Challenges in the Era of Globalization - iaabd

Challenges in the Era of Globalization
Edited by Emmanuel Obuah
economic relations. The results of these visits were manifested in the strong support from African nations
in China’s bid for a seat on the United Nations Security Council in 1971. Efforts to maintain close ties
with the African continent certainly intensified following the liberalization of the Chinese economy in
1978 and the institution of economic reforms. Africa provided China with valuable political support in
her accession to the World Trade Organization in 2001 and China in turn provided increased development
assistance and cancelled the debts of a number of the poorer African countries (Tull, 2006).
Today China’s engagement in Africa is driven by four major considerations (a) access to natural
resources, (b) access to final product markets on the continent, (c) improving China’s leverage in
international relations, and (d) ending Taiwan’s diplomatic influence on the continent ((le Pere, 2007 and
Shinn, 2009). China’s involvement in Africa has clearly evolved over the years. China began to provide
financial assistance to Africa in the 1970s that was more focused on strengthening ideological ties with
the continent. Today China’s assistance to the region is predicated on economic objectives in addition to
more humanitarian or idealistic motivations. This paper will focus on economic issues, specifically direct
foreign investment and the internationalization strategies of CSOEs and CPOEs.
Research Objectives
This paper will attempt to achieve the following specific objectives:
( a ) to profile China’s foreign direct investment in Africa.
( b ) To compare the internationalization strategies, governance structures and performance outcomes
of CSOEs and PSOEs in Africa.
( c ) To develop the managerial and policy implications of the differences in the internationalization
strategies of CSOEs and CPOEs in Africa.
Organization
This paper is organized into six major sections. Following this brief introduction is presented an overview
of Chinese foreign direct investment in Africa. In the third section is provided a review of the theoretical
literature considered germane to this study’s research objectives. Our conceptual model is discussed in the
fourth section along with a number of testable research propositions. The managerial and policy
implications of our work are outlined in the fifth section while the sixth and final section provides a few
concluding observations.
Chinese Foreign Direct Investment in Africa:
Data provided by National Bureau of Statistics of China indicate a sharp acceleration in net overseas
direct investment (ODI) in Africa over the period 2004 to 2008. As illustrated in Table 1 China’s overseas
direct investment in Africa increased from $US31.7 million in 2004 to $US 549 million in 2008. China’s
ODI stock in Africa similarly showed significant gains rising from $US 159.5 million in 2005 to $US
780.3 million in 2008. It should be recognized that these data may well understate the true level of
China’s direct foreign investment in Africa. An ECOWAS-SWAC/OECD report, for example, put the
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