The Impact of Chinese FDI on Zambia's Socio-Economic Development

Abstract

There has been an increase of Chinese investments in many parts of the globe. According to Bo Li (2016), China’s outward foreign direct investment OFDI stock has grown from $1 Billion in 2004 to more than $30 Billion in 2014. However, there is an ever-growing volume of literature premised on the criticism of the impact of Chinese investment in Africa and other parts of the globe. Many studies have cited China as being after the resources of its host countries without much concern to the effects or benefits to local populations, (James Mayers:2015) and (Reisen and Rielander:2011). This paper made an attempt to explore the impact of Chinese FDI on social economic development focusing on job creation and poverty reduction in Zambia. The study was largely qualitative in nature and adopted a mixture of descriptive and explorative study designs. The study focused on Zambia because of the unique bilateral ties with China which span over decades. Furthermore, many studies done on Chinese FDI usually aggregate all African countries overlooking the differential impact of the source and type of Chinese FDI in Africa which makes it difficult to generalize findings, (Abdoulkadre Ado Zhan Su:2016). While many studies only focus on the economic effects of FDI by stressing on quantitative aspects, this study went further to analyze a mixture of qualitative and quantitative variables within the socio-economic context. This approach was adopted in order to provide a comprehensive analysis and hence a point of departure from other similar studies done on this subject.  Less focus was laid on characteristic of FDI which in itself was a delimitation. A number of key conclusions revealed through my findings are that China has made significant investments in different sectors of the economy which have translated into job creation and helped to lift thousands of local people from poverty. However, despite the numerous investments made, jobs created are mostly for unskilled laborers. In addition, although most firms meet the minimum wage requirement, wages still fall below the Basic needs and nutrition basket, (Jesuit Center for Theological Reflections:2022). These are some of the areas of concern which have undermined notable gains. The paper therefore starts by unpacking suppositions surrounding FDI, then makes efforts to disambiguate economic growth from economic development before stressing on the findings and finally drawing conclusion.

Keywords: FDI, economic growth, economic development, sustainable development.

DOI: 10.7176/JESD/14-10-01

Publication date:May 31^st 2023