Greening African economy: The role of Chinese investment and trade

Abstract

AbstractGlobal warming and the rapid depletion of natural assets have made many countries anxious to find green growth strategies, including global partnerships and international business. China has positioned itself as the right partner for sustainable growth and development in Africa through different engagement routes. In this study, we employ fixed effects on a sample of 27 countries over 17 years to examine the impact of China's foreign direct investment and trade on green growth in Africa. Our results show that China's investment and trade affect green growth differently. We find that foreign direct investment and export have a negative impact on green growth. Contrarily, we find importation from China to increase green growth. Our results suggest that the growing presence of China in Africa through direct investment and exportation of natural resources is likely to hamper achieving the Sustainable Development Growth goals. However, countries can harness some benefits from importing sustainable products from China. Our study extends the green growth literature and informs policymakers of the need to pay attention to the effects of growing Chinese‐Africa engagement on attaining sustainable and greener growth. The results are robust to different identification techniques, including two‐stage least square and system generalised method of movement.