Effects of capital inflows on emerging market economies : How FDI from Chinese investors impacts on growth of Sub-Saharan African countries?

Even though the implications of foreign direct investment (FDI) have been studied greatly, only a small part have focused on Sub-Saharan Africa (SSA). With young and relatively talented workforce, SSA will provide enormous opportunities for multinationals entering the region. The purpose of this research is to examine whether FDI from China has a significant impact on economic development in Sub-Saharan African countries. In addition, it identifies the difference between the motivations of Chinese and Western foreign direct investment. It highlights job creation, infrastructure development, industry dynamics and spillovers as key drivers. Results indicate that FDI is associated with positive consequences under certain conditions. For instance, infrastructure development has enjoyed positive influence of increasing FDI from China. However, when taking into account all factors, foreign direct investment from China has a weak or insignificant positive relationship with growth in Sub-Saharan Africa