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The impact of Chinese FDI in Africa: evidence from Ethiopia

Crescenzi, Riccardo and Limodio, Nicola (2021) The impact of Chinese FDI in Africa: evidence from Ethiopia. Geography and Environment Discussion Paper Series (22). Department of Geography and Environment, LSE, London, UK.

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We exploit exogenous variation in China’s export taxes to investigate the impact of Chinese foreign direct investment (FDI) in Ethiopia. Higher sector-specific export taxes in China lead to more Chinese FDI in Ethiopian districts specialized in those sectors and generate highly heterogeneous effects. Domestic firms competing with Chinese FDI reduce their sales, investment, inputs and prices, while firms in upstream and downstream sectors expand. We build a 20-year district panel of night lights and observe that Chinese FDI leads to no instantaneous impact on local growth, but significant and persistently positive effects after 6-12 years.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 2021 The Authors
Divisions: Geography & Environment
Subjects: H Social Sciences > HG Finance
H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor
JEL classification: F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O16 - Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output (Income) Convergence
Date Deposited: 18 Jan 2021 08:27
Last Modified: 03 Mar 2021 00:06

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