The Influence of Digital and Human Capital on Chinese FDI in Africa: Comparing Resource-Rich and Resource-Poor, Landlocked and Coastal States

This study investigates the determinants of Chinese Outbound Foreign Direct Investment (OFDI) across 47 African countries from 2003 to 2020, with a specific focus on comparing landlocked and coastal, and resource-rich and resource-poor, countries. Grounded in the Knowledge-Capital Model and Dunning’s OLI Paradigm, extended by the Digital Silk Road framework, the analysis employs fixed-effects regression with clustered robust standard errors, complemented by two-step system GMM for robustness. The sample was disaggregated into four groups: landlocked (16), coastal (33), resource-rich (24), and resource-poor (23). The findings revealed significant heterogeneity across these groups. Human capital positively influences Chinese OFDI across all country types, with the strongest effects in coastal and resource-rich states. Digitalization (internet penetration) significantly attracts Chinese OFDI only in coastal and resource-rich countries, confirming its role as a critical location-specific advantage. Natural resources significantly drive investment in coastal and resource-rich contexts, but not in landlocked or resource-poor countries. Financial development and trade openness also positively affect Chinese OFDI in coastal and resource-rich countries. These results are robust to concerns regarding endogeneity. The findings offer insights for policymakers and investors, emphasizing that human capital development and digital infrastructure are key to attracting Chinese FDI, particularly in coastal and resource-rich regions. For landlocked and resource-poor countries, targeted investments in education, digital connectivity, and regional infrastructure are essential to overcome their inherent disadvantages.