What happens when your hand is in my pocket: the foreign policy effects of China’s foreign direct investment in Africa

Abstract

This study utilizes social exchange theory to argue that a more complete picture of the effects of China’s FDI in Africa needs to include non-economic factors, especially institutional forces that incorporate macro political considerations. We propose that economic dependencies created by China’s FDI in Africa are reciprocated by votes in international organizations, and thus, we hypothesize and test that increasing China’s FDI in African nations leads to increased political alignment in international affairs with those African nations. The proposed relationship, however, will be weakened for African countries with stronger governance mechanisms. Using data for China’s FDI in African countries from 2001–2019, we find support for our hypotheses. We find that China’s economic engagement in Africa has resulted in increased political alignment on international issues evidenced by votes in United Nations organizations raising the possibility Africa’s most attractive resource may not be economic, but rather political. This, however, poses the question of whether votes are a ‘resource’ that can be traded for economic purposes.