Chinese FDI, political events in recipient countries, and the innovation of African firms

This study examines the effects of Chinese foreign direct investment (FDI) and political events on firm-level innovation in African recipient countries using data from the World Bank Enterprise Surveys during 2018–2020. The findings demonstrate that Chinese FDI significantly improves innovation outcomes among African firms. Political events in host countries not only directly stimulate innovation but also amplify the positive influence of Chinese FDI. These results indicate a complementary, rather than substitutive, relationship between political and market factors in the allocation of innovation resources. By highlighting the interactive role of political dynamics and market mechanisms, this research contributes to institutional economics and extends the literature on innovation in emerging economies. Policy implications are proposed to guide African enterprises in fostering sustainable innovation through the effective use of Chinese FDI.