Export determinants of China's FDI in Africa: Empirical evidence from oil/minerals exporting African countries

• Main Authors: Gold, Kafilah Lola, Rasiah, Rajah, Kwek, Kian Teng, Muhamad, Murtala
• Format: Article
• Published: Inst Economic Forecasting 2020
• Subjects: HC Economic History and Conditions
• Online Access: http://eprints.um.edu.my/37020/

This paper investigated the determinants of China's FDI flow towards Africa's oil/minerals exporting countries from 2003 to 2017 using the UN-Comtrade Harmonized System (HS) nomenclature trade data and UNCTAD China's FDI data to examine the extent to which sector trade, institution and other variables determine China's FDI. The econometric approach employed for the outlined model is random effects, generalized least squares and instrumental variable two-stage least squares. For the trade variables, the findings indicate that oil/minerals have higher magnitude and a positive significance to support the effect on the FDI flow. In other words, China's FDI flow in Africa is inclined towards the extractive sector. Furthermore, the institutional quality finding is negative and significant to justify the upsurge of Chinese investment in weak politically stable regions.