The Impact Of Chinese Outward Foreign Direct Investment On Sub-Saharan Africa And South America Economic Growth

Thanks to the opening-up policy,WTO accession,expanding international relationship,agreements,and investments,China has been developing rapidly over the last few decades.What is more,China looks for foreign research and business opportunities for investments abroad in many different sectors,like raw materials,manufacturing,transport,services,and many more.According to available literature and data,both Africa and South America have become the areas of Chinese investment interests in recent years.The paper is about the impact of COFDI on Sub-Saharan Africa and South America’s economic growth between 2005-2019 of nine SSA countries and nine South American countries.They have been decided to consider because of the existing and available data from World Bank,UNCTAD,and China Global Investment Tracker.The modernization theory is used to analyze the relation and correlation between COFDI and the economic growth of studied countries using linear regression with the OLS method by excluding control variables one by one to check how they affect the calculations and form a final model.The findings indicate that COFDI has a significant effect on host countries’ economic growth,and what is interesting,the result is more important in South American countries than in SubSaharan African studied countries.Additionally,the Growth Rate of Population(GPO)and Inward Foreign Direct Investment(IFDI)are statistically significant and correlated with the growth in this research.The large population size might encourage Chinese investors to act in studied countries actively.Trained labor skilled,and qualified people are more attractive for Chinese investors interested in manufacturing,services,and natural resources,where physical laborers are needed.To IFDI,the crowd out effect has not been noticed there.Additionally,it is evident that investors inside and outside the recipient countries might be willing to cooperate and support each other.They can run co-investments and have more extensive benefits from them.What is interesting is that there might be an increase in production capacity and services that China needs and looks for in developing countries.