of Chinese Foreign Direct Investment on employment and economic growth in Sub-Saharan Africa |
| title_sort | impact of chinese foreign direct investment on employment and economic growth in sub saharan africa |
| topic | Development Finance |
| url | http://hdl.handle.net/11427/32645 |
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