Foreign direct investment, black economic empowerment and labour productivity in South Africa

Mebratie, Anagaw Derseh; Bedi, Arjun S.

doi:10.1080/09638199.2013.745287

Cited by 26 publications

(19 citation statements)

References 32 publications

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“…The findings, however, remain contradictory. Blyde et al (2004) for Venezuela, Bwalya (2006) for Zambia, Marin and Bell (2006) and Chudnovsky et al (2008) for Argentina, and Mebratie and Bedi (2013) for South Africa did not find any spillovers. Jordaan (2008aJordaan ( , 2008b for Mexico and Waldkirch and Ofosu (2010) for Ghana find negative FDI effects.…”

Section: Review Of the Literaturementioning

confidence: 92%

“…This suggests an association of cross‐section studies and positive findings, and negative or insignificant findings and panel studies. Panel studies by Aitken and Harrison () for Venezuela report negative effects, whereas Haddad and Harrison () for Morocco, Blalock and Gertler () for Indonesia, and Mebratie and Bedi () for South Africa report no effects. However, recent panel studies (e.g., Kee, , for Bangladeshi; Takii, , for Indonesia; and Van Thanh and Hoang, , for Vietnam) find positive effects.…”

Section: Review Of the Literaturementioning

confidence: 99%

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A Meta‐analysis of Fdi and Productivity Spillovers in Developing Countries

Demena

Bergeijk

2016

Journal of Economic Surveys

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This meta‐analysis reviews the intrasector heterogeneity of productivity spillovers from foreign direct investment (FDI) in 31 developing countries through a larger more comprehensive data set. We investigate how the inconsistencies in the reported spillover findings are affected by publication bias, characteristics of the data, estimation techniques, and empirical specification, analyzing 1450 spillover estimates from 69 empirical studies published in 1986–2013. Our findings suggest that reported FDI spillover estimates are affected by publication bias. In combination with model misspecification of the primary studies, the bias overstates the genuine underlying meta‐effect, but the meta‐effect remains economically and statistically significant. Our results emphasize that spillovers and their sign largely depend systematically on specification characteristics of the primary studies and publication bias. Publication bias is not caused by “best practice” choices. Future research needs to cover more developing countries and to investigate not only whether spillovers occur, but also to explore inside the black box of how spillovers actually emerge.

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Section: Review Of the Literaturementioning

confidence: 92%

Section: Review Of the Literaturementioning

confidence: 99%

A Meta‐analysis of Fdi and Productivity Spillovers in Developing Countries

Demena

Bergeijk

2016

Journal of Economic Surveys

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“…We model spillover effects within the context of a production framework in which output is a function of capital, labour, and access to technology. With regard to the outcome variable, the empirical literature uses a production function of either a one-step direct approach (see Aitken and Harrison 1999;Mebratie and Bedi 2013;Kinuthia 2016), or a two-step indirect estimation technique (see Waldkirch and Ofosu 2010;Merlevede, Schoors, and Spatareanu 2014;Fatima 2016). The former employs a direct approach to the FDI effect using labour productivity, output or value-added as the dependent variable.…”

Section: Empirical Approachmentioning

confidence: 99%

“…For instance, if a foreign firm gravitates into the most productive industry, then the observed result on productivity spillovers will overstate the impact of FDI. The best way to address this possibility is to estimate fixed-effects (Konings 2001;Hanousek, Kočenda, and Maurel 2011;Mebratie and Bedi 2013). In addition to the usual econometrics of panel data, an estimation of fixed-effects is, therefore, likely to mitigate for the possibility of reverse causality from domestic productivity to foreign investment.…”

Section: Empirical Approachmentioning

confidence: 99%

Transmission channels matter: Identifying spillovers from FDI

Demena

Murshed

2018

The Journal of International Trade & Economic Development

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The empirical literature on the spillovers of foreign direct investment (FDI) has so far not analysed the well-established theoretical transmission channels through which FDI impacts on domestic firms. This paper shows how channels of transmission matter for productivity spillovers from FDI by providing more fuller and nuanced picture of the effects. We analyse a panel of eight sub-Saharan Africa countries spanning the period 2006-2014 and demonstrate the empirical relevance of distinguishing three channelsdemonstration, labour mobility, and competition. We provide measures of these effects and also show that the size, significance, and sign of spillover effects depend on the local absorptive capacity, technology levels, geographical proximity, and foreign ownership structure. Overall, results suggest that demonstration spillovers are large and economically significant, whereas the patterns of labour mobility and competition spillovers are not stable across the various specifications and measures. Finally, the analysis involves several measures of further investigations and robustness checks. Results are robust to the construction of spillover and outcome variables, the introduction of additional explanatory variables and an alternative estimation method.

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“…While foreign firms are exempt from the BEE ownership provision they are expected to comply with other elements including preferential procurement of inputs from PDI owned companies. However, Mebratie and Bedi (2011) show that after accounting for firm level fixed effects, foreign firms were not more productive than domestically owned firms in South Africa. In other words, since FDI is considered to disproportionately favor more productive firms, and since there are no productivity premium to foreign ownership, compliance with BEE procurement measures are not bound to favor foreign firms vis-à-vis domestic firms.…”

Section: Partnerships and Chartersmentioning

confidence: 82%

South Africa's Quest for Inclusive Development

Ncube¹,

Shimeles²,

Verdier‐Chouchane³

2014

International Development

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The end of apartheid in 1994 ushered in a new era in South Africa and with it came the challenge of building a democratic, inclusive and stable society. The government led by the African National Congress initially followed a neoliberal stance to manage the economy and a redistributive strategy to close the income disparity with a streak of a developmental state. These two tracks were at times at odds with each other. The last decade has shown widening inequality and slow progress in addressing poverty, deprivations and other dimensions of wellbeing. Economic growth resulted in huge regional disparities and left a large middle-class vulnerable to uncertainties. In response, the government adopted an ambitious strategy called the New Growth Path that combined the goal of strong economic growth, job creation and broad economic opportunity in one coherent framework. This effort towards greater inclusion is not without challenges.

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Foreign direct investment, black economic empowerment and labour productivity in South Africa

Cited by 26 publications

References 32 publications

A Meta‐analysis of Fdi and Productivity Spillovers in Developing Countries

A Meta‐analysis of Fdi and Productivity Spillovers in Developing Countries

Transmission channels matter: Identifying spillovers from FDI

South Africa's Quest for Inclusive Development

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