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1、The Economic Determinants of Chinese FDI to AfricaName: Tianwen HuanDepartment: Economic Development and Policies Kobe University11SummaryForeign direct investment (FDI) has become an increasingly popular topic in recent decades and China, as a new major emerging investor, has drawn more and more at
2、tention among world economies. As Chinese foreign direct investment has played a very important role in economic activities in Africa, this paper empirically analyzes the economic determinants of Chinese FDI to 37 African countries from 2003 to 2012. This paper first measures exchange rate volatilit
3、y using the GARCH (1,1) model. Then, all the variables presented in current US$ were adjusted by using the US GDP deflator in units of one million dollars. As the argument about the unit root test for panel data, two interpretative models are used in the final calculation to analyze the relationship
4、 between variables and Chinese FDI to Africa.The results, which illustrate how Chinese FDI to Africa is driven by characteristics of the host countries, can be summarized as follows:First, GDP can be seen as one of the most important considerations to attract Chinese FDI to Africa, which means Afric
5、an countries with a larger market size normally receive more Chinese FDI. In addition, Chinese investment to Africa is empirically generated as a supplementary part to Chinese exports to Africa. Interestingly, if the amount of imports from China to a single country grows too quickly, Chinese OFDI de
6、creases to that country. Second, another determinant of Chinese OFDI to Africa can be explained by the phenomena of resource seeking. In this paper, fuel exports are used as a proxy for resource seeking. The result shows that Chinese OFDI is attracted to countries with larger energy resources. Final
7、ly, this paper finds that the relationship between macroeconomic instability and Chinese OFDI to Africa is insignificant. However, countries with a lower exchange rate attract more Chinese OFDI than countries with higher exchange rate.ContentsAbstract11. Introduction12. Literature Review32.1 Market-
8、seeking and FDI32.2 Resource-seeking and FDI42.3 Risk Aversion and FDI52.4 Measure of Exchange Rate Volatility62.5 Summary73. Empirical Model and Data103.1 Interpretative Model103.2 Expected Results124. Methodology and Econometric Specification144.1 Econometric Methodology: Fixed Effects Panel Data1
9、54.2 Exchange Rate Volatility Estimations155. Empirical Analyses196. Conclusion216.1 Research Conclusion216.2 Research Evaluation22References24Appendix 128Appendix 231Acknowledgements33The Economic Determinants of Chinese FDI to AfricaAbstract: Foreign direct investment (FDI) has become an increasin
10、gly popular topic in recent decades and China, as a new major emerging investor, has drawn more and more attention among world economies. As Chinese foreign direct investment has played a very important role in economic activities in Africa, this paper empirically analyzes the economic determinants
11、of Chinese FDI to 37 African countries from 2003 to 2012. This paper first measures exchange rate volatility, stemming from the exchange rate, as one of the determinants by using the GARCH (1,1) model. The results of this study showed the fact that big market size, imports from China, abundant energ
12、y resources and low exchange rate of the host country would attract Chinese FDI. However, a too speedy growth of imports from China would decrease the FDI flowing into African economies.Keywords: Chinese FDI; Africa; Economic determinants; GARCH1. IntroductionAccording to Ruiza and Pozob (2008), for
13、eign direct investment (FDI) has become an increasingly important engine to foster growth and economic development in developing countries. Because of the long-term nature, FDI is seen as being less susceptible to a crisis and has the potential to increase productivity via generating employment oppo
14、rtunities and transferring skills and technology. On the other hand, Nourbakhshian et al. (2012) point out that home countries are hoping to push FDI into developing countries using guarantee funds and match marketing. In comparison to other types of capital inflows, these foreign direct investment
15、benefits have made it an attractive economic development strategy in many developing countries.Among these developing countries, China is a rising economic power. And its economy and its relationship with other countries become more and more arresting. Sanfilippo (2010) shows that Chinas vigorous gr
16、owth over the past decades has now developed to a new stage. Official analysis in the most recent years show that, China is no longer only participated in the world economy as one of the largest recipients of foreign direct investment, but also regarded as a major source of foreign direct investment among developing countries. UNCTAD (2013) points out that China
