How Chinese investments and loans impact the development of infrastructure in African countries

Abstract

This thesis investigates how Chinese Foreign Direct Investments and Loans to Africa impact African infrastructure development. The study uses panel data of 51 African countries that span from 2003-2024. The model that is used to study the relationship between African infrastructure development and Chinese loans & Chinese Foreign Direct Investments (FDI) is an OLS linear regression model with multiple regressors and fixed effects. Three different regression models will be used to study the relationship, the first model study the effect of all Chinese loans and FDI on African infrastructure development. For the second model two interaction variables were created to study the effect that corruption and government efficiency has on infrastructure development. The last model studies how Chinese investments and loans in each sub-sector of infrastructure effect infrastructure development. The data will show that the effect of Chinese infrastructure investments and loans to Africa will have a positive relationship with infrastructure development, but the effect is nonsignificant thus we cannot draw any decisive conclusions from the study. The thesis will provide multiple probable explanations for why the results are non-significant.