The management of Chinese foreign direct investment

Van Der Lugt, Sanne (2011-03)

CCS Policy Briefings are drawn from the published reports and other material produced by the Centre. They aim to highlight specific recommendations and outcomes from the larger reports and present them in a concise, easily consumable format.

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China is becoming an important source country for foreign direct investment (FDI) for many African countries, catching up fast with the historical main FDI source countries to Africa, such as the United States, the United Kingdom or France. One of the charms of China to African policy makers in the last years was a change of discourse, shifting from ‘challenges in development’ to ‘opportunities in doing business’ in Africa. Popular claims link the inflow of FDI almost automatically to economic development. This paper looks into framework conditions for investment, assuming that they matter strongly for investment to become beneficial for development. In order to better regulate, conditions in the host country have to be considered. Additionally, the investment promo-tion policies and institutions of the home country to investment – China in this case – need to be understood in order to engage with the right actors in the ‘sending’ country.

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