The principal aim of this thesis is to examine the impact of Chinese Foreign Direct Investment (FDI) on three issues that are important to Africa: export diversification, technical progress, and income growth using a panel of host African countries to gain a better understanding of China's contribution to Africa's overall economic development. In particular, this thesis empirically investigates the impact of China's rising economic prominence in Africa on the continent's overall development by focusing on issues critical to Africa's development. To achieve this aim, this thesis is structured under three major empirical chapters/essays in addition to the introductory and concluding chapters. The first empirical chapter (i.e., chapter two) addresses the interrelationship between China's outward FDI, institutional quality, and export diversification in Africa. Specifically, the chapter assesses the role of China's FDI outflows and institutional quality in the export diversification of the host African countries. The empirical findings presented in this chapter indicate that China's outward FDI has no bearing on export diversification in Africa and that export diversification in Africa is influenced by domestic capital, infrastructure, and institutional qualities. The second empirical chapter goes on to examine the effect of China's outward FDI and international trade on the technical progress of the host African countries. The analysis in this chapter empirically tests the hypothesis that China's foreign investment results in some economic externalities which, via backward and forward linkages, promote productivity growth. The empirical results presented in this chapter show that China's outward FDI is a conduit for productivity spillover, although the size of the spillovers is small. The final empirical chapter explores the implications of China's outward FDI on income per capita growth in Africa and investment outflows of other countries (i.e., the United States and Europe). The empirical results presented in this chapter indicate that although China's outward FDI has contributed to per capita income growth in Africa, outward FDI by Europe has far-reaching impact on the per capita income growth. The chapter also finds that China's investment outflows do not displace those of Europe in Africa, and as such, China's sudden prominence in Africa is not a threat to Europe's economic interest in the continent. In general, the overall contribution of this thesis is that it offers a better understanding of China's economic impact on Africa's overall economic development.
|Date of Award||28 Jul 2023|
|Supervisor||Abhijit Sharma (Main Supervisor)|