Chinese economic growth has astounded the world of late, with China officially becoming the world’s second largest economy in August 2010. China has also been following a more outward-orientated economic stance over the past two decades and has actively been engaged in trade, aid and investment in the world economy. As China emerges as a new global economic powerhouse, analysts strive to understand the impact that the rise of China will have on the rest of the world. The possible economic impact of China on Africa is one of the most debated and often contentious aspects of studies regarding China. Sino-African relations, though certainly not a new phenomenon, have seen a significant impetus since 2000. A popular explanation for China’s recent engagement of Africa seems to be that China is hungry for resources needed to fuel its economic growth. This conception has led to much criticism of China’s increasing involvement in Africa, causing concern that China’s interest in Africa will entrench corruption and deepen the so-called resource curse experienced in many resource abundant African countries. China’s official policy on Africa, as embodied in its White Paper on Africa, which was released in 2006, and also in FOCAC (Forum on China-Africa Cooperation) refutes the notion of a neo-colonialist relationship with Africa. China’s official stance on Sino-African relations, as based on these documents, declares the need for a relationship based on mutual benefit and respect for sovereignty. Sino-African relations encompass many modes of economic interaction, including investment, trade and aid. This study focuses on Chinese Foreign Direct Investment (FDI) to Africa, and the possible impact thereof on Africa. It is an important issue since Africa is still the poorest continent in the world and needs to manage its resources carefully in order to enhance growth on the continent. FDI has also frequently been identified as a possible catalyst for growth in Africa. This study investigates the potential impact of Chinese FDI in Africa by means of a literature study which focuses on the theoretical relationship between FDI and economic growth in developing countries, and in Africa specifically. A survey of the literature on the relationship between FDI and economic growth published between 1998 and early 2010 shows that studies on this topic are varied and inconclusive. Though there is no proof of a positive, uni-directional relationship between FDI and economic growth, it is generally accepted that FDI can enhance economic growth in a host economy, given certain basic levels of educational attainment and institutional quality. Following the literature study, the state of global FDI is investigated, focusing on the volumes of nominal FDI flows that have been received by developed and developing countries between 1990 and 2008. As expected, developed countries dominated FDI inflows during this period. Africa, as a developing region, lagged behind most other developing regions in terms of FDI inflows during this period, though the continent has seen an exponential increase in nominal FDI receipts since 2000. Looking at developing regions, developing Asia received the largest volume of FDI inflows during the period 1990 to 2008, while Developing Oceania received the smallest inflows. A basic profile of Chinese investment in Africa is also provided, illustrating clearly that Chinese investment in Africa has been rising steadily since 2000 and 2006 in particular. The profile provides background information on the specific African countries, sub regions and economic growth performers that have received Chinese FDI during the period covered. Chinese investment in Africa is widespread, with 45 of the 53 African nations receiving FDI from China between 2003 and 2008. In contrast with more traditional investors, who focus mostly on North Africa, Chinese FDI to Africa during the period under revision was concentrated mostly in Southern Africa. Surprisingly, Chinese FDI was also aimed at the more diversified countries that had achieved sustainable economic growth rates in the preceding decade. The analysis of Chinese FDI also shows that Chinese firms follow an unconventional way of doing business, often undertaking the building of infrastructure in return for access to various natural resources, such as oil and other minerals. Using data obtained from the 2008 Statistical Bulletin of China’s Outward Foreign Direct Investment, issued by the Chinese Ministry of Commerce, a basic cross-section panel model is estimated. The model investigates the determinants of Chinese FDI to Africa and finds that China’s motivations for investing in Africa are more diverse than initially suspected. Though oil is an important factor in attracting Chinese FDI, agricultural land and market size are also found to be significant factors which determine Chinese FDI flows to Africa. This study concludes that Chinese FDI in Africa between 2003 and 2008 does not follow the conventional, preconceived notion of Sino-African relations. Though resources are important considerations for Chinese investors in Africa, resource security is not the only motive for Chinese FDI in Africa. Africa could potentially benefit from increased Chinese FDI, though the challenge lies in strategically managing these investments in order to ensure that Africa reaps the highest possible growth and development spillover benefits. / Thesis (M.Com. (Economics))--North-West University, Potchefstroom Campus, 2011.

