Natural Resources and Foreign Direct Investment in Africa: Evidence from Chinese Firms

Chen, Yan; Zhai, Ruirui; Zhang, Kevin H.

doi:10.3390/su12229616

Cited by 10 publications

(8 citation statements)

References 14 publications

(28 reference statements)

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“…The authors assert that investors targeting Ghana are primarily resource‐seeking. Contrary to this belief, Chen et al (2020) argue that Chinese investors targeting Africa are not attracted to resource‐rich and institution‐poor countries. Instead, they are mainly profit‐driven like any other investors.…”

Section: Discussionmentioning

confidence: 95%

Why is sub‐Saharan Africa an attractive destination to foreign land grabbers? Evidence from country characteristics

Nkansah-Dwamena

Yoon

2022

African Development Review

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Investments in large-scale land acquisition by foreigners, also referred to as land grabbing, are crucial to sub-Saharan Africa's development. Land acquisition investments have attracted considerable attention in global development circles due to their potential positive (e.g., technology transfer, employment creation, infrastructure improvement, and global market integration) and negative (e.g., environmental degradation, food insecurity, displacement, and loss of livelihoods) impacts. The factors making land investments attractive to foreign investors are unclear. This paper examines country characteristics associated with land acquisitions in 20 sub-Saharan African countries to provoke evidence-based discussion. The paper estimates regression models of land acquisitions using country-level data from 2010 to 2019 on demographic and economic conditions, natural resources, business practices and governance. The results reveal that the availability of land and water, corruption, days required to start a business, government effectiveness, cost of business startup and political stability are critical determinants of land acquisition investments in sub-Saharan Africa. The paper recommends that African governments should: (1) strengthen regulatory frameworks on foreign direct investment in land; (2) scrutinize investors' business models, technical experience and knowledge of local culture; (3) undertake rigorous environmental and social impact assessments (ESIA) to weigh the long-term costbenefits of LASLA projects; and (4) conduct transparent contract negotiations, taking political and economic power imbalances between parties into consideration.

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Section: Discussionmentioning

confidence: 95%

Why is sub‐Saharan Africa an attractive destination to foreign land grabbers? Evidence from country characteristics

Nkansah-Dwamena

Yoon

2022

African Development Review

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“…African countries generally have a low level of governance, poor national and regional governance capacity, and political instability and violent conflicts are particularly prominent (Alhassan & Kilishi, 2019), making it difficult to guarantee asset security and policy stability of investment projects, which is not only an important factor limiting China's direct investment in Africa but also a key issue restricting Africa's ability to enhance its independent development (Chen et al, 2020), while public diplomacy is conducive to a wider sharing and exchange of regional governance experiences between China and Africa bilaterally, this maybe pressures governments to provide a climate more hospitable to foreign corporations and alter patterns of domestic economic policy (Jensen, 2003), which can fundamentally improve the governance capacity of African countries, thereby enhancing the scale and quality of China-Africa investment cooperation. Accordingly, this paper proposes a third research hypothesis.…”

Section: Public Diplomacy Governance Capacity and Ofdimentioning

confidence: 99%

Public Diplomacy and Chinese OFDI: Empirical Evidence from the Africa

et al. 2023

REA

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Public diplomacy is a significant factor in promoting policy communication, people-to-people bonds, and the protection of foreign assets between two nations, but there is little research on the economic worth of public diplomacy. Python was used to crawl the daily search frequency of "China", "African countries", and related terms to construct the heat index of China-Africa public diplomacy during 2011-2019, and a two-way fixed effect model was developed to examine the impact of public diplomacy on China’s outward foreign direct investment (OFDI) in Africa. The empirical results show that public diplomacy has a considerable favorable effect on China’s OFDI in Africa, and after a series of robustness tests, the basic conclusion still holds. Heterogeneity tests show the investment promotion effect of public diplomacy is more pronounced in sub-Saharan Africa and that the promotion mechanism exhibits the characteristics of poverty alleviation and risk aversion. In addition, the promotion effect of public diplomacy on China’s OFDI becomes greater as time goes on. In terms of impact mechanisms, public diplomacy may promote OFDI by enhancing financing capacity and improving national governance. The research conclusion has policy implications for promoting China-Africa public diplomacy and investment cooperation in the new era.

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“…The second concerns OFDI influencing factors. It has been suggested that investment in developed countries can promote the technological innovation of the home country, while investment in emerging countries is not conducive to the technological innovation of the home country [4]. OFDI has been shown to be conducive to the upgrading of China's industrial structure, especially the optimization of mining and manufacturing industries [18].…”

Section: Literature Reviewmentioning

confidence: 99%

“…This finding is in line with other researchers who have argued, for example, that geographical distance and economic distance significantly promote Chinese OFDI. Chinese OFDI has a strong natural resource seeking motive, and in order to access natural resources, Chinese firms will overcome geographical distance and cultural differences to make OFDI in countries far from China [4].…”

Section: Conclusion and Recommendationsmentioning

confidence: 99%

“…Under market economy conditions, OFDI is an act of independent choice for enterprises, but the OFDI behavior of enterprises in different industries and of different nature brings different impacts on the home country, including technology, trade, resources, and environment, etc. [1][2][3][4][5]. For example, investment in developed countries can improve China's technology level, but there are few patents from local independent innovation, and Sustainability 2021, 13, 9824 2 of 19 OFDI can expand exports and alleviate the problem of insufficient resources for domestic economic development, but the degree of impact of OFDI on the home country is closely linked to factors such as technology and resource endowment of the host country [6,7].…”

Section: Introductionmentioning

confidence: 99%

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Analyzing the Characteristics and Evolution of Chinese Enterprises’ Outward Forward Direct Investment Host Country Network

2021

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With the promulgation of the “Going Global” strategy, Chinese enterprises’ outward forward direct investment (OFDI) moved towards a stage of rapid development. Based on the data concerning projects of Chinese enterprises, this paper establishes a network of OFDI host countries with the industry as the media and analyzes the network and its evolution characteristics by using the complex network method. Results show that the number of network nodes is increasing, and the edges between communities are greater, and the number of countries along the Belt and Road route is increasing. The network is a so-called small-world network. To reduce investment risks, it is necessary to identify the key nodes in the network. Based on the centrality of key nodes in complex networks, the improved “scatter degree” method is used to evaluate the importance of each host node. Results demonstrate that the United States and Australia are the most important countries for Chinese enterprises to invest overseas, followed by Brazil, Canada, Russia, Indonesia, and the United Kingdom (UK). Excluding the UK, all other countries are resource-rich. Thus, it can be seen that the FDI of Chinese enterprises is mainly resource-based investment.

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Natural Resources and Foreign Direct Investment in Africa: Evidence from Chinese Firms

Cited by 10 publications

References 14 publications

Why is sub‐Saharan Africa an attractive destination to foreign land grabbers? Evidence from country characteristics

Why is sub‐Saharan Africa an attractive destination to foreign land grabbers? Evidence from country characteristics

Public Diplomacy and Chinese OFDI: Empirical Evidence from the Africa

Analyzing the Characteristics and Evolution of Chinese Enterprises’ Outward Forward Direct Investment Host Country Network

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