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Cultural Distance and FDI: China Africa Perspective

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DOI: 10.4236/ojbm.2018.62028    394 Downloads   1,041 Views
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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.

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Gagne, O. (2018) Cultural Distance and FDI: China Africa Perspective. Open Journal of Business and Management, 6, 382-399. doi: 10.4236/ojbm.2018.62028.

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