The relationship between the foreign direct investment and the growth Dissertation

The relationship between the foreign direct investment and the growth and development of the underdeveloped and developing countries - Dissertation Example According to the study the economy of China has been showing continuous growth and development in previous few years. The economists and analysts acknowledge the dramatic improve in the economy of China with the passage of time as the country has evolved from underdeveloped country to an emerging and developed world economy. Most of the countries and analysts have been looking towards China in order to provide financial support to different underdeveloped and developing countries. In this regard huge emphasis is on the Chinese investment in the African countries. Foreign direct investment has an important role to play in improving the economic condition of the country. Particularly if the country is developing then it could assist in improving and igniting investment in the country and therefore creating more employment and more opportunities for people to earn. In addition to this, foreign direct investment could help in growing the economy and improving the productivity of labour. However there are some disadvantages as well. African countries have been one of the most profitable and lucrative and this is the reason why several countries like United States, European Countries, Japan, China and several others have been making investment in African countries. Therefore this indicates that there are several opportunities in this part of the world. The foreign direct investment inflows of several African countries have been improving and the situation looks positive for this part of the world. With more investment, African developing countries would be able to improve their economies. ... 1.2. Background of the Research Study: China has been making investment in different parts of the world including African countries. Ethiopia and Nigeria are also among the two countries that China has eyed already for investment purpose. In both these countries, China has invested in different projects and some of the projects are regarding the infrastructure of the country and therefore China has already completed and has under process different projects with Nigeria and Ethiopia. In Nigeria, China has invested in different sectors including mining, banking sector, service industries, financial sector, manufacturing sector, real estate sector and several others. In addition to this, with Nigeria Chinese firms have formed joint ventures and together they are identifying, analysing and capitalising on the opportunities in the market. Some of the major projects that China has undergone with Nigerian firms are related to oil and gas exploration, service industry, financial services etc (Oyeranti, Babatunde, and Ogunkola, 2011). In comparison to this, in Ethiopia the Chinese government has helped the African nation in several ways as it has invested and helped them in improving the infrastructure of the country. China has already helped by giving financial support in the form of interest free loan to Ethiopia so that the government is able to develop the infrastructure and provide facilities to the people in the country. Also Chinese firms that have started their venture in Ethiopia have also helped the locals to improve their skills and competencies. China also has invested in different projects related to the infrastructure of Ethiopia in order to improve the situation of the