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Thursday, 24 May 2012

Rising Chinese role in WA provides alternative to dependence on EU

How can we assess the impact of Foreign Direct Investment (FDI) in West Africa? Is FDI boosting economic development there?  Is the increasing inflow of Chinese FDI to West Africa providing an alternative to dependence on Europe and the United States?  A recent article by the International Relations and Security Network (ISN), analyses if FDI is a blessing or a curse for the region, presenting the the case ‘for’ and ‘against’.
The author highlights the “dramatic changes” in the sources of FDI into West Africa over the last three decades.  While the US and the EU accounted for over 40% of FDI in the region in the 1980s, China's FDI only accounted for 0.1%. Nowadays, China’s share of FDI into West Africa has skyrocketed to 27.5%, and, significantly, Asia accounts for 37% of the total FDI inflow for projects in agriculture.
The article also emphasises that this increase results from Beijing’s less restrictive approach to FDI, given the EU or US requirements of democracy and good governance to keep FDI in third countries. No similar conditionality on the Chinese side for West African countries, and therefore no reason to stop delivering funding to the region, proves, “vital to reducing poverty across West Africa and the region’s further insertion into the global economy”, according to the author.

Source: ISN