| Abstract: |
In the 3 years before the 2008 Financial Crisis, GDP growth in sub Saharan
Africa (averaged over individual economies) was around 6%, or 2 percentage
points above mean growth rates for the preceding 10 years. This period also
coincided with significant Chinese FDI flows into these countries, accounting
for up to 10% of total inward FDI flows for certain countries in these years.
We use growth accounting methods to assess what portion of this elevated
growth can be attributed to Chinese inward FDI. We follow Solow (1957),
Dennison (1962), and others and use data for individual economies between 1990
and 2008 to calculate Solow residuals for these years for individual
economies. We use capital stock data, workforce, and factor share data by
country. Capital stock data is unavailable directly, and so we use perpetual
inventory methods to construct the data. Factor shares come from UN National
Accounts data. We then run counterfactual growth accounting experiments for
thirteen Sub-Saharan African countries excluding Chinese FDI inflows for
2005-2007 and also 2003-2009. Our individual results vary by year and country,
but there are several year/country combinations where Chinese FDI contributed
to an additional one half of a percentage point or above to GDP growth. These
results suggest that a significant, even if in some cases small, portion of
the elevated growth in sub Saharan Africa in the three years before the
Financial Crisis and also in the two years afterwards (2008-2009) can be
attributed to Chinese inward investment. |