FDI, Global Value Chains, and Local Sourcing in Developing Countries

Vito Amendolagine, Andrea Presbitero, Roberta Rabellotti, Marco Sanfilippo and Adnan Seric

No 2017/284, IMF Working Papers from International Monetary Fund

Abstract: The local sourcing of intermediate products is one the main channels for foreign direct investment (FDI) spillovers. This paper investigates whether and how participation and positioning in the global value chains (GVCs) of host countries is associated to local sourcing by foreign investors. Matching two firm-level data sets of 19 Sub-Saharan African countries and Vietnam to country-sector level measures of GVC involvement, we find that more intense GVC participation and upstream specialization are associated to a higher share of inputs sourced locally by foreign investors. These effects are larger in countries with stronger rule of law and better education.

Keywords: WP; firm; global value chain; investor; supplier; Foreign Direct Investment; Global Value Chains; Local Sourcing; Africa; Vietnam; firm propensity; GVC involvement; firm level; foreign investor; FDI spillover; GVC position; GVC indicator; Production growth; Exports; Foreign corporations; Global; Sub-Saharan Africa (search for similar items in EconPapers)
Pages: 40
Date: 2017-12-21
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Citations: View citations in EconPapers (12)

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