A Study Oil China’s Direct Investment To Africa

With the deepening of economic globalization, the economic ties among countries aregetting closer and closer and the relevant reliance strengthens gradually. As main kind ofmeans of participation in international economic activities, investment in the internationalmarket play an important role, for each country involving in the world economy operates in amore effective and advantageous way. China is a developing country whose economicdevelopment level is not high. It needs to be pushed hard with great power by means ofinvestment for its rapid economic development. The implementation of the policy of reformand opening up in past years has strengthened China’s economic development and promotedinvestment activities with other countries in the world, especially since entering WTO,China’s foreign investment have grown remarkably. At the same time,"going out" strategyhas been well carried out, which helps the rising of its international position and provides apowerful driving force to its internal economy.As compared with international trade, China’s foreign investment started rather late, buthas developed fast, with an average annual growth rate of8%or even more. China’s directinvestment in foreign countries is mainly focus on the countries in Asia, Europe and LatinAmerica. The proportion of the investment in Africa is lower. But, with African investmentenvironment improves and the economies are getting more and more complementary, China’sdirect investment in African countries is rising day by day. Therefore, the study on theeconomic effect of investment on African countries has real practical and guiding significance,which is especially to provide strategic support to the direct investment by the Chinesegovernment and enterprises, so as to promote fast and better growth of direct investment inAfrican countries. This article, from a macro angle, delivers an overall analysis on theeconomic effect of investment, using the analysis method of econometrics model for abetter proof of the viewpoint in the essay.At first, this paper expounded some classical theories related to direct investment,including Hymer’s monopoly advantage theory, Raymond Venon’s product life cycle theory,Kiyoshi Kojima’s marginal industry expansion theory and so on. Then, it introduces thedevelopment and condition of China’s direct investment in African countries, by a combiningmethod of quantitative and qualitative analysis. Thirdly, it analyzes the economic effects ofChina’s direct investment in Africa by the qualitative analysis method and empirical researchmethod, including trade and employment effect.In qualitative analysis, it analyzes theeconomic effects of China’s direct investment in Africa, including employment and industry effect and so on. In empirical analysis, the econometric model is applied mainly based on thetotal value of China-Africa trade and China’s direct investment in Africa over the past16years, and it proves the relationship of China’s direct investment in Africa and China-Africatrade through cointegration test and Granger inspection. Finally, this paper analyzes thepresent problems in China’s direct investment in Africa and proposes relevant strategies andsolutions for the government and enterprises to the problems, so that we can develop ourinvestment to African and promote economic development of our country.