INVESTMENT
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TRADE LINKAGES IN AFRICAN
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ASIAN
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gated analysis of the extent to which trade and FDI flows are related to one another on the continent. We now turn to assess the findings from these data.
Firm-Level EvidenceModes of Foreign Investment EntryThe initial conditions of Chinese and Indian foreign investors entry into the African economy influence the scale and pattern of integration attained by these businesses. As chapter 2 shows, FDI in Africa by Chinese and Indian firms is not a wholly recent phenomenon indeed, in some cases Chinese and Indian FDI in Africa dates back several decades.
Nonetheless, according to new firm-level data from the 2006
WBAATI survey, a snapshot of a large sample of the
stock of Chinese and Indian firms currently operating in Africa reveals that the median Chinese firm began its African operations in 2002, and its Indian counterpart began its operations in 1999; see table 6.1. This finding at the firm level is consistent with that suggested by the aggregate data presented in chapter 2, which showed a rapid increase
in the last few years of flows of FDI to Africa by firms from these countries. Overall, today, a substantial portion of Chinese and Indian foreign investors in Africa are of a relatively young vintage, especially compared with European firms currently operating on the continent.
Initial conditions are also shaped by the form of entry that firms pursue in their FDI. Worldwide there is much diversity in the way
in which firms engage in FDI, depending in no small measure on the sector in question and the degree of economic and political stability of the country, among other factors. Still, it is often the case that firms that are newer to a market—and thus less familiar with the local investment climate—tend to
TABLE 6. 1
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