Boosting economic growth through energy in Africa: the role of Chinese investment and institutional quality

Abstract

ABSTRACT In 2019, Chinese investment rose to $110 billion across all sectors in Africa. However, there are many criticisms that the Chinese presence is a curse to the development of Africa. Hence, we direct our attention to unravel the truth about these allegations by examining the underlying effect of institutional quality and Chinese investment in Africa on energy consumption (EC) and its impact on economic growth. We applied a panel corrected standard error (PCSE) econometric procedure for a selected 21 sub-Saharan African countries. Our results show that energy consumption promotes economic growth. Similarly, the study revealed that the institutional quality and Chinese investment in Africa were the underlying factors for the positive effect of energy consumption and economic growth. Therefore, our results expand the economic growth literature and inform policymakers of the need to pay attention to bilateral trade and investment with China.