This paper analyzes the horizontal productivity effects of foreign direct investment (FDI) from industrialized and developing countries in 10 sub‐Saharan African countries. We establish a unique data set by combining data from the World Bank Enterprise Surveys that allow us to distinguish between foreign investors from sub‐Saharan Africa, Asia, Europe, the Middle East, and North Africa. We find strong evidence of horizontal productivity spillovers to domestic firms derived from foreign‐firm presence. However, these effects are clearly dependent on domestic firms’ absorptive capacity. The largest productivity effects seem to be driven by investors from sub‐Saharan Africa. Our analysis also shows that productivity effects differ according to the income level of host countries. Overall, the strongest productivity effects seem to materialize in lower‐middle‐income countries. These key findings emphasize the increasing importance of emerging investors, beyond the traditional players from industrialized countries, in sub‐Saharan Africa.
German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE). Discussion Paper, 2017, 13/2017
T20 Blog, 2017
GIGA Focus Africa, 07/2016
in: African Development Bank / Organisation for Economic Co-operation and Development / United Nations Development Programme (eds.), Perspetivas económicas em África 2016: Cidades sustentáveis e transformação estrutura, Paris: OECD Publishing, 2016, 57-86
in: African Development Bank, Organisation for Economic Co-operation and Development, United Nations Development Programme (ed.), Perspectives économiques en Afrique 2016: Villes durables et transformation structurelle, Paris: OECD Publishing, 2016, 57-85