FDI, Global Value Chains, and Local Sourcing in Developing Countries

41 Pages Posted: 27 Aug 2019

See all articles by Vito Amendolagine

Vito Amendolagine

University of Pavia

Andrea Presbitero

International Monetary Fund (IMF)

Roberta Rabellotti

University of Pavia

Marco Sanfilippo

University of Antwerp - Institute of Development Policy and Management

Adnan Seric

United Nations Industrial Development Organization (UNIDO)

Date Written: December 2017

Abstract

The local sourcing of intermediate products is one the main channels for foreign direct investment (FDI) spillovers. This paper investigates whether and how participation and positioning in the global value chains (GVCs) of host countries is associated to local sourcing by foreign investors. Matching two firm-level data sets of 19 Sub-Saharan African countries and Vietnam to country-sector level measures of GVC involvement, we find that more intense GVC participation and upstream specialization are associated to a higher share of inputs sourced locally by foreign investors. These effects are larger in countries with stronger rule of law and better education.

Keywords: Foreign direct investment, Spillovers, International trade, Econometric models, Developing countries, Sub-Saharan Africa, Vietnam, Foreign Direct Investment, Global Value Chains, Local Sourcing, Africa, Vietnam

JEL Classification: G01, G21, J23, J63

Suggested Citation

Amendolagine, Vito and Presbitero, Andrea and Rabellotti, Roberta and Sanfilippo, Marco and Seric, Adnan, FDI, Global Value Chains, and Local Sourcing in Developing Countries (December 2017). IMF Working Paper No. 17/284. Available at SSRN: https://ssrn.com/abstract=3442855

Vito Amendolagine (Contact Author)

University of Pavia ( email )

Corso Strada Nuova, 65
27100 Pavia, 27100
Italy

Andrea Presbitero

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Roberta Rabellotti

University of Pavia ( email )

Corso Strada Nuova, 65
27100 Pavia, 27100
Italy

Marco Sanfilippo

University of Antwerp - Institute of Development Policy and Management ( email )

City campus building S
Lange Sint Annastraat 7
Antwerp, 2000
Belgium

Adnan Seric

United Nations Industrial Development Organization (UNIDO) ( email )

Wagramer Strasse 5
P.O. Box 300
Vienna, A-1400
Austria

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