The Impact of China’s Trade and Foreign Direct Investment on the Economic Growth of Sub-Saharan Africa

Emma Serwaa Obobisa, Chen Hai-bo, Maxwell Opuni Antwi, Kofi Baah Boamah

Abstract


Sub-Sarah Africa has recognized trade and foreign direct investment as a major way to change its economic development. China looks on to offer Sub-Sarah Africa a new model for growth alternative to the advanced countries style that depends on commercial relatives and fair market. It prioritizes immovability over democracy by way of providing alternative growth model through promoting product variation and contending in various market mechanism. The main question of this study is “What is the impact of China trade and Foreign Direct Investment (FDI) flows on the Africans economic growth?” This study would get rid of the bad impression people have diabolically registered on their minds about Chinese trade and investments. It is vital that the study would assist scholars, economists, investors, business owners and other government officials to understand the importance of FDI and its realization of a sustainable social and economic growth. It will be able to strengthen existing factual and evaluative statements about the impact of Chinese trade and FDI. This study will be limited to the economic activities Chinese trade and investments have impacted in the economy of Sub-Sarah Africa. This study is set to determine the quality of goods and services rendered to the various economic sectors of Sub-Sarah Africa; the role of Chinese trade and FDI in African economy and other financial flows such as loans, development assistance between China and Sub-Sarah Africa. We use panel data from 4 SSA countries covering 1981 to 2015. The empirical evidence indicates that China trade and FDI has had positive impact on sub-Saharan Africa economic growth. Our findings are promising and support the view that the relation between trade openness, FDI and economic growth is linear for SSA. Accordingly, SSA countries must have more effective trade openness, mainly by industriously regulatory import levels, in order to boost their economic growth through international trade.
 

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