Multi-dimensional Complementarities and the Growth Impact of Direct Investment from China on Host Developing Countries

This paper examines the growth impact of Chinese outward foreign direct investment (OFDI) on economic growth in host developing countries. Our results show that the net growth effect of Chinese OFDI is determined by the multi-dimensional complementarities between the FDI and the host economies. Chinese OFDI appears to have a significant positive impact on the long-run economic growth of host economies. It has contributed positively to economic growth in Africa and, less significantly, in Asia, but not in Latin America. Chinese OFDI in resource-rich countries shows a stronger growth effect in the short-run but a weaker effect in the long-run. 

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