The internationalisation of Chinese firms has attracted attention worldwide although most of Chinese MNEs are still in their early stage of internationalisation. Chinese firms internationalisation has unique characteristics due to their home country s unique political environment, culture and economic structure. This thesis aims to investigate the implications of both of short-term stock market performance and long-term operating performance of outward foreign direct investment (OFDI) by Chinese firms. Drawing on signalling theory and the institution-based view, the thesis firstly examines the extent of stock market reactions to the announcement of cross-border merger and acquisition (M&A) deals from a financial perspective, based on an event study of a sample of Chinese firms during the period 2000-2012. The findings indicate that Chinese firms cross-border M&As result in a positive stock market reaction. The shareholders of Chinese firms that acquire a target firm in a host country with a low level of political risk gain higher cumulative abnormal returns than those firms targeting companies in countries with a high level of political risk. However, the shareholders of Chinese state-owned enterprises experience lower abnormal returns compared with those of Chinese privately owned firms when engaging in cross-border M&A deals. The thesis further examines the impact of M&As on Chinese firms post-acquisition operating performance by integrating organisational learning theory with the institution-based view. The findings indicate that firms with serial cross-border M&As achieve better performance than those engaged in first-time cross-border M&As, and those with horizontal M&As perform better than those carrying out vertical M&As. The positive effects of acquisition experience and horizontal acquisitions on the post-acquisition performance of Chinese acquiring firms are reinforced by the institutional quality and language similarity of host countries. Finally, this thesis investigates from a management perspective how Chinese MNEs adopt different management strategies (e.g. expatriates and subsidiary autonomy) to respond to environmental challenges and improve the performance of overseas subsidiaries. Drawing on the resource dependence theory, this thesis examines the indirect effects of expatriates on subsidiary performance via subsidiary autonomy based on a survey sample of Chinese MNEs. The findings show that an increase in expatriates reduces the level of subsidiary autonomy and thus negatively affects subsidiary performance. This study also finds that the institutional quality of host countries reinforces the negative impact of expatriates on subsidiary autonomy, but reduces the importance of the latter on subsidiary performance.

Doctor of Philosophy / Department of Economics / Yang-Ming Chang / This dissertation comprises three chapters in international trade and the economics of conflict. These chapters are put together according to two dimensions. From the international relations dimension, Chapter 1 analyzes free trade, which is the most “liberal” form of international relation; Chapter 2 analyzes different types of trade agreements, which is the most common and “moderate” form of international relation; and Chapter 3 analyzes conflict, which is the most violent and “extreme” form of international relation. From the proximity dimension, free trade usually occurs between countries that are far from each other, trade agreements usually signed by countries with in a region, and conflict usually happens between two very close countries. Chapter 1 develops a novel model of international trade in which transportation costs are driven by trade imbalance of an individual country. This task is accomplished by assuming a representative transportation firm in each country that competes with its counterparts from other countries for international operation. The model of trade imbalance driven costs complements results from traditional international trade model in that it sheds light on how trade costs are affected by country size. With multiple countries and a continuum of production firms in each country under monopolistic competition, we derive an index of transportation costs to capture bilateral trade barriers for country pairs. This index is time-variant, which makes it suitable for panel data studies. Based on the index, simulation and simplified three-country free trade model show that countries with a relatively larger size incur a trade deficit while smaller size implies a trade surplus under free trade. A gravity equation is derived and estimated using Poisson Pseudo Maximum Likelihood. Estimation results support the fitness and robustness of the theoretical model of trade using the constructed transportation cost index. Further, statistical test shows that this transportation cost index is a better approximation of bilateral trade cost than distance. A growing number of recent regional trade agreements (RTAs) have introduced provisions concerning cross-border investments. Likewise, a substantial number of RTAs have been preceded by agreements regarding cross-border investments. In Chapter 2, we develop a partial equilibrium three-country model to examine the relationship between RTAs and FDI while also allowing for double taxation. Our analysis shows that the formation of an RTA between two regional countries with wage asymmetry is welfare-improving for the low-wage country and the region, but can be welfare-deteriorating for the high-wage country. We extend our analysis to examine the role of repatriation taxes in the determination of firm location when an RTA is and is not established. Our final result suggests that the signing of an RTA would not induce the relocation of a plant from the high-wage country to the low-wage country unless a reduction of the repatriation tax rate also occurs. In Chapter 3, we attempt to resolve the “inefficiency puzzle of war” by developing a general equilibrium model of bargaining and fighting with endogenous destruction. In the analysis, we consider the scenario that two contending parties engage in bargaining to avoid fighting when there are direct costs (e.g., arms buildups) and indirect costs (e.g., destruction to consumable resources) of conflict. Taking into account different modes of “destruction technology” (in terms of weapons’ destructiveness) without imposing specific functional form restrictions on conflict technology and production technology, we characterize their interactions in determining the Nash equilibrium choice between fighting and bargaining. We find that bargaining is costly as the contending parties always allocate more resources to arming for guarding their settlement through bargaining (but under the shadow of conflict) than in the event of fighting. Contrary to conventional thinking that bargaining is Pareto superior over fighting, we show conditions under which fighting dominates bargaining as the Nash equilibrium choice. The positive analysis may help explain the general causes of fighting, strikes, international conflict, and wars without incomplete information or misperceptions.

