Multinationals in Sub-Saharan Africa: Domestic linkages and institutional distance

Lucia Perez-Villar () and Adnan Seric ()

No 1893, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper analyzes the role of institutional distance in the establishment of domestic linkages by multinational enterprises in a cross- section of 19 Sub- Saharan countries. Investors' familiarity with formal and informal procedures in the host country lowers uncertainty and facilitates networking with local firms. Hence, a similar degree of institutional development boosts linkages between domestic firms and multinationals. Using a novel dataset from the 2010 Africa Investor Survey by UNIDO we find that institutional distance in terms of contract enforcement deters the domestic linkage in host countries with worse institutions relative to the origin country. Additionally, institutional distance matters more for multinationals from the north. The paper sums to the literature on domestic linkages by including the understudied institutional dimension, to the still scarce literature on South- South FDI in least developed countries and contributes to the definition of clearer targets for foreign investment policies.

Keywords: Multinational Firms; South- South; Backward Linkages; Institutions (search for similar items in EconPapers)
JEL-codes: F14 F23 O19 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/88765/1/775764019.pdf (application/pdf)

Related works:
Journal Article: Multinationals in Sub-Saharan Africa: Domestic linkages and institutional distance (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1893

Access Statistics for this paper

More papers in Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().