Determinants of Chinese FDI to Sub-Saharan Africa: a regional analysis and Guinea-Bissau case study

Abstract

This thesis aims to contribute to the literature concerned with putting the nature of South-South economic ties into perspective. Specifically, it empirically examines which characteristics of Sub-Saharan African nations are related to higher foreign direct investment inflows from China. A comprehensive literature review yields a range of factors that are hypothesized to play a role in this regard. For a case study of Guinea-Bissau results suggest that even though high endowments of natural resources are inherent to the country, Chinese money inflows in the form of foreign direct investments only occur sporadically. In the regional comparison my panel data regression analysis yields that the country factors with significant, positive association to Chinese direct-investment sums are more democratic regimes, bigger markets, a non-French and non-British colonial legacy, as well as a higher agricultural potential. Contrary to what the existing literature suggests, no evidence is found that countries with higher natural-resource endowments actually receive more foreign direct investments from China.