This study focuses on Multinational Corporations (MNCs) and their importance in the economic development of Third World Countries. Recogni sing that. MNCs can contribute to economic growth and development, most Third World Countries are constantly working to attract them. hence their demand has become highly competiti ve. However, MNCs do not go without some negative effects. such as conflicts between host and investor countries. and the creation of damaging competition to local firms. These negative effects could be minimised if policies and strategies for the promotion and attraction of MNCs are part of. and integrated into. general economic development and economic reform policies and not seen in isolation. Although Third World Countries have implemented strategies to attract more MNCs. a refinement of some of these policies is needed if a country is to be successful in this regard. / Thesis (M.A (International Relations) North-West University, Mafikeng Campus, 2014

Master of Arts / Department of Economics / Yang M. Chang / China’s absorbing foreign direct investment (FDI) has contributed importantly to its economy growth. Based on the findings of some previous studies in the literature, this report presents a general review of FDI in China, which includes characteristic, history and regional distribution. In the report, I discuss various economic determinants of FDI (such as market size, labor cost, infrastructure, and government policies) and investigate the impact of FDI on China's economic growth. Furthermore, I discuss challenges, new trends and the future opportunities facing China.

Since the late 1970s, the Chinese economic system has experienced a series of economic reforms, which include attracting foreign direct investment and the liberalisation of Chinese international trade. Due to the successful reform, China has experienced a 30 year economic growth. Previous empirical studies found the positive effect of FDI in the Chinese economic development. This study plans to investigate the factors which attract the investment to China and the impact of the inward FDI on international trade and Chinese economic development under the geographic location condition. OLI model has emphasis the location effect in motivated FDI flows. The first research question is the determinant of FDI in China with concerning the geographic effect. Different with the previous empirical paper on the FDI determinants in China, the using the geographic effect as an dummy variable in the specification, this study investigate the effect of the other determinant under different geographic background. The geographic effect has been explore in two levels: national level and regional level. On national level, there are two countries have been selected as research samples: the investment from the U.S. and the investment from Japan. These two countries have similar economic size and FDI stock in China but have different geographic relationship with China. Through the ARDL research approach, this study finds that the key drivers of inward investment are relative wages, relative capital cost, market size and net exports, although the source of these FDI flows is also found to be important especially those from the USA and Japan. The determinants of FDI from the US and Japan have different effect. International trade has negative effect of export from US to China on the US FDI stock in China, while it has positive coefficient of the exports from Japan to China on the Japanese FDI. The large market size would drive the FDI from US but reduce the FDI from Japan. The geographic effect influences the motivation of FDI (Helpman 1984, Cushman 1988). This further lead the determinants has different effect. The study on regional FDI divided the Chinese provinces in two subgroups: the eastern coastal area and the western hinterland. The eastern area has more than 80% of FDI in China. The eastern coastal has rich resource in the transportation, openness, physical and human capital. The west hinterland area has cheaper labours. However, the result shows that the competition in the sub-regions are determined by it scare resources. Cheaper wage is the key factor to attractive the investment to the east regions. While the technology, human capital and economy openness is the key factors to determine the FDI stock in the west hinterland. The second research question is the impact of FDI on international trade. Chapter 6 investigates the plausibility of FDI driving trade. The granger causality test has been applied to test the endogenity between international trade and FDI stock in China, the results does not support the causality. The further regression results show that this model is not substantiated by the data, so the maintained hypothesis that FDI is the dependent variables seems to be appropriate for China. The third contribution is to examine the effects of FDI on economic growth. In this panel data analysis the impact of FDI on the regions of the country is examined. Furthermore, the impact on the sub-regions groups has also been explored. The results show that economy of the east coastal area in China is motivated by the inward FDI stock. However, due to the limitation of the catch-up capability, FDI has negative effect on the development of the hinterland in China. The hinterland economy is driven by the international trade, although the transportation resource in the hinterland is not as rich as ones in the eastern coast.

