Why investing in Africa? The differential role of Chinese government support

We study whether the determinants of greenfield FDI in Africa differ between Chinese and non-Chinese investors. By using investment-level data we focus on the differential effect of risk- and information-related factors, i.e., investment protection provided by International Investment Agreements (IIAs) and agglomeration economies (country-of-origin agglomeration, industry agglomeration, and internal agglomeration) both at an aggregate level and for different functions. Chinese investors appear to be less reliant on internal and country-of-origin agglomeration and on investment protection agreements than non-Chinese ones. This result appears to be mostly driven by investments in Services and Manufacturing activities. We argue that Chinese investors are backed by the direct engagement of their State when locating in Africa so that firm co-location and IIA protection are less salient in affecting their location choices.