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Paper short abstract:

This article will present preliminary findings from a field study in Angola whose objective is to identify and assess spillover effects of Chinese FDI. These can be understood as productivity gains that local firms may reap as a result of transfer of technology brought by foreign investors.

Paper long abstract:

For better or worse foreign direct investment (FDI) has always been an engine of the Angolan economy and a tool for political elites to consolidate power. Typically, scholars would look potential gains from FDI in what is known as "direct effects". These are balance of payment gains, capital provision, including plugging saving and foreign exchange gaps, job creation, wage increases, additional tax revenues or trade creation. Not much attention has been given to what economists call "indirect effects" or "spillover effects". These are productivity gains that local firms may reap as a result of a transfer of technology and knowledge brought by foreign investors. In fact, considering all potential FDI gains spillover effects have been considered the most sought after by hosting countries. Whereas Western FDI, driven almost entirely by resource-seeking motives, have never been expected to yield much of these, the rhetoric surrounding China-Africa ties might suggest that benefits from Chinese FDI should be spreading beyond the usual and investment activity of Chinese firms, which is arguably more across-the-board, would lift if not all the boats, then perhaps more of them. This article will present preliminary findings from a field study in Angola whose primary objective is to identify and assess the spillover effects of Chinese FDI in selected sectors.