Does Africa’s natural resource impact Chinese enterprise FDI efficiency? A DEA-Tobit model

Abstract This study investigates the effectiveness of foreign direct investment (FDI) by Chinese enterprises in Africa and how the natural resources of the continent influence this effectiveness. It assesses foreign direct investment (FDI) effectiveness in 40 African nations between 2006 and 2022 using a Data Envelopment Analysis (DEA) model and Tobit regression, also examining differences according to income categories. The average technical efficiency (TE) of Chinese enterprises foreign direct investment (FDI) remained low to medium, according to the research, with a slight improvement from 0.459 in 2006 to 0.471 in 2022. Fewer nations did, however, reach complete efficiency, which reflects the mounting difficulties in resource optimization. Pure technical efficiency (PTE) decreased, indicating persistent problems with resource management and governance, whereas scale technical efficiency (SE) greatly increased. While low-income countries demonstrated slow pure technical efficiency improvements as a result of learning and adaptation, upper-middle-income countries continuously outperformed others. Resource dependency and “resource curse” ideas are supported by Tobit regression results, which show that natural resources had a negative influence on technical efficiency and pure technical efficiency in 2022 but no discernible effect on efficiency in 2006. While trade openness appeared as a critical factor in boosting pure technical efficiency, Gross Domestic Product (GDP) had a good impact on efficiency in 2006 but had lost relevance by 2022. These findings give businesses, host countries, and governments practical advice on how to improve foreign direct investment (FDI) efficiency through sustainable investment strategies, economic diversification, and governance reforms.