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China in Africa: Financial Implication
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Added on 2021-01-15
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It relates to the invitation of encouragingcross-border expansion so as to derive benefits from the other economies by harnessing onto each other's competitive advantage.The research questions are: first, Is China's FDI benefiting the economies of African countries by penetrating into their market?; second, What are the advantageand disadvantages of China's financial implication in African countries?; lastly, What challenges will China have to face while operating within African countries? This has resulted in an improvement in both
China in Africa: Financial Implication
Added on 2021-01-15
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China in Africa:FinancialImplication
ACKNOWLEDGEMENTThroughout the writing of this dissertation, I received a great deal of support anassistance. I would firstly like to extend my gratitude towards my Supervisor whose immenseknowledge in the field contributed invaluable insights while formulating my study, specificallythe research topic and methodology. Finally, I would like to show my heartfelt gratitude towardsmy family, friends as well as tutors among others who were there to lend me an ear when Ineeded one and help me sail through this dissertation smoothly all this while.
ABSTRACTThe purpose of this paper is to reflect upon the financial implications of Chinese ForeignDirect Investment on Africa in the light of globalization. Globalization has been a highlydebatable topic since its inception. It relates to the invitation of encouraging cross-borderexpansion so as to derive benefits from the other economies by harnessing onto each other'scompetitive advantage. The research questions are: first, Is China's FDI benefiting theeconomies of African countries by penetrating into their market?; second, What are theadvantage and disadvantages of China's financial implication in African countries?; lastly, Whatchallenges will China have to face while operating within African countries? Our investigationconnotes that Chinese investment has mainly been motivated from the need to fulfil its scarcityfor natural resources. This has resulted in an improvement in both Chinese corporations in termsof profit, performance as well as mutual national benefits along with increase in productivity,work conditions, standard of living and employment opportunities for African countries.Keywords: Financial Implications, Investment, China, Africa, Employment, Resources,FDIs
EXECUTIVE SUMMARYThis study summarizes the financial implications of China's Foreign Direct Investment(FDI) on Africa. China has been a reclusive economy with a policy of non-interference in theaffairs of countries in which it operates. The main aim of China to invest in Africa is to getnatural resources that are required for its extractive industries. Along with this, Africa initiatedthe practice of inviting FDIs from 1980s which helped in revival of its manufacturing, services aswell as mining markets in addition to the standard of living and overall growth in Africancountries. Prior to which there had been no such facilities available in that region. This attractedinvestments from countries like China that derived benefits in the form of natural resources andin return provided employment opportunities as well as improved standard of living to the peopleof African countries in which such corporations were operational.Based on the research conducted through Primary as well as Secondary Research, aProbabilistic random sampling carried out for 20 African Economists derived that the largestmarket of Africa pertains to Mining. Apart from this, it is recommended that the governmentmust invite Foreign Direct Investment from Chinese Corporations as well as other countries tooso as to improve the work conditions, living standards as well as over all employment and GDPin the African Economies.
