Crossing the river by feeling the stones : how China's state-driven FDI in Africa is gradually challenging conventional FDI theory

Abstract

Since the early 2000s China's investment into the African continent has increased dramatically. While much has been written on the effects of Chinese engagement on African development, what has received less attention is how Chinese FDI departs from traditional FDI theory such as the OLI or Uppsala model. In the following, this dissertation will examine how Chinese MNEs make their investment decisions, what exactly drives those decisions and the way in which they depart from traditional FDI narratives. After the Introduction and a brief literature review, the third chapter will deal with the specificities of Chinese FDI, in particular Chinese FDI to Africa, in more detail. It identifies the main actors, providing evidence that despite a growing importance of privately held companies in China, it is indeed still the state that is the dominant force behind outward FDI. Chapter IV will analyse the motivation behind Chinese outward FDI into Africa. last but not least, Chapter V will use two case studies that of Angola and Zambia, the largest African oil and copper exporters to China to further substantiate the findings in the previous chapters. After examining these factors, the conclusion will be drawn that Chinese engagement in Africa is distinctly different to Western equivalents in the sense that it is mainly driven by state rather than purely commercial interest.