Abstract

This study was conducted to assess the impact of Chinese outward foreign direct investment flows on economic growth in sub-Saharan Africa. The design used was a longitudinal study. The analysis used was existing data on 37 sub-Saharan African countries between 2003 and 2011. Two balanced panel regressions were estimated using time and country fixed effects, respectively. The estimations suggested that Chinese foreign direct investment positively affected economic growth in the studied countries. However, the effect, though statistically significant, was weak. Other covariates such as natural resources, employment and trade volume significantly increased economic growth while the opposite effect was observed for inflation rate. Sub-Saharan African countries are still not able to reap the expected benefits from foreign direct investments because most of them still do not have efficient absorptive capacities. It is suggested that African countries implement policies such as the fighting against corruption, the establishment of the rule of law and the setting up of efficient financial infrastructures.

Key words: China, foreign direct investment, economic growth, sub-Saharan Africa, panel regression.