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DPE Tuesday Talk Series: Yi Feng, Zhijun Gao and Wanjun Jiang, “Logic of Foreign Direct Investment, Convergence or Divergence? A Comparative Study of US and China’s Outgoing FDI to Africa.”

The Division of Politics & Economics invites the CGU community to attend this week’s Tuesday Lunch Talk featuring Yi Feng, Zhijun Gao and Wanjun Jiang, CGU. Lunch will be provided.

Yi Feng is the Luther Lee Jr. Memorial Chair in Government at Claremont Graduate University. At CGU he has also served as provost and vice president for academic affairs (2006–2011) and as dean of the Division of Politics & Economics (2003–2006). His areas of concentration are international political economy, public policy analysis, and quantitative methodology. He has taught a wide variety of courses, including International Political Economy, International Relations, Political Economy of Regional Integration and Globalization, Public Policy Research, Political Economy of Pacific Asia, Quantitative Research Methods, and Computer Applications for Data Analysis.

Yi Feng
Yi Feng

Zhijun Gao is an Interfield PhD student in political science and economics at Department of International Studies, Claremont Graduate University. His research focuses on international political economy, global money and finance, globalization, development economics, and political economy of China.

Talk title: Logic of Foreign Direct Investment, Convergence or Divergence? A Comparative Study of US and China’s Outgoing FDI to Africa.

Talk Description:
As the first and second largest economies of the world, the United States and China have broad and deep engagement with Africa. Apart from trade and foreign aid, foreign direct investment (FDI) has become one of the most essential forms of economic cooperation between the two great powers and many African countries. However, most existing studies claim that there exist large variations regarding the determinants of the two countries’ FDI in Africa. A majority of scholars argue that the US firms select their destinations of investment based on the market factors and tend to avoid targeting on the countries with autocratic regime or poor governance; meanwhile, the Chinese counterparts usually choose to make investments in resource-rich countries who implement autocratic regimes or have low levels of governance. The scholars attribute the above differences to the state-owned characteristics of many Chinese firms whose investment in Africa stemmed from the national interests. Since most of the existing studies focus on the period before 2012, their theory and empirical analysis may not capture the recent trend of diversification of Chinese FDI. Therefore, we conduct this empirical study to investigate the determinants between the US and China’s FDI in Africa based on the most up-to-date dataset covering the period of 2007-2016. Using the fixed-effect regression models, our preliminary empirical results demonstrate that both countries’ FDI in Africa are mainly influenced by macroeconomic factors such as GDP per capita and openness to FDI; while most political and intuitional factors are not statistically significant. Regarding the natural resources, it only shows a marginal significance for attracting Chinese FDI and it does not have a significant impact on the US FDI. Overall, the results indicate a convergence rather than divergence of the determinants between the US and China’s FDI in Africa. It implies the trend of field diversification of Chinese investment and the increasing presence of Chinese private firms in the continent.

More information about the DPE Tuesday Talk Series can be found here.