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