The Impact Of Chinese FDI On Economic Growth: An Empirical Study From Sub-saharan Africa(SSA)

The main objective of this research is to analyze the impact of Chinese Foreign direct investment(FDI) in Sub- Saharan Africa and to also examine the impact that Chinese FDI has on the industrial structure, the transfer of technology and employment creation in the region. Although, in absolute terms, FDI inflows to Sub-Saharan Africa have risen significantly over the recent three decades and there are today many theories and empirical studies regarding FDI. The results and conclusions go in different directions and much disagreement on whether or not FDI actually contributes to growth. However, irrespective of disagreements on whether or not FDI contributes to growth, there is a general agreement around the theory that FDI promotes growth through other factors in the host countries. Thus, this study investigates the channels through which FDI may contribute to growth in Sub-Saharan Africa. This study investigates the effects of four factors – GDP growth, industrial structure, Technology transfer employment creation – on the FDI-Growth relationship for Su Saharan Africa for the period 1995-2014. The results indicate that there is a positive relationship between Chinese FDI and three of the variables namely Gross Domestic Product(GDP), industrial structure(IND) and employment(EMP) in the Sub-Saharan African region. However, contrary to other studies, this study finds that Chinese FDI has a negative relationship with the variable Technology transfer(TECH) in Sub-Saharan Africa. All calculations and estimations are conducted using Gretl and SPSS statistical analysis software.