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Does FDI Work for Africa? Assessing Local Spillovers in a World of Global Value Chains

Author

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  • Farole, Thomas

    (World Bank)

  • Winkler, Deborah

    (World Bank)

Abstract

The extent to which developing countries benefit from foreign direct investment (FDI) depends on whether they are able to realize the productivity-enhancing benefits of knowledge and technology spillovers from foreign investors. To date, the experiences in Sub-Saharan Africa have been largely disappointing. This is perhaps not surprising, bearing in mind the complex interplay of factors needed for spillovers to emerge. On top of the challenges of supply side capacity and the host country's policy environment, the willingness and capacity of foreign investors to support spillovers vary hugely across sectors and firms, and are shaped by the dynamics of the global value chains (GVCs) in which they operate. This note summarizes the main findings from the new World Bank book Making Foreign Direct Investment Work for SubSaharan Africa and discusses the implications for policy makers hoping to harness the potential of FDI for better development outcomes.

Suggested Citation

  • Farole, Thomas & Winkler, Deborah, 2014. "Does FDI Work for Africa? Assessing Local Spillovers in a World of Global Value Chains," World Bank - Economic Premise, The World Bank, issue 135, pages 1-6, February.
    • Handle: RePEc:wbk:prmecp:ep135
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    File URL: http://siteresources.worldbank.org/EXTPREMNET/Resources/EP135.pdf
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    1. Thomas Farole & Deