Tracing the Legacy: China's Historical Aid and Contemporary Investment in Africa

Journal Article

Abstract In this article we depart from the classic model of foreign direct investment (FDI) determinants and examine the effect of sociohistorical factors on FDI. We argue that past foreign aid projects confer social capital that constitutes specific resources available to investors in the present, increasing their preferences for host countries in which their home country has accumulated more social capital. We use new data on China's historical aid in Africa to test these contentions, uncovering a positive, significant connection between China's historical aid program in Africa (1956–1999) and contemporary (2000–2015) investments by Chinese companies. While China's historical aid may have been politically driven, it has had important long-term consequences for its commercial investors. More broadly, these findings suggest a sociohistorical explanation of the puzzle of why Chinese foreign investments deviate from conventional FDI patterns.

Full Text

Duke Authors

Cited Authors

  • Morgan, P; Zheng, Y

Published Date

  • September 1, 2019

Published In

Volume / Issue

  • 63 / 3

Start / End Page

  • 558 - 573

Published By

Electronic International Standard Serial Number (EISSN)

  • 1468-2478

International Standard Serial Number (ISSN)

  • 0020-8833

Digital Object Identifier (DOI)

  • 10.1093/isq/sqz021

Language

  • en