Political Risk and Chinese Outward Foreign Direct Investment to Africa : The Role of Foreign Aid

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Original languageEnglish
Pages (from-to)82-98
Journal / PublicationAfrica Journal of Management
Issue number1
Online published18 Feb 2017
Publication statusPublished - 2017
Externally publishedYes


We investigated the role of Chinese Aid in mitigating the political risk for Chinese outward foreign direct investment (OFDI) in Africa, especially in resource-abundant countries. Using panel data for 50 African countries that have received Chinese OFDI from 2002 to 2012, we tested two hypotheses developed based on the two-tier bargaining model proposed by Ramamurti (2001). Our results indicated that Chinese aid had a positive moderating effect on the relationship between political risk and OFDI in those resource-abundant countries. However, such a moderating effect was negative for all African countries. Theoretical and managerial implications following on from this study are discussed.

Research Area(s)

  • Africa, China, FDI, international aid, political risk

Citation Format(s)