Table of ContentsChina in Africa: Financial Implication............................................................................................1ACKNOWLEDGEMENT...............................................................................................................2ABSTRACT.....................................................................................................................................3EXECUTIVE SUMMARY.............................................................................................................41. INTRODUCTION.......................................................................................................................12. LITERATURE REVIEW............................................................................................................2Benefits of China's FDI to economy of African Countries by penetrating in to their market.....2Advantage and disadvantages of China's financial implication in African countries..................4Challenges that could be faced by China while operating within African countries...................73. RESEARCH AIM........................................................................................................................9Aim..............................................................................................................................................9Objectives....................................................................................................................................9Research questions.......................................................................................................................94. METHODOLOGY......................................................................................................................9Research paradigm.....................................................................................................................10Research philosophy..................................................................................................................10Research approach.....................................................................................................................11Research design.........................................................................................................................11Data collection...........................................................................................................................12Data Assessment........................................................................................................................13Sampling....................................................................................................................................13Access and ethical consideration...............................................................................................14Limitations.................................................................................................................................14Equipments................................................................................................................................145. FINDINGS.................................................................................................................................146. EVALUATION OF RESULTS.................................................................................................17Data Interpretation.....................................................................................................................177. CONCLUSION..........................................................................................................................268. IMPLICATIONS FOR PRACTICE AND FUTURE RESEARCH .........................................27
9. BIBLIOGRAPHY......................................................................................................................29
1. INTRODUCTIONOverview:Globalisation helps business entities to get interconnected and execute business activitiesin different countries for the purpose of generating higher sales and profits. With the help of itcultures can also be exchanged by nations that are involved in collaboration of businessoperations. When world started to globalised then various territories started to make investmentsin other regions in order to expand and establish business there. At the same time Chineseorganisations made FDI in African countries which helped them to develop the economy.Increasing interest of China in Africa has resulted in conflicts with other countries. Due to thisUS also started to make investment in those countries and in year 2017 its contribution in Africawas highest as compare to any other territory (Benfratello, D’ambrosio and Niu, 2019). Varioustypes of factors have been integrated in to Chinese society which includes economic, social andcultural factors. Currently china is benefited hugely from globalisation because it is facilitatingthe companies which are operating business in this country by helping them to establish branchesin different nations and execute operations there. With the help of globalisation variousopportunities to touch international market are grabbed by China. It also provide chance tocommunicate with international suppliers, investors and customers which helps to enhanceprofitability and productivity of business entities of China.Background: Various African countries such as Republic of Congo, Kenya, Nigeria andEthiopia are being selected by Chinese organisations to establish their business there and helpthem to develop the economy. It has resulted in enhanced profitability of those organisations andgrowth of African countries. Globalisation has provided opportunity to the Africans to comeChina and work there. Currently around 200000 Africa's citizens are working in this country. Inorder to develop the economy African government (Cheung and et.al, 2012). China has build upworld's second largest economy and it has experienced a boast growth fro which most ofcountries usually dreams. This nation has mark its development all over the world not only intechnological sectors but also in term of economy by investing in several other countries likeAfrica, US and many more. Foreign direct investment performed by China within Africancountries contribute a lot in improving the economical condition of these countries. Over year2003-14 flow of Chinese FDI has increased significantly where the FDI stock of China has rosein Africa from $491 million to $32.4 billion. There are three major countries of Africa such as1
Ethiopia, Kenya and Nigeria that has experience a tremendous growth after the FDI contributionof China.Significance: Research topic of this report is China in Africa which is based upon FDImade by Chins in African countries such as Nigeria, Republic of Congo, Kenya, Ethiopia etc. Itwill help to find out financial implications of China's FDI on Africa. With the help of it learnerswill be able to enhance knowledge about FDI which is made by Chinese organisations inbusinesses of Africa.Rationale: China in Africa is selected by the researcher for the purpose of analysingimpacts of China's FDI on African countries. This can help the observers to enhance knowledgeregarding increased interest of China in African countries for the purpose of making FDI. Withthe help of present research learners will be able to analyse all the issues and challenges thathave taken place before and after FDI of China in African countries (Gusarova, 2019).2. LITERATURE REVIEWIt is a type of review article which helps researcher to find answers for their researchquestions and achieve all the objectives that were formulated previously. It helps to evaluatesome of the selected topics that are related to research which helps learners to attain detailedinformation regarding the main subject of study. The data which is already being studies byothers and used by researcher to resolve all the questions of present study is considered as thepart of literature review. It is mainly based on secondary information which is gathered fromdifferent sources such as journals, websites, articles etc. Sometimes primary information is usedfor the purpose of literature review which includes peer reviewed articles and one to oneinteraction. Main aim of writing a literature review is to provide detailed information of researchobjectives to the observers and readers of whole study. Only relevant and appropriateinformation is used in literature review which is beneficial for students who are going to study itin future for the enhancement of their knowledge.Benefits of China's FDI to economy of African Countries by penetrating in to their marketAccording to Meunier, (2014) China has started to invest in African countries in 1980sand since 2000 its investment in Africa it is continuously increasing and benefiting theireconomy. Various organisations that are related to China, have helped such nations to establish aup stream -downstream-integrated chain of the industry. It has resulted in the transformation of2
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