FDI and Local Linkages in Developing Countries: Evidence from Sub-Saharan Africa

This paper investigates the determinants of backward linkages of foreign manufacturing firms in 19 Sub-Saharan African countries. We shed light on the micro and macro level factors which contribute to a higher degree of interactions between foreign subsidiaries and local firms. Our results indicate...

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Bibliographic Details
Published in:World development 2013-10, Vol.50, p.41-56
Main Authors: Amendolagine, Vito, Boly, Amadou, Coniglio, Nicola Daniele, Prota, Francesco, Seric, Adnan
Format: Article
Language:English
Subjects:
Africa
backward linkages
Developing countries
Domestic markets
foreign direct investments
Foreign investment
Foreign subsidiaries
LDCs
Manufacturers
Organizational structure
Studies
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Summary:This paper investigates the determinants of backward linkages of foreign manufacturing firms in 19 Sub-Saharan African countries. We shed light on the micro and macro level factors which contribute to a higher degree of interactions between foreign subsidiaries and local firms. Our results indicate that the time since entry of foreign firms, the presence of a local partner in the ownership structure and a finalmarket orientation are associated with higher local linkages. Finally, we lend further support to the idea that good institutions and in particular a reliable legal system are pre-conditions for boosting the linkages generated by foreign firms.
ISSN:0305-750X
1873-5991
DOI:10.1016/j.worlddev.2013.05.001