Beitrag vom 11.12.2014

GIGA Working Papers

The Heterogeneity of FDI in Sub‐Saharan Africa -

How Do the Horizontal Productivity Effects of Emerging Investors Differ from Those of Traditional Players?

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.

Complete Version:

http://www.giga-hamburg.de/de/system/files/publications/wp262_pfeiffer-…