The heterogeneity of FDI in Sub-Saharan Africa: How do the horizontal productivity effects of emerging investors differ from those of traditional players?

Birte Pfeiffer, Holger Görg and Lucia Perez-Villar ()

No 1981, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: 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.

Keywords: foreign direct investment; productivity; South-South firms; spillovers; sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: F23 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-afr, nep-eff and nep-int
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Related works:
Working Paper: The Heterogeneity of FDI in Sub-Saharan Africa – How Do the Horizontal Productivity Effects of Emerging Investors Differ from Those of Traditional Players? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1981

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