Chinese Investment and Africa's Digital Leap: A New Era of Economic Growth

Chinese Outward Foreign Direct Investment (OFDI) has emerged as a significant driver of economic interactions between China and Africa, particularly within the digital transformation framework. This study investigates the relationship between Chinese OFDI, digital transformation, and economic growth across 41 African countries from 2005 to 2020. Using robust econometric methods—Panel-Corrected Standard Errors (PCSE), System Generalized Method of Moments (System GMM), fixed effects, and Quantile regression—the analysis identifies key findings: Chinese OFDI has a positive and significant impact on advancing digital transformation in Africa. Furthermore, while the standalone contributions of Chinese OFDI and digital transformation to economic growth are limited, their combined effect is substantial, revealing a complementary relationship. This synergy suggests that improvements in local digital infrastructure enhance the productivity of Chinese investments, accelerating digital progress through infrastructure development and skill transfer. The study underscores the need for targeted Chinese investments and African policy reforms to leverage this relationship, offering actionable insights for promoting sustainable economic growth in a digitally evolving landscape.