TITLE:
Cultural Distance and FDI: China Africa Perspective
AUTHORS:
O’scawn Gagne
KEYWORDS:
Cultural Distance, FDI, China-Africa
JOURNAL NAME:
Open Journal of Business and Management,
Vol.6 No.2,
April
27,
2018
ABSTRACT: Since the establishment of the Forum on China-Africa Cooperation back in
2000, Chinese investment in Africa rapidly increased. Almost two decades
later, the economic partnership between China and African countries is facing
both opportunities and challenges. This paper studies the impact of cultural
distance on FDI, in the specific context of China-Africa cooperation. We employ
generalized least squares regression analyses to estimate the impact of
cultural distance on Chinese Outward FDI in 40 African countries from 2003
to 2015. Our results indicate that cultural distance has a significant negative
impact on Chinese investment in Africa. Furthermore, distance in two of the
four cultural dimensions has a bigger impact on FDI: Masculinity/Femininity
and Uncertainty avoidance. We conclude that from China-Africa perspective,
cultural distance creates additional barriers to Chinese investment.