Making Foreign Direct Investment Work for Sub-Saharan Africa : Local Spillovers and Competitiveness in Global Value Chains

By T. Farole, Deborah Winkler. 2014

248 citations recorded by the source corpus.

Foreign Direct Investment (FDI) is becoming an increasingly significant catalyst for output and trade in developing countries, in part due to a major expansion in the scope of Global Value Chains (GVCs). FDI delivers a number of important contributions to economic development in terms of investment, employment, and foreign exchange. However, it is FDI's spillover potential-the productivity gain resulting from the diffusion of knowledge and technology from foreign investors to local firms and workers-that is perhaps its most valuable input to long-run growth and development. While substantial empirical evidence has been amassed over the past decade on the existence and dynamics of FDI spillovers, the results are mixed-simply attracting FDI by no means guarantees that a country will benefit from spillovers. This chapter provides an overview of the objectives of the research for which the results are presented in this book. The aim of the research is to identify the critical factors for the realization of FDI-related spillovers including dynamic interactions between FDI and local suppliers, service providers, workers, local producers, customers, and institutions. The research involved detailed field surveys in three industries, characterized by GVCs, across eight countries, with a specific focus on low-income countries in Sub-Saharan Africa.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/a71303c25bb2a61b4456977ab157d93e04e65f19

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Citations in the corpus

Global value chains, rising power firms and economic and social upgrading (2015, background): “However, there has been weak evidence to support the spillover argument (Farole and Winkler, 2014; Oetzel and Doh, 2009).”
Economic upgrading through global value chain participation: which policies increase the value-added gains? (2017, background): “Education and skills influence the share of human capital in firms and are particularly important for expanding GVC participation (Farole and Winkler 2014).”
Local sourcing in developing countries: The role of foreign direct investments and global value chains (2019, background): “Moreover, the country’s human capital endowment is a necessary condition for the absorption of FDI spillovers (Borensztein et al., 1998) including those realized through linkages (Farole and Winkler, 2014), and for entry to and upgrading in GVCs (Antràs, Chor, Fally, & Hillberry, 2012).”
Do Global Value Chains Offer Developing Countries Learning and Innovation Opportunities? (2017, background): “More recently, participation in Global Value Chains (GVCs) has been recognized as providing an important opportunity for developing countries to access and acquire foreign knowledge (see, for instance, Farole and Winkler, 2014).”
Cross sectoral FDI spillovers and their impact on manufacturing productivity (2018, background): “In comparison with material inputs, services inputs benefit a wider range of clients (Farole and Winkler, 2014).”
Innovation Trajectories in Developing Countries: Co-evolution of Global Value Chains and Innovation Systems (2018, background): “In their analysis of the apparel sector in Kenya, Lesotho and Swaziland, Staritz and Frederick (2014) focus on GVC linkage and spillover effects, showing how such effects were constrained by limited absorptive capacity.”