One of the most visible indicators of the increasing global integration of the world economy over the past decade or so has been the phenomenal growth of Foreign Direct Investment (FDI) flows and expansion of cross-border activities of multinational enterprises. FDI inflows are considered as channels of entrepreneurship, technology, management skills, and resources that are scarce in developing countries and Southern Africa in particular. Recent developments in growth theory highlight the importance of improvements in technology, efficiency and productivity in simulating growth. In this regard, FDI’s contribution to growth comes through its role as a conduit for transferring its advanced technology from the industrialized to the developing economies and as such FDI inflows could help in the industrialization of the host countries. For instance, Findlay (1978) postulates that FDIs increases the rate of technical progress in the host country through a “contagion” effect from the more advanced technology and management practices used by foreign firms. Since FDI is said to be the most stable source of private capital for developing and transition economies, attracting FDI is at the top of the agenda of such economies around the world as they aim to reduce poverty that is deep and widespread. The paper will look at FDI and its contributions; discuss the relationship between FDI and economic growth; explore the determinants of FDI and economic growth; consider the implications of FDI to economic growth and poverty alleviation; examine Taiwan’s experience when its development was closer to current levels in Africa and Southern Africa in particular; and explore how the Southern African region can attain economic growth through FDI and alleviate its deep and widespread poverty. In trying to assess the extent to which FDI contributes to construction of production facilities, infusion of innovative technologies, management strategies, workforce practices, new employment, and skill transfer, the paper seeks to shed light on appropriate policies to pursue in order to encourage high volumes of FDI and their likely implications for economic growth and poverty alleviation. While economic growth is not synonymous with economic development, it is at least necessary. Provided that mechanisms exist to facilitate some trickle-down of the benefits of economic growth to the impoverished, economic growth can aid in poverty reduction. The most important mechanism by which trickle-down occurs is via employment-creating economic growth. In this way, it is possible that, if FDI serves as a catalyst for economic growth, it will stimulate development and contribute to alleviating poverty (Lipsey, R., 2000). David Dollar (2001) states that Globalization has been a force for growth and poverty reduction in a diverse group of countries and defines globalization as the growing integration of economies and societies around the world as a result of flows of goods and services, capital, people, and ideas. He claims that integration accelerates development and reduces gaps between the developed and developing countries by raising productivity in the developing world. In this way globalization can be a powerful force for poverty reduction. FDI is one element that links the Southern part of Africa to the global economy and as a World Bank report (2001) shows that rapid economic growth and poverty reduction are positive aspects of globalization, the volume of FDI attracted will have an influence on whether the Southern Africa’s poor can benefit from the globalization of markets.

