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Internal Business in Africa

In: Business and Management

Submitted By mike156
Words 1207
Pages 5
L-T Benefits for Africa, with some opposing views, and recommended policies at the end. I did not include the footnotes yet as we have to agree on a format first. Let me know what you think. Thanks.

Viewed from a short-term perspective, it is quite clear that Chinese FDI in Africa is more beneficial for China than Africa. However, as Africa slowly familiarizes itself to the increased participation of China in its economy, the long-term potential of Chinese FDI for Africa is much more apparent. The benefits are significant, and are more likely to be attained when Africa has fully adapted to China’s involvement in its economy. First of all, Chinese FDI is considered an essential source of capital formation, especially for the less developed economies of the African countries. Large capital inflows from China would not only stimulate Africa’s economy, but also increase its wealth by promoting trade as well as opening and expanding market opportunities. China, in particular, is reputed to save its income to a greater extent than other countries[1], implying that a large amount of this surplus of income is being spent on its investments in Africa to further strengthen Africa’s economy. In fact, Africa’s economy grew by 5.8% in 2007, and this dramatic increase is to be partially attributed to Chinese investment[2]. Moreover, Chinese knowledge and expertise are expected to be passed on to the local African firms in the form of transfer of technologies[3]. Further analysis reveals that Chinese technology may even be the most appropriate to be transferred to Africa. Indeed, even though China does not possess the most advanced technology, its low-cost and straightforward techniques are the most suitable for the African countries at their present level of industrialisation. Africa simply cannot meet the minimum requirements of highly sophisticated technologies at

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