Threats and Opportunities Developing Nations of Africa Can Draw From the Foreign Direct Investment From Russia and China

Abstract

The 21st century has seen the world superpowers, such as Russia and China and multi-lateral agencies encourage backward states to embrace and promote foreign direct investment (FDI) as an instrument to improve domestic production which will lead to economic growth and development. This is premised on the fact that FDI comes with transfer of technology, new and advanced management approaches, technical skills, and access to international markets. However, researchers have shown that occasionally FDI inflows achieve the opposite as they compete for the same markets with local industries and, as a result, they crowd out local industries leading to higher unemployment. Further, research has shown that most international financial crises were caused by rapid withdrawal of FDI. In essence, FDI can have positive and can also have negative effects on economic growth. Against this background, this discussion seeks to outline and look at the threats and opportunities that backward states, such as those in Africa will draw from the 21st century FDI from world superpowers.