Chinese FDI and its effect on trade for the five African countries Angola, Nigeria, South Africa, Zambia and Zimbabwe

Sammanfattning: This thesis evaluates the effect of Chinese Foreign direct investment (FDI) on exports and imports for the five African countries: Angola, Nigeria, South Africa, Zambia and Zimbabwe using the gravitational model. The gravitational model will analyze how both inward FDI investments and Chinese investments impact import and export by using a sample of 166 partner countries over the period 2003-2012. The reverse causality effect will also be accounted for because of endogeneity in dependent variables. The results indicate that Chinese FDI have a weak or no impact on imports and exports of the African countries, which differs from previously reported research. However, more studies examining detailed trade data on product level and the potential connection with FDI are needed to further explain the complex relation between Chinese FDI and exports and imports to the five African countries.