<p> </p><p>The purpose of this paper is to examine whether foreign direct investment, FDI, has any impact on economic growth in Mexico. In order to find a possible connection I use a multiple regression analysis with GDP per capita as dependent variable. Furthermore, I critically examine previous studies of FDI and its effect on GDP per capita in Mexico as well as other studies with several developed and developing countries. The difference between this paper and previous studies is that the data is more up-to-date here. My results, like most of the previous studies, do not indicate on any statistical significance that FDI has a positive effect on economic growth. FDI do however seem to produce positive spillover effects on the domestic economy, mainly through knowledge and technological spillovers.</p><p> </p><p> </p>

The objective of this study was to determine the perceptions of the impact of political instability on Foreign Direct Investment (FDI) in Nigeria. In conducting this research, 350 questionnaires were distributed to some selected Foreign Direct Investors, Nigerians, and chief executive officers (CEOs) of indigenous companies. Out of the 350, 280 questionnaires were completed, returned and analyzed for this research. Chi-square statistics and frequency distribution were used for the evaluation of the perceptions of the impact of political instability on foreign direct investment in Nigeria. Two hypotheses were also developed on the same subject. The results of the tests conducted showed that fo reign investment is negatively affected by political instability in Nigeria. The results of the study suggest that it would be good public policy for the Nigerian Government to strike a balance between the nation's developmental objectives and the interest of foreign investors. The study makes some recommendations to help improve the climate for foreign investments.

Le changement rapide du contexte économique mondiale caractérisé par la globalisation entraîne une évolution des exigences et objectifs des investisseurs internationaux. Les gouvernements, surtout ceux des pays en développement, doivent en tenir compte et adapter leurs facteurs d'attractivité aux nouvelles attentes des entrepreneurs mondiaux. Dans ce but La Libye a commencé depuis les années 2000 à pratiquer des politiques d'ouverture et de communication afin d'attirer les investissements étrangers Ces investissements devaient contribuer au développement de son économie et à la résolution des problèmes liés à la dépendance de l'économie au secteur pétrolier. Pour cela l'Etat libyen a fait un appel à Michael PORTER et aux grandes institutions mondiales pour définir une stratégie globale. Dans cette perspective, la présente recherche se donne deux objectifs : d'une part, mettre en lumière l'environnement de l'investissement direct étranger en Libye et, d'autre part, définir une stratégie spécifique pour stimuler les investissements étrangers selon les attentes, les besoins et les exigences des firmes multinationales.Le choix d'une démarche qualitative par entretien et questionnaire auprès d'entreprises étrangères implantées en Libye permet d'avoir une évaluation exhaustive de l'attractivité du territoire libyen et d'envisager la stratégie à mettre en œuvre par l'Etat libyen pour attirer les IDE à forte valeur.L'analyse montre l'existence de deux profils bien distincts quant à l'attractivité des IDE : les investisseurs pessimistes et les investisseurs optimistes. Dans ce sens, le pays doit mener une stratégie spécifique par profil pour bien stimuler les investisseurs étrangers. L'amélioration du potentiel d'attractivité des IDE en Libye, notamment dans les secteurs hors pétrole, nécessite la mise en place de conditions d'accueil spécifiques. Il s'agit entre autres du développement des infrastructures, du renforcement de la stabilité politique après la guerre et de l'amélioration de la gestion des recettes pétrolières afin que le secteur pétrole impulse le développement des autres secteurs. / The rapidly changing global economic context characterized by globalization leads to changing requirements and goals of international investors. Governments, especially in developing countries, must take into account and adapt their attractiveness factors the new expectations of entrepreneurs worldwide. To this end Libya began in the 2000s to pursue policies of openness and communication in order to attract foreign investments These investments should contribute to the development of its economy and solving problems related to the dependence of the economy to the oil sector. For this, the Libyan government has appealed to Michael Porter and large global institutions to develop a comprehensive strategy. In this perspective, this research has two objectives: first, to highlight the environment of foreign direct investment in Libya and, secondly, to define a specific strategy to encourage foreign investment, according to the expectations the needs and requirements of multinational firms.The choice of a qualitative approach by interview and questionnaire with foreign companies operating in Libya provides a comprehensive assessment of the attractiveness of the Libyan territory and consider the strategy to be implemented by the Libyan government to attract FDI in high- value.The analysis shows the existence of two distinct profiles on the attractiveness of FDI: investors pessimistic and optimistic investors. In this sense, the country must pursue a strategy-specific profile for many stimulating foreign investors. Improving the potential attractiveness of FDI in Libya, especially in non-oil sectors, requires the implementation of specific reception conditions. These include infrastructure development, strengthening of political stability after the war and improving the management of oil revenues to the oil sector promote development of other sectors.