FDI and Local Linkages: Evidence from Selected African Countries
World Development, 50, p. 41-56. DOI: 10.1016/j.worlddev.2013.05.001
Posted: 17 Jul 2014
Date Written: October 2013
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 final market 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.
Keywords: foreign direct investments; backward linkages; Africa
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