Introduction to the Political Economy of Chinese FDI in Africa

The primary aim of this book is to examine the impact of productive foreign direct investment (FDI) with a focus on Chinese FDI on the growth of the light manufacturing industry in Africa, with a particular emphasis on Ethiopia, from 2000 to early 2020. The introductory chapter outlines an overview, background, aims, and analytical frameworks. It highlights a number of critical insights. First, the study analyses Ethiopia’s industrialisation challenges, which necessitates investigating the country’s industrial development dynamics, progress, and debates on industrialisation within the context of Africa. Second, the literature review highlights the role of FDI in accelerating industrialisation in countries like Ethiopia. However, FDI has been primarily directed into Africa’s extractive sector, with inadequate contributions to the continent’s industrialisation efforts. Ethiopia is an exception to this trend focusing on manufacturing and horticulture sectors. Third, China has become a significant source of FDI, especially after 2000, due to the progress of China-Africa cooperation. FDI has been vital in China’s industrialisation efforts and manufacturing exports. A comparative research approach based on case studies that analyses micro-, meso-, and macro-level factors. The research methods combine qualitative interviews, document reviews, direct observations, and focus groups over an extended period. The study draws from three competing conceptual perspectives: the dynamics of industrialisation and industrial policy from development economics, views on FDI drivers and their effects, and the nature and evolution of China-Africa relations from the international political economy.