Chinese Investment in Africa: Exploring Economic Growth Through Export Diversification

This study investigates the pivotal role of Chinese Outward Foreign Direct Investment (OFDI) in stimulating economic growth through export diversification in African nations. Leveraging a comprehensive dataset spanning 41 African countries from 2005 to 2020, advanced econometric methods including system GMM and PCSE estimators were employed for rigorous analysis. Key findings unveil a negative and substantial impact of Chinese OFDI on economic growth in Africa. Further analysis highlights that an increase in Chinese OFDI in Africa has the potential to contribute to export diversification, subsequently driving economic growth. Moreover, our study reveals a nuanced link between Chinese OFDI, export diversification, and economic growth across African regions and income groups. Notably, the analysis demonstrates that diversified economies exhibit a heightened capacity to drive economic growth. This special quantitative achievement contributes to a nuanced understanding of the intricate dynamics that underlie the economic transformations brought about by Chinese investments within African nations. Furthermore, we establish that fostering collaborative partnerships between African enterprises and Chinese counterparts holds the key to unlocking new avenues for innovation and technology transfer. By leveraging the expertise and resources of Chinese companies, African businesses can enhance their competitive edge and contribute meaningfully to environmental conservation efforts.