Skip to main content

LUP Student Papers

LUND UNIVERSITY LIBRARIES

Chinese FDI and Debt-trap Diplomacy

Fallenius, Jonas LU (2021) NEKH03 20211
Department of Economics
Abstract
This empirical study seeks to initiate a new field of study. Through panel data analysis the relationship between Chinese FDI, non-Chinese FDI, and government debt in Sub-Saharan Africa is investigated. The model is expanded to include resource endowment and political stability variables. This is contextualized with the narrative of debt-trap diplomacy. This controversial notion is relatively well-trodden ground in the literature, however, not in the context of FDI and its effect on government debt. The panel consists of 46 countries, over the period 2003-2019. Granger Causality testing is employed. The result shows positive effects on government debt from Chinese FDI and a negative effect on non-Chinese FDI. Where a negative effect is... (More)
This empirical study seeks to initiate a new field of study. Through panel data analysis the relationship between Chinese FDI, non-Chinese FDI, and government debt in Sub-Saharan Africa is investigated. The model is expanded to include resource endowment and political stability variables. This is contextualized with the narrative of debt-trap diplomacy. This controversial notion is relatively well-trodden ground in the literature, however, not in the context of FDI and its effect on government debt. The panel consists of 46 countries, over the period 2003-2019. Granger Causality testing is employed. The result shows positive effects on government debt from Chinese FDI and a negative effect on non-Chinese FDI. Where a negative effect is expected. The positive effect is increased both in the case of natural resources and political stability. The conclusions drawn from the study are; that the effects of Chinese FDI are different from non-Chinese FDI and that there seems to be a link between higher effects on government debt and resource endowment and political stability. This does support the nation of debt-trap diplomacy, however, this study alone is certainly not able to confirm or deny its existence. (Less)
Please use this url to cite or link to this publication:
author
Fallenius, Jonas LU
supervisor
organization
course
NEKH03 20211
year
type
M2 - Bachelor Degree
subject
keywords
Foreign direct investment, China, Sub-Saharan Africa, debt-trap diplomacy
language
English
id
9055560
date added to LUP
2021-07-05 13:30:50
date last changed
2021-07-05 13:30:50
@misc{9055560,
  abstract     = {{This empirical study seeks to initiate a new field of study. Through panel data analysis the relationship between Chinese FDI, non-Chinese FDI, and government debt in Sub-Saharan Africa is investigated. The model is expanded to include resource endowment and political stability variables. This is contextualized with the narrative of debt-trap diplomacy. This controversial notion is relatively well-trodden ground in the literature, however, not in the context of FDI and its effect on government debt. The panel consists of 46 countries, over the period 2003-2019. Granger Causality testing is employed. The result shows positive effects on government debt from Chinese FDI and a negative effect on non-Chinese FDI. Where a negative effect is expected. The positive effect is increased both in the case of natural resources and political stability. The conclusions drawn from the study are; that the effects of Chinese FDI are different from non-Chinese FDI and that there seems to be a link between higher effects on government debt and resource endowment and political stability. This does support the nation of debt-trap diplomacy, however, this study alone is certainly not able to confirm or deny its existence.}},
  author       = {{Fallenius, Jonas}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Chinese FDI and Debt-trap Diplomacy}},
  year         = {{2021}},
}