Foreign Direct Investment, Black Economic Empowerment and Labour Productivity in South Africa

Anagaw Derseh Mebratie () and Arjun Bedi
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Anagaw Derseh Mebratie: ISS, Erasmus University Rotterdam

No 6048, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The impact of foreign direct investment (FDI) on domestically owned firms in developing countries has been widely debated in the literature. It has been argued that FDI provides access to advanced technologies and other intangible assets which may spill over to the host country and allow domestic firms to improve their performance. While there is a substantial literature on this issue, for obvious reasons, little is known about the effect of FDI on domestic firms in the African context. Noting this gap, this paper uses two-period (2003 and 2007) firm level panel data from South Africa to examine the impact of foreign direct investment on the labour productivity of domestic firms. A key policy change during this time period was the passage of the broad-based black economic empowerment act (BB-BEE) and we also examine the effect of the interaction between foreign firm ownership and BEE on labour productivity. Regardless of the empirical specification we find no spill over effects and no evidence that a greater degree of BEE compliance by foreign firms influences labour productivity.

Keywords: black economic empowerment; FDI; labour productivity; spillover; firm; South Africa (search for similar items in EconPapers)
JEL-codes: J24 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2011-10
New Economics Papers: this item is included in nep-afr, nep-dev and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Journal of International Trade and Economic Development, 2013, 22 (1), 94-115

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Journal Article: Foreign direct investment, black economic empowerment and labour productivity in South Africa (2013)
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