The Determinants Of China's Direct Investment In Algeria

The respective evaluations of China's FDI both outward and inward in these tow last decades are indicative of the important role played by China in the contribution of the global economic,as well as its role and importance through others factors to made China second largest country in the world,it should be noted in this domain that China's firms has increased more their interests,presence and investments to the developing and transited countries in Latin America,Asia and Africa in parallel of developed countries as it is known.Conversely,Algeria,this Arabic,center North Africa and vast source country of natural wealth stayed during 40 years depending on oil and gas as the only source of revenue and dominated exported product considered as an unhealthy economic phenomena with negative impact,has finally changed its economic policy and strategy in a curve of attraction of foreign investment,but still weak and fair from attracting either FDI from China or other countries.In this context,due to lots of encouraged factors and determinants,China's FDI in Algeria is existed since 2000,and has known a significant increase during the two last decades with huge and big Sino-Algerian trade relationship the same time,infrastructure and energy sectors are till now the dominated China's FDI in Algeria.According to the previous,this paper attempts to investigate about what are the determinants of outward China's direct investment(OFDI)in Algeria and which among determinants has the most importance to attract China's firms to invest in Algeria,moreover this paper attempts to investigate the fact,opportunities,obstacles and impact of outward China's direct investment(OFDI)in Algeria and China's firms investment this paper will take the time period(2003–2015)as a statistical,data and analyzed reference,by using a multiple regression model as an econometric study to prove result about analysis of the impact and relationship between given determinants and China's FDI in Algeria.The results and findings of this empirical study showed that natural resources,market size,infrastructure,country risks,trade openness has influenced directly China's FDI inAlgeria,and therefore has a significantly effect in terms of promoting Chinese OFDI to Algeria either positive or negative,results showed exactly that all these determinants has a significant impact on the China's FDI in Algeria unless country risks which have a negative impact as data and statistic analyses proved.Characteristics of both China's and Algeria's economy,statistics and data pull to consider that these five determinants are most important to attract China's FDI to Algeria than the tax,GDP and human capital when making comparison between them,however,these three last determinants have their important impact and effect to China's FDI in Algeria as determinants,this why the econometric study limited to only five determinants,due also to the time period which make the model chosen in impossibility situation to bear and account the eight determinants.In fact Algeria economy which based on the oil exportation has known a big progress since 1999 because of the rise of oil price,thus pull the state to spend their expenses for social and infrastructure projects,for that China firms was attracted mainly and totally to infrastructural investments,accordingly to this and beside the essential topic,it will be necessary to pass through and analyze this imposed phenomenon.Market vitality and potential either in consumption or manufacturing or agricultural productions needs and demands,high level size of Sino-Algeria trade exchange,the Geostrategic geographical location of Algeria(intermediate between Europe and Africa,Sea front with Overlooking of the Mediterranean Sea accounted 1400-km,incentives and exemptions approved by investments law,low cost of raw material,new markets orientation prospects with low costs of transportation and exportation,are also other sides and aspects that this paper tried to study and analyze them in term of their importance as real and promising opportunities and attractants as well as the main topic which is the determinants.