Research On The Impact Of Aid To Africa On Direct Investment By Chinese Enterprises

Foreign aid and OFDI,as two major modes of international economic cooperation,play an extremely important role in promoting the development of the two countries.However,there is no consensus in the existing literature on the relationship between the two: on the one hand,some scholars believe that foreign aid can help promote OFDI;On the other hand,some scholars have found that the relationship between foreign aid and OFDI is uncertain,depending on the type of aid.In addition,few studies have studied the impact of foreign aid on the investment behavior of micro-individual enterprises from the macro level.So,what kind of impact will China’s aid to Africa have on Chinese companies’ direct investment in Africa,and through what mechanisms? In order to solve the above problems,this thesis explores the relationship between the two from a microscopic perspective.Since the reform and opening up,China has actively implemented the "going out" strategy and vigorously developed foreign direct investment.And as the "Belt and Road" initiative gradually changes from concept to action,Chinese enterprises have increased the scale of investment in other countries(especially African countries).However,investment risks due to political change(Simon,1982),corruption(Yang et al.,2018),nationalization(Costa and Figueira,2017)and other factors are prevalent in African countries,resulting in losses incurred by Chinese enterprises in the process of direct investment in them.Therefore,China needs to take action to prevent the risks that Chinese enterprises will face in the process of going global and minimize the investment losses of Chinese enterprises.As an important policy and diplomatic tool,China’s foreign aid has been effective in strengthening communication with recipient countries and strengthening political mutual trust,which can reduce investment risks to a certain extent,thereby giving Chinese enterprises confidence in investment.In order to test the above hypothesis,this thesis uses empirical analysis to explore the impact and mechanism of China’s aid to Africa on Chinese enterprises’ direct investment by Chinese enterprises,based on panel data from 2003 to 2017.The empirical evidence in this thesis is mainly divided into the following five parts.Firstly,in order to study the impact of China’s aid to Africa on Chinese enterprises’ direct investment,this thesis conducts a benchmark regression.Secondly,in order to verify the robustness of the results,this thesis uses the following two methods: first,the amount of foreign aid is replaced by the number of foreign aid projects for regression;Second,considering the lag in China’s foreign aid,it will be returned with a lag of one and two periods;Thirdly,in order to avoid endogenous interference of the empirical results,this thesis uses the multiplier terms of China’s steel production and foreign aid projects in lag I and lag II as instrumental variables for 2SLS regression.Then,in order to verify the impact of differences in aid purpose,aid mode,development level and enterprise type of recipient countries on China’s aid to non-direct investment by Chinese enterprises,this thesis examines the corresponding heterogeneity.Finally,this thesis conducts a series of impact mechanism tests,and regresses the mediating effects of infrastructure level,human capital level and national governance level.The results of this thesis show that:(1)the benchmark regression results show that China’s aid to Africa is conducive to Chinese enterprises’ direct investment in Africa;(2)The robustness results and endogenous results are consistent with the results obtained from benchmark regression.The robustness results show that there is a lagging effect of China’s aid to Africa,and the first period of aid lag has a significant impact on investment.(3)The results of the heterogeneity test show that there are differences in the purpose of aid,the mode of assistance,the region and the type of enterprise in promoting the investment of Chinese enterprises.From the perspective of aid heterogeneity,China’s non-official financial assistance(OOF)for mixed and development purposes has a significant role in promoting Chinese enterprises’ investment in Africa,and the investment effect of aid to low-development countries is more significant.From the perspective of enterprise heterogeneity,China’s aid to Africa can stimulate the willingness of private enterprises to invest more than that of state-owned enterprises.(4)The results of the impact mechanism test show that China’s foreign aid can attract Chinese enterprises to invest by improving the level of infrastructure,national governance and human capital of recipient countries.In addition,this thesis finds that the level of infrastructure is a complete intermediary,while the level of national governance and human capital are partially intermediated.The contributions of this thesis are mainly reflected in academic contributions and social value.In terms of academic contributions,there are the following points: first,from a micro perspective,this thesis takes Chinese enterprises as the main research body,considers the impact of differences between different Chinese enterprises,and makes up for the corresponding research gaps;Second,by expanding the study range and quantifying outward FDI by Chinese firms,the accuracy and reliability of the results were increased.In terms of social value,first,it provides corresponding thinking for future aid policies,and China’s assistance to a country should take into account the economic development of each donor country and carry out differentiated and targeted assistance,such as adjusting the proportion of aid amount and adjusting the aid method;Second,it provides suggestions for promoting direct investment by Chinese enterprises.Chinese enterprises should give full play to the positive role of foreign aid in foreign investment,and at the same time establish and improve the risk control system to improve risk tolerance.