The existing literature on the effects of FDI inflows on domestic firms' performance offers ambiguous evidence. Macro-level studies suggest that the characteristics of inward FDI and the ‘absorptive capacity’ of the host economy matter in determining the sign (or the mere existence) of these effects. Studies based on micro-level data have so far mostly focused on finding a nexus between FDI inflows and the productivity of domestic firms, suggesting that the effects might be highly heterogeneous. This article, using a recent firm-level survey conducted by UNIDO in 19 sub-Saharan African countries, explores the channels through which multinational enterprises may exert an impact on local firms: products’ market, input availability and costs, access to finance and export opportunities, and analyses the strategic reactions of domestic firms induced by the presence of foreign affiliates."> The existing literature on the effects of FDI inflows on domestic firms' performance offers ambiguous evidence. Macro-level studies suggest that the characteristics of inward FDI and the ‘absorptive capacity’ of the host economy matter in determining the sign (or the mere existence) of these effects. Studies based on micro-level data have so far mostly focused on finding a nexus between FDI inflows and the productivity of domestic firms, suggesting that the effects might be highly heterogeneous. This article, using a recent firm-level survey conducted by UNIDO in 19 sub-Saharan African countries, explores the channels through which multinational enterprises may exert an impact on local firms: products’ market, input availability and costs, access to finance and export opportunities, and analyses the strategic reactions of domestic firms induced by the presence of foreign affiliates."> The existing literature on the effects of FDI inflows on domestic firms' performance offers ambiguous evidence. Macro-level studies suggest">
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Which Domestic Firms Benefit from FDI? Evidence from Selected African Countries

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  • Amadou Boly
  • Nicola D. Coniglio
  • Francesco Prota
  • Adnan Seric
Abstract
type="main" xml:id="dpr12130-abs-0001"> The existing literature on the effects of FDI inflows on domestic firms' performance offers ambiguous evidence. Macro-level studies suggest that the characteristics of inward FDI and the ‘absorptive capacity’ of the host economy matter in determining the sign (or the mere existence) of these effects. Studies based on micro-level data have so far mostly focused on finding a nexus between FDI inflows and the productivity of domestic firms, suggesting that the effects might be highly heterogeneous. This article, using a recent firm-level survey conducted by UNIDO in 19 sub-Saharan African countries, explores the channels through which multinational enterprises may exert an impact on local firms: products’ market, input availability and costs, access to finance and export opportunities, and analyses the strategic reactions of domestic firms induced by the presence of foreign affiliates.

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  • Amadou Boly & Nicola D. Coniglio & Francesco Prota & Adnan Seric, 2015. "Which Domestic Firms Benefit from FDI? Evidence from Selected African Countries," Development Policy Review, Overseas Development Institute, vol. 33(5), pages 615-636, September.
    • Handle: RePEc:bla:devpol:v:33:y:2015:i:5:p:615-636
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    Cited by:

    1. Yassin Elshain Yahia & Liu Haiyun & Muhammad Asif Khan & Sayyed Sadaqat Hussain Shah & Mollah Aminul Islam, 2018. "The Impact of Foreign Direct Investment on Domestic Investment: Evidence from Sudan," International Journal of Economics and Financial Issues, Econjournals, vol. 8(6), pages 1-10.
    2. Hans B. Christensen & Mark Maffett & Thomas Rauter, 2024. "Reversing the Resource Curse: Foreign Corruption Regulation and the Local Economic Benefits of Resource Extraction," American Economic Journal: Applied Economics, American Economic Association, vol. 16(1), pages 90-120, January.
    3. Simplice A. Asongu & Uchenna R. Efobi & Ibukun Beecroft, 2021. "Aid in Modulating the Impact of Terrorism on FDI: No Positive Thresholds, No Policy," Forum for Social Economics, Taylor & Francis Journals, vol. 50(4), pages 432-456, October.
    4. Asongu, Simplice & Efobi, Uchenna & Beecroft, Ibukun, 2015. "FDI, Aid, Terrorism: Conditional Threshold Evidence from Developing Countries," MPRA Paper 67856, University Library of Munich, Germany.
    5. Moran, Theodore H. & Görg, Holger & Seric, Adnan, 2016. "Quality FDI and Supply-Chains in Manufacturing: Overcoming Obstacles and Supporting Development," KCG Policy Papers 1, Kiel Centre for Globalization (KCG).
    6. Seyoum, Mebratu & Wu, Renshui & Yang, Li, 2015. "Technology spillovers from Chinese outward direct investment: The case of Ethiopia," China Economic Review, Elsevier, vol. 33(C), pages 35-49.
    7. Uchenna R. Efobi & Simplice A. Asongu & Ibukun Beecroft, 2015. "Foreign Direct Investment, Aid and Terrorism: Empirical Insight Conditioned on Corruption Control," Research Africa Network Working Papers 15/007, Research Africa Network (RAN).
    8. Vito Amendolagine & Nicola D. Coniglio, 2014. "Economic Enclaves or Bridges to the Global Economy? Foreign and Diaspora Investments in Developing Countries," RSCAS Working Papers 2014/10, European University Institute.
    9. Holger Görg & Adnan Seric, 2016. "Linkages with Multinationals and Domestic Firm Performance: The Role of Assistance for Local Firms," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 28(4), pages 605-624, September.
    10. Kappel, Robert & Pfeiffer, Birte & Reisen, Helmut, 2017. "Compact with Africa: fostering private long-term investment in Africa," IDOS Discussion Papers 13/2017, German Institute of Development and Sustainability (IDOS).
    11. Moran, Theodore H. & Görg, Holger & Seric, Adnan & Krieger-Boden, Christiane, 2017. "How to Attract Quality FDI?," KCG Policy Papers 2, Kiel Centre for Globalization (KCG).
    12. Oliver Godart & Holger Goerg & Aoife Hanley, 2020. "Harnessing the Benefits of FDI in African Countries," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 21(02), pages 32-37, July.
    13. Görg, Holger & Seric, Adnan, 2013. "With a little help from my friends: Supplying to multinationals, buying from multinationals, and domestic firm performance," Kiel Working Papers 1867, Kiel Institute for the World Economy (IfW Kiel).
    14. Hans B. Christensen & Mark Maffett & Thomas Rauter, 2020. "Reversing the Resource Curse: Foreign Corruption Regulation and Economic Development," Working Papers 2020-155, Becker Friedman Institute for Research In Economics.
    15. Penelope Pacheco-Lopez, 2014. "Contrasting the Perception and Response of Domestic Manufacturing Firms to FDI in Sub-Saharan Africa," Studies in Economics 1410, School of Economics, University of Kent.

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