Attracting Chinese Foreign Direct Investment (FDI) to Africa: Determinants and Policies - The Case of Guinea

Abstract

This study examines the determinants and policies for attracting Chinese FDI to Africa by specifically analyzing major characteristics, trends and developments in the economic engagement between Guinea and China. Guinea’s selection as the case study is justified by the country's experience of macroeconomic instability and social policy since independence. By considering mechanisms that play important roles in attracting FDI; market size, economic growth, employment, degree of trade openness and trade policy of the recipient country, the results show positive R-squared- a valid regression. However, all of these coefficients of determination are still not significant enough. The disparity to attract investment is assessed from geographical location, infrastructure, corruption levels, and income yields to implementation of the policies by the governments. It recommends policies at both national and bilateral levels in order to increase large Chinese FDI inflows towards Guinea and improve the forecast for macroeconomic and its constant development.