Transcript yifter_pres2

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The Growing Presence of Chinese
Investment in Africa: The Motivations and
Implications
Danielle Daley & Hermila Yifter
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Introduction
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As Chinese outward direct investment in African nations
increase, we want to answer the following:
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What attracts Chinese investment?
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Do polity and natural resources play a significant role in this
attraction?
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More importantly, how does Chinese investment affect economic
growth?
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Road Map
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We will discuss the background of China’s growing role as an
economic world power, the world’s growing interest in Africa,
and the Sino-African relationship.
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We will then discuss our theory and hypothesis regarding how
polity and natural resources influence China to invest and the
implications on economic growth.
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We will then discuss our methodology and explain our results.
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Lastly, we will discuss the significance of our research and our
future work.
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Background/Debate
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To begin with, China’s growing economic leverage and political
influence has been seen by many African countries as an alternative
investment and trading partner in Africa’s growing presence in the
world.
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“strictly-business” style of cooperation vs. “conditions”
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China's FDI in Africa is growing rapidly: it went from $20 million a
year in the early 1990s, grew to $100 million in 2000, and reached up
to $1 billion a year in 2006
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If China’s economy surpasses that of the United States’ economy,
which its GDP growth rate suggests, then there is major possibility
that it will “become a leading investor in Africa” (Klaver and
Trebilcock, 169, 170).
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What factors does
China consider
when they decide to
invest in specific
African nations?
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We hypothesize that polity
plays no role in determining
which African nation China
invest in.
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Hypothesis: Polity
 Sudan Angola-
Authoritarian Government ( Darfur Crisis)
Republic; Multi Presidential Regime
 South Africa-Constitutional
 Algeria-
Parliamentary Republic
Semi- Presidential Republic
 Nigeria-Federal
Republic
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Methodology: Polity
Not
Statistically Significant
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We hypothesize that natural
resources “are at the core of
China’s economic interests in
Africa―or perhaps even tis
overall interest in the
continent” (Tull 465).
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Hypothesis: Natural Resources
 “Africa’s
resource rich countries are in a
position to provide an ample percentage of
China’s requirement.” (Tull 465)
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Natural Resources: Oil
$360 Billion
13 Million
2020
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Natural Resources: Agriculture
7%
Mozambique
1,338,299,500
Mawali
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Natural Resources: Precious
Metals
Democratic Republic
of Congo & Zambia
South Africa &
Algeria
Copper & Cobalt
Iron Ore &
Platinum
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Methodology: Natural Resources
Not
Statistically Significant
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We hypothesize that there is a
positive correlation between
increased Foreign Direct
Investment (FDI) and GDP
(per) capita.
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Hypothesis: Relationship between
Chinese FDI & Economic Growth
in Africa
 “…aid
and investment in infrastructure are bringing desperately
needed capital to the continent” (Zafar 103).
 Chinese
government officials “have been cautious to stress that
their foreign policy was not a sort of “charity” it is one based on
“mutual benefit.” (Deborah and Adam Gaye).
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Hypothesis: Relationship between
Chinese FDI & Economic Growth
in Africa
 ‘“the
Chinese government is not only fulfilling its aid promises to
Africa,” a Zambian policy-maker noted, “but it is also
encouraging Chinese companies to invest in infrastructure
development in Africa.”’(Isaac Idun-Arkhurst and James Laing
17).
 Additionally,
with Chinese increased investment in Africa,
projects there were never completed, are being revived at a
lower cost.
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more importantly, with China’s increased interest in the
region, more and more nations are recognizing Africa’s potential
in the future.
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Methodology: Relationship
between Chinese Foreign Direct
Investment & Economic Growth in
Africa
Not
Statistically Significant
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Conclusion
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China is not influenced by the presence of natural resources or
the type of government an African nation has.
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What is the motive then? Are the lack of conditions and concern for
regime healthy for the economic growth of an African nation?
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Is China “ambulance-chasing”?
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How will China’s role as the “alternate” influence future relationships
among African nations and the West?
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Future Work
 Limited
Data- Relatively New Topic of Discussion
 Exports
and Imports
 Explore
other reasons why China is investing in Africa