Capitalizing on FDI for Knowledge Domestication and Spillovers: A Comparative Study of South Africa, Nigeria, and Egypt in the Quest for Sustainable Development

Paulinus Ikechukwu Iyika ()
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Paulinus Ikechukwu Iyika: Center for International Tax Advancement in Africa(CITAx Africa)

A chapter in Economic Transformation in Sub-Saharan Africa, Volume I, 2026, pp 205-230 from Springer

Abstract: Abstract Amid the growing consensus regarding the potential impact of foreign direct investment (FDI) on fostering sustainable economic development through knowledge transfer and innovation, there remains a critical gap in understanding the variance in FDI’s effectiveness in domesticating foreign knowledge across different contexts. This study fills this gap by assessing the differential impacts of FDI on knowledge domestication and spillover effects in South Africa, Nigeria, and Egypt, correlating these effects with the pursuit of Sustainable Development Goal (SDG) 9, particularly in the areas of industry innovation and infrastructure. Employing a comparative analysis framework, this research analyses annual data on international patent filings by residents as a proxy for foreign knowledge domestication and contrasts this against inward FDI, considering GDP growth, trade policies, and economic freedom (a proxy of the overall economic and institutional structure in each country) to gauge the economic and institutional milieu in each country. Findings reveal a distinct variance in the impact of FDI on knowledge spillover among the nations, with South Africa and Egypt displaying positive correlations, whereas Nigeria shows negligible effects, indicating that Nigeria benefitted the least. This underscores the importance of implementing country-specific policies and frameworks for regional cooperation to enhance the assimilation and application of FDI’s knowledge and technological components, promoting sustainable development across Sub-Saharan Africa. By integrating a nuanced approach to data analysis with a focus on country-specific effects, this research advances the understanding of how FDI influences knowledge transfer processes, advocating for policy reforms and regional collaborations that bolster domestic innovation and economic growth.

Keywords: FDI; Knowledge spillover; Patent filings; Sustainable development; Sub-Saharan Africa; Foreign knowledge domestication (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-77821-6_7

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DOI: 10.1007/978-3-031-77821-6_7

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