The impact of Chinese direct investments on employment in Africa

Abstract

Purpose

Chinese direct investments play a very prominent role in economic interactions with many African countries and result in many economic effects. This study aims to identify the employment effect of Chinese direct investments in Africa.

Design/methodology/approach

This paper empirically investigates the employment effects of Chinese direct investments using a panel data approach over the period 2007-2012.

Findings

The results suggested that for Africa as a whole, represented in 38 countries, Chinese direct investments had a significant positive effect on employment. They also indicated that the education level supported employment. In southern Africa, represented in 32 countries, the results were the same. So, there is a need to encourage and diversify Chinese investments. However, in northern Africa, represented in six countries, the results indicated that Chinese direct investments had an insignificant effect on employment, while education still had its positive effect. Therefore, it is important for northern African Governments to ensure issues like job creation and technology transfer in any future investment projects with China.

Originality/value

This study is characterized by the following contributions: it deals with a gap in the economic knowledge concerning the impact of Chinese investments on employment. Most of the previous studies have focused on the determinants of these investments or on their economic growth effects. It is the first study that measures the employment impact of Chinese investments in Africa at both macro and regional levels. The study deals with the period of financial crisis and its ensuing repercussions on the movement of investments, and this makes it more reflective of current developments through the most recent data available.

Citation

Nabil Khodeir, A. (2016), "The impact of Chinese direct investments on employment in Africa", Journal of Chinese Economic and Foreign Trade Studies, Vol. 9 No. 2, pp. 86-101. https://doi.org/10.1108/JCEFTS-03-2016-0009