FDI and Local Linkages in Developing Countries: Evidence from Sub-Saharan Africa

Amendolagine, Vito; Boly, Amadou; Coniglio, Nicola D.; Prota, Francesco; Šerić, Adnan

doi:10.1016/j.worlddev.2013.05.001

Cited by 148 publications

(114 citation statements)

References 28 publications

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“…This result is consistent with other examples in the literature such as Amendolagine et al (2013) and Merlevede et al (2011) who find a similar non-linear effect. An interpretation for this counterintuitive result could be that that older firms prefer to internalize part of the input production and source less from local manufacturing firms.…”

Section: Methodology and Resultssupporting

confidence: 93%

“…In this sense, the larger the distance the higher the trade costs and therefore the more profitable would be for the multinational to source locally (Rodriguez and Clare, 1996). Consistent empirical evidence of the four factors has been found for Sub-Saharan African by Amendolagine et al (2013) using, as we do, the UNIDO Africa Investor dataset. Regarding domestic firms' characteristics, Javorcik and Spatareanu (2009) find that suppliers to multinationals are larger, have a higher capital-labor ratio, pay higher wages and exhibit a higher productivity level.…”

Section: What Drives the Domestic Linkage?supporting

confidence: 86%

“…Contract enforcement 7 For robustness and following the literature we include two alternative linkage measures based respectively in long and short run input demand functions. We follow Amendolagine et al (2013), Görg et al (2011) and Kiyota et al (2007). Detail on these functions and the corresponding regression results are provided in the Appendix in tables C1 and C2.…”

Section: Datamentioning

confidence: 83%

“…To our knowledge the only study that directly includes an institutional variable as local linkage determinant is the work by Amendolagine et al (2013) who found evidence that indeed higher host-4 country ability to guarantee contract enforcement promotes the domestic linkage. These authors they find that indeed investor origin matters for linkage generation, arguing that cultural and language distance might be playing a role.…”

Section: What Drives the Domestic Linkage?mentioning

confidence: 99%

“…(2008 we estimate the MNE's demand for local inputs using a translog cost function. We estimate a long run version and a short run version following Amendolagine et al (2013) and Kiyota et al (2013).…”

Section: Relative Demand For Local Inputsmentioning

confidence: 99%

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Multinationals in Sub-Saharan Africa: Domestic linkages and institutional distance

Perez-Villar

Šerić

2015

International Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper analyzes the role of institutional distance in the establishment of domestic linkages by multinational enterprises in a cross-section of 19 Sub-Saharan countries. Investors' familiarity with formal and informal procedures in the host country lowers uncertainty and facilitates networking with local firms. Hence, a similar degree of institutional development boosts linkages between domestic firms and multinationals. Using a novel dataset from the 2010 Africa Investor Survey by UNIDO we find that institutional distance in terms of contract enforcement deters the domestic linkage in host countries with worse institutions relative to the origin country. Additionally, institutional distance matters more for multinationals from the north. The paper sums to the literature on domestic linkages by including the understudied institutional dimension, to the still scarce literature on South-South FDI in least developed countries and contributes to the definition of clearer targets for foreign investment policies. Terms of use: Documents in

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Section: Methodology and Resultssupporting

confidence: 93%

Section: What Drives the Domestic Linkage?supporting

confidence: 86%

Section: Datamentioning

confidence: 83%

Section: What Drives the Domestic Linkage?mentioning

confidence: 99%

Section: Relative Demand For Local Inputsmentioning

confidence: 99%

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Multinationals in Sub-Saharan Africa: Domestic linkages and institutional distance

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Šerić

2015

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The role of external debt in the foreign direct investment–growth relationship

Tanna

Vita

2018

Int. J Fin Econ

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This paper investigates the relevance of external debt as a factor inhibiting economic growth gains to be accrued from foreign direct investment (FDI). We develop a model that formalizes a mechanism to allow for the influence of external debt in the transmission of FDI‐generated externalities and conduct threshold regressions to test the existence of a debt contingency effect that limits the positive impact of inward FDI on growth. With the use of annual as well as 5‐year averaged data for 39 developing countries over the period 1984–2010, our findings support the hypothesis that FDI‐induced growth is dependent on the external debt constraint. In particular, we show that beyond a certain threshold high indebtedness constrains economies from reaping growth benefits from FDI as they seek to reduce their debt levels. In this scenario, the evidence also shows that increasing financial development can mitigate the negative influence of high external debt on the FDI–growth nexus.

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Foreign Direct Investment, Employment and Wages in Sub‐Saharan Africa

Coniglio

Prota

Šerić

2015

J of Intl Development

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Job creation is one of the main challenges for developing countries. The aim of this paper is to analyse the relation between foreign ownership and employment using an original firm‐level dataset that covers 19 sub‐Saharan African countries. Our results show that although foreign firms are generally larger than local ones, the employment they generate is relatively more unskilled labour intensive compared with that generated by domestic firms. We discover substantial differences between foreign investors from the north and the south, in terms of both skill intensity and wage premiums. We also find that, ceteris paribus, Chinese firms employ more workers (mostly blue‐collar workers) and pay lower wages for both skilled and unskilled workers compared with both domestic firms and other foreign investors. Copyright © 2014 John Wiley & Sons, Ltd.

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FDI and Local Linkages in Developing Countries: Evidence from Sub-Saharan Africa

Cited by 148 publications

References 28 publications

Multinationals in Sub-Saharan Africa: Domestic linkages and institutional distance

Multinationals in Sub-Saharan Africa: Domestic linkages and institutional distance

The role of external debt in the foreign direct investment–growth relationship

Foreign Direct Investment, Employment and Wages in Sub‐Saharan Africa

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