The Study Of The Efficiency Of China’s FDI In East Africa

In a globalizing world, FDI has become an important way to boost economic growth and expand market share for a country. Africa, as newly emerging developing countries, has become an important force to promote the development of world economy and has become popular countries in world’s investment. To invest directly in Africa coincides to the Chinese economic policy and Africa market demand, so in recent years, Chinese FDI stock in East Africa has raised rapidly, Which impacts the east African nations’ economic development greatly. However, literature on the topic of efficiency of Chinese FDI in East Africa is relatively rare in domestic and abroad academia. East Africa is an important economic entity in Africa plate, thus, analysis of economic efficiency of Chinese FDI in East Africa separately is of great significance to the academia. Evaluation of Chinese FDI efficiency provides a new research perspective for the research of Chinese investment in East Africa, bilateral trade and enriches the theory of the Chinese FDI in Africa. This thesis analyzes the efficiency level of Chinese FDI in East Africa, which provides decision-making reference for the Chinese government and Chinese enterprises in East Africa.This thesis firstly analyzes the shortage of Chinese FDI in East Africa from the qualitative perspective. Based on DEA model, this thesis secondly discovers that Chinese FDI efficiency isn’t high in East Africa from the quantitative perspective, and has found out the causes of low FDI efficiency. Lastly this research put forward countermeasures and suggestions. This thesis can be divided into three parts. The first part is the introduction, which briefly describes the research background, research significance, research situation at home and abroad. This part makes the research contents, research methods and the issues to solve in this paper clear, and points out the innovation and deficiency of this research. The second part is the body of this research. This part firstly describes the related theory of this paper and constructs a model of theory to analyze the efficiency of FDI. This paper analyzes the economic thought of using DEA model to research the efficiency Chinese FDI in East Africa, and the relationship between the CCR model and BCC model. After analyzing, it finds out that the function of DEA model is consistent with the purpose of this study0, and it has great advantages in using DEA model for analysis of Chinese FDI in East Africa. DEA model is the theoretical model basement of the empirical analysis in this paper. Second, it qualitatively analyzes the general economic situation and the status of the Chinese FDI in East Africa, and discovers that, in recent years,overall economic foundation is weak in East Africa, but in good economic trend. From comparative analysis, this paper find that Chinese FDI in East Africa shows the general characteristics of increasing amount, but FDI isn’t distributed balanced in East Africa countries. Chinese FDI in East Africa has made great progress and achievements, such as increasing investment scale, diversifying sources of investment, enriching investment field, etc., but problem and deficiency is also exists, such as too concentrated investment, unstable growth rate, serious waste of capital, etc. Third, based on DEA model, is to have an empirical analysis of efficiency Chinese FDI in East Africa from quantitative perspective. According to the DEA evaluation steps, this paper measures the efficiency of FDI in East Africa with calculating technical efficiency, pure technical efficiency, scale efficiency and FDI redundancy. Through DEA analysis, this paper discovers the overall efficiency level of Chinese FDI in East Africa is not high, and the reason mainly lies in the invalid Scale Efficiency and Pure Technical Efficiency in some countries. If investors can make an adjustment of the scale of FDI and improve the ability to adapt to the market environment, Chinese FDI efficiency will be greatly improved. The third part is the countermeasures and suggestions. Based on the factors influencing the FDI efficiency discovered from the qualitative analysis and quantitative analysis, this thesis put forward many feasible countermeasures and suggestions from the aspect of adjusting FDI scale as well as improving the decision-making ability of investors.