Africa: blessed or cursed by Chinese FDI?

In the last three decades China has transformed itself from a subordinate economy into the second largest economy in the world. To support its growth it needs an enormous amount of commodities. China finds these in Africa. Scientist, politicians, economists and other scholars have different opinions on what the consequences of China‟s involvement in Africa will be for Africa, for China and for the rest of the world. This thesis will investigate how the intensifying relationship between China and Africa influences both the well-being of the African people and the economy of Africa. The four characteristics that define well-being in this thesis are inequality, corruption, pollution and child labor. These four components and the economic performance are investigated to see whether and how they react to Foreign Direct Investment (FDI) coming from China. The country-time data is from 1995 until 2009 for 47 countries in Sub Saharan Africa. These five components have been controlled for several economic and sociologic variables, time effects and country-specific effects. This thesis finds support that the Chinese FDI is increasing both inequality and corruption in Africa. However, evidence is also found that Chinese presence is decreasing environmental damage and that it stimulates economic growth.