EXAMINATION OF CHINESE CHOPSTICKS MERCANTILIST POLICIES IN AFRICA

Abstract

It is a theoretical fact that countries in which foreign direct investments (FDI) are realized by trans-national corporations for the purpose of profit should have some economical and institutional pull factors. This study examines whether Chinese FDI in African countries is supported theoretically by the economic and institutional factors of these African countries or whether these investments instead serve mercantilist policies of China independently of these factors. With this in mind, we examined the effect of the GDP, trade openness, natural resource rents and some institutional indicators of the host African countries on the Chinese foreign direct investments within the period 2003-2017 for 10 African countries. We used Swamy's random coefficient panel regression method due to the heterogeneity of these 10 African countries. The empirical results show that China makes foreign direct investments in Africa for market and resource-seeking purposes which display significant elements of a chopsticks mercantilist policy.