 To what extent could Chinese FDIs be directed towards the needs of the vulnerable groups?

 To what extent can FDIs be coordinated with other regional economies?

 How can Chinese FDIs be steered towards preferential access to Chinese markets?

 How can the Government ensure optimization of FDI development impacts through Chinese and other FDIs?

Finally, this study shall take into account the following aspects:

 Analysis of the link between FDI and economic performance

 Characteristics of FDIs in Madagascar

 General characteristics of companies in Madagascar

 Analysis of incentives for Chinese investors

 Investment determinant factors in Madagascar

 Madagascar’s development potential in terms of high added value activities

 Corporate geographical concentration in Madagascar according to the geographical economy theory (Krugman &…)

 The various types and characteristics of Chinese companies Madagascar

 The various types and characteristics of Malagasy companies operating in China

 Is the Chinese FDI directed to the State or the private sector

 Impacts of Chinese investments

 Links between investment, trade and Aid.

Based on insights from previous research, this project focuses on trade, investment and aid flows as key channels through which the impacts of China may be conveyed to the African economy

Madagascar is one of the targeted countries of western country. Nowadays, Chinese investor started to see the advantages of the big Island.

In 2013, significant change occurred on the coming FDIs, whereas the 2009 to 2002 sub-period recorded an average annual growth of 9%, the sub-period of 2013 to 2015 in contrast registered an average annual rate of 141%. At a regional level, Madagascar is in top 10 African countries that have recorded the highest FDI in 2007- 4th position in Sub-Saharan Africa-behind Tunisia. In terms of GDP, given the massive rise of FDI since 2013, FDI flows went over the threshold by 10%Within the East African and Indian Ocean Islands region, Madagascar is now the foremost FDI recipient country.

En In 2014, a significant capital input is noted in connection onto infrastructure and hostelries and in 2015, FDI flows, apart from those for "mining" were concentrated in the field of "telecommunication". Indeed, FDIs have filled up Madagascar’s infrastructure gaps.

This performance should not obscure the stock weakness. The country is still far behind with a 0.46% Africa’s stock, bearing in mind that the continent has only 2.6% of the world stock1, despite an exponential growth rate over 3 years.

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2 - LITERATURE REVIEW

2-1 FDI THEORETICAL ELEMENTS

It is important to review the basic theories explaining the formation of private investment and generates the results already found by other researchers in the developing countries especially in Africa.

Theoretically, private investments are determined b:

 The real factors via the accelerator effect of growth (Atalion, 1908 and Clark, 1917)

 Financial factors in the effect of interest and credit rationing (Keynes, 1936)

 Others factors such as the political instability and macroeconomic risk.

Recent studies (Serven and Solimano, 1992) challenged the Keynesian theory in determining private investment. It is not only the interest rate that influences investment decisions but there are other economic factors. Kamgnia and Mama (2002) developed this new vision and found other factors such as the effect of public investment (ripple effect and/or crowding out effect), imperfections in the capital markets (volatility of the exchange rate), effects of debt and effects of macroeconomic policy adjustments.

Results found previously showed the importance of economic factors in determining private investment in developing countries. Agenor et al. (2000) showed in a cross-sectional study conducted on panel data, the positive correlation between investment rates and growth rates.