The Effect of Foreign Direct Investment on Economic Growth in African Countries: Investments from China versus Investments from the Western World

Sammanfattning: The purpose of this thesis is to investigate if there is a difference in the effect of foreign direct investment (FDI) on economic growth depending on whether the FDI comes from China or the Western world. This study investigates the effect of FDI on economic growth in 44 African countries from 2003 to 2017, based on panel data. According to growth theory, an increase in investments leads to an increase in economic growth. The results of the analysis show that FDI from China and FDI from the Western world are not significant for economic growth in African countries. However, when including an interaction variable between FDI and political stability, FDI from the Western world becomes significant, which implies a difference between FDI from China and FDI from the Western world.