Chinese Direct Investment in Madagascar Benefits and Risks

Given Madagascar's development challenges, domestic savings are insufficient to support national investment; therefore, it is imperative for the Malagasy people to attract as much foreign capital as possible. Since 2000, Madagascar has participated in the China-Africa Cooperation Forum, and as a result, Chinese direct investment in Madagascar has increased significantly. Chinese investments in Madagascar take various forms and span diverse sectors of the Malagasy economy. However, the investment structure has reflected the predominance of the "extractive industries" sector. In short, these investments are beneficial to the Malagasy economy because they contribute to the country's economic growth. However, risks are also to be expected from the investments of these Chinese multinational companies in Madagascar, particularly in the social, political, economic, and environmental spheres.