Chinese Investment in Africa
Foreign direct investment is often cited in relation to economic development, but the actual mechanisms of this interaction can be quite ambiguous. The first section of this paper addresses this, defining foreign direct investment and differentiating it from other kinds of international capital flows. Here, I describe foreign direct investment’s role in development, specifically how it facilitates economic growth by driving technological progress. I also mention determinants that commonly influence a country’s attractiveness to foreign direct investment. The second section of this paper highlights the most popular criticisms against Chinese foreign direct investment in Africa. Using these criticisms as a framework, I then assess how China’s investment both conforms to and diverges from the general characteristics and effects of foreign direct investment. The third section of this paper briefly speculates on China’s underlying motives. By analyzing the nature of Chinese investment in Africa, I put China’s investment in the continent in perspective to show that while these activities are not as alarming as recent reports portray them to be, it does demonstrate the importance of and need for foreign direct investment to drive African development.