African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 3968

Full Length Research Paper

Effect of Chinese outward foreign direct investment on international trade of Africa

Wang Aihu
  • Wang Aihu
  • Department of Logistics and Supply Chain Management, School of Business Administration, South China University of Technology, China.
  • Google Scholar
Adolphe Bertrand Chedjou
  • Adolphe Bertrand Chedjou
  • Department of Logistics and Supply Chain Management, School of Business Administration, South China University of Technology, China.
  • Google Scholar


  •  Received: 30 December 2017
  •  Accepted: 19 March 2018
  •  Published: 14 April 2018

Abstract

This article aimed at analyzing the relationship between foreign direct investments from China and the international trade of African countries. International trade was found to be affected by the degree of openness of the economy, the level of exports and the level of imports. The findings were brought out by using a Vector Error Correction Model in a cylindrical panel of 52 African countries on a period going from 2000 to 2015. The three main findings were: There was a two-way relationship between foreign direct investment and international trade; foreign direct investment had a strong positive influence on international trade; trade exerted a weak and negative influence on foreign direct investment. Thanks to this study, it was indicated to recommend that alternation be sought by African heads of states through transparent elections to guarantee political stability necessary to attract foreign direct investment.

Key words: Foreign direct investment, outward Chinese foreign direct investments, international trade, exports, Imports, Africa.