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Linked-in by FDI: The Role of Firm-Level Relationships for Knowledge Transfers in Africa and Asia

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  • Carol Newman
  • John Page
  • John Rand
  • Abebe Shimeles
  • Måns Söderbom
  • Finn Tarp

Abstract

This study combines evidence from interviews in seven countries with (i) government institutions responsible for attracting Foreign Direct Investment (FDI), (ii) 102 multinationals (MNEs), and (iii) 226 domestic firms linked to these foreign affiliates as suppliers, customers, or competitors, to identify whether relations between MNEs and domestic firms lead to direct transfers of knowledge/technology. We first document that there are relatively few linkages between MNEs and domestic firms in sub-Saharan Africa compared with Asia. However, when linkages are present in sub-Saharan Africa they raise the likelihood of direct knowledge/technology transfers from MNEs to domestic firms as compared to linked-in firms in Asia. Finally, we do not find that direct knowledge/technology transfers are more likely to occur through FDI than through trade. As such our results are not consistent with the view that tacit knowledge transfers are more likely to occur through localised linkages.

Suggested Citation

  • Carol Newman & John Page & John Rand & Abebe Shimeles & Måns Söderbom & Finn Tarp, 2020. "Linked-in by FDI: The Role of Firm-Level Relationships for Knowledge Transfers in Africa and Asia," Journal of Development Studies, Taylor & Francis Journals, vol. 56(3), pages 451-468, March.
    • Handle: RePEc:taf:jdevst:v:56:y:2020:i:3:p:451-468
    DOI: 10.1080/00220388.2019.1585813
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    Cited by:

    1. Bernard Hoekman & Marco Sanfilippo & Margherita Tambussi, 2023. "Foreign Direct Investment and Structural Transformation in Africa," RSCAS Working Papers 2023/02, European University Institute.
    2. Osabutey, Ellis L.C. & Papanastassiou, Marina & Jin, Zhongqi & Navare, Jyoti & Agyapong, Ahmed, 2023. "Revisiting FSAs and CSAs in Sub-Saharan Africa: Evidence from Ghanaian Firms," International Business Review, Elsevier, vol. 32(4).

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