Making It Rain? Comparing the Determinants of Chinese and Western FDI Flows to Africa. Issue 4 (13th September 2021)

• Record Type: Journal Article
• Authors: Landry, David
• Is Part Of: Global policy. Volume 12:Issue 4(2021)
• Page Start: 468
• Page End: 481
• Publication Date: 2021-09-13
• Subjects: Globalization -- Periodicals; International relations -- Periodicals; World politics -- Periodicals; 327.1705
• DOI: 10.1111/1758-5899.12996
• Languages: English
• ISSNs: 1758-5880

Abstract

Abstract: This paper tests whether Chinese FDI disproportionately flows to poorly governed African countries, compared to those of the West. It also explores whether UN voting alignment between home and host countries, development loans from the former to the latter, and host countries' market size, natural resource wealth, and per capita income impact Chinese and Western FDI flows differently. It finds that governance quality among African countries plays a positive role in predicting their FDI inflows – from both Western countries and China. The only governance indicator that has a significantly lower impact on Chinese FDI than that of the West is corruption controls, and only when South Africa is excluded from the models. Even then, however, the relationship between corruption controls and Chinese FDI flows is positive in absolute terms. Beyond governance, this paper finds that UN voting alignment and development loans have a significantly larger impact on Chinese FDI than that of the West and that the opposite is true with regard to market size and per capita income. Abstract : This paper unequivocally demonstrates the positive link between good governance and FDI inflows from both China and the West among African countries. This finding underlines the need for African governments that want to attract FDI to continue pursuing a good governance agenda. The paper's findings demonstrate that measures to improve political stability and curb corruption would be particularly impactful in terms of attracting FDI.