Effets Of Chinese Foreign Direct Investment (FDI) On The Economic Growth Of Niger

Niger, a country of West Africa, knows during the last decade a flow of foreign investors because of enormous natural potentialities contained in the country. Indeed, Niger suffers from a high level of poverty, inequality of income, unemployment... All these problems have a direct effect on economic growth. Thus, to improve the economic situation of the country and achieve the goal of the Millennium, it would be wise to encourage foreign firms to invest in various sectors such as agriculture, industry, education, health... the injection of these investments will help to eradicate poverty and improve the living conditions of the population.This study was investigated on the motive of Chinese SMEs to invest in Niger and the effect of these investments on economic growth of Niger. The study examine empirically the motives of Chinese SMEs operating in Niger and determined if they were driven by the supply/resource-based or the market driven factors. The study also identified the external environmental factors which can hinder foreign SMEs from investment in Niger.The survey method was utilized to collect data. Data was gathered through self-administered questionnaires. The specific methods of data analyses used include descriptive statistics, cross-tabulations, frequency tables and T-tests. The VAR (Vector Autoregressive) model was utilized in this study to explore the causal relationship between Chinese FDI and economic growth for the period1990-2012in Niger.The research findings showed that the motives of the Chinese SMEs foreign direct investment in Niger was predominantly market-seeking FDI and demonstration effet. With in the Granger Causality framework, this study finds a long-term relationship between Chinese FDI and economic growth. This finding is a long-term relationship between variables but failed to establish the direct correlation between each variable. This can be explained by the fact that low volume flows of Chinese FDI in Niger have major consequences on the economic system, particularly on employment, inflation and GDP. More, this weakness is emphasized by the insignificance of the volume of capital flows (domestic and foreign) circulating in the Nigerien economy and domestic savings. The study provided some recommendations to ameliorate the external business environment of Niger so that more efficacious and efficient FDI is attracted. To attract sufficient supply/resource predicated FDI, the regime additionally needs to ameliorate its labour regulations, thus facilitating the hiring process. In addition, Niger has to make its legal system more efficient by abbreviating the long procedures and duration of court judgments as well as making it more affordable.