Chinese FDI in Sub-Saharan Africa - And its impact on development

Student thesis: Master thesis (including HD thesis)

  • Andreas Dalsgaard Kusk
Since the mid-2000s, the relationship between China and Africa has evolved rapidly. They went from having relatively weak ties to China being the number 1 contributor to FDI in Sub-Saharan Africa. This increase in FDI can be argued to be because of the economic rise China has experienced in the last couple of decades. In this thesis it will be found that China is successful in their FDI in SSA due to several factors. These factors mainly consist of what they are doing differently with their development model in contrast to the West. Western FDI has always had several political agendas they wanted to push, such as only giving aid or FDI to nations who follow the Western standards of human rights. This is done differently in China, as it is much more a business decision than it is giving aid. China seeks to expand their Chinese model throughout Africa, and they are susceptible to it because they have seen the model succeed in its country of origin. China also differentiates themselves from the West in the notion that the main investors are the Chinese government, or government related companies. In the West, the FDI comes more so from private investors such as companies and organizations, who want to expand their business to the African continent. The money China are investing in SSA are much more likely to end up in infrastructure and construction projects, whereas Western FDI focuses more on soft power related topics and intangibles, such as health and education.
However, even though China is conducting their FDI very differently from the West, they are also repeating some of the patterns the West has created. The Western FDI model has been criticized heavily due to how they create dependency in the region. They are covering their true intentions of penetrating an easy market with the positively perceived word “aid”. Although China refuses to view their FDI as aid, because of its negative connotations with dependency, they are still creating dependency in their own way. They are doing this by using Chinese workers for construction projects, thus they are not assisting the local economy, as most money goes back into China. Many of these construction and infrastructure projects are created due to their Belt and Road Initiative, which creates dependency on four different factors: profit extraction, exploitation, the entrenchment of disarticulated economies, and the diversification of dependency.
This rise of China and their FDI in SSA is thus argued to have complexed impact on development in the region, as they are creating positive development by giving back some sovereignty to the SSA countries, while also creating more dependency in their own way. The impact this has on the
LanguageEnglish
Publication date26 May 2021
Number of pages50
ID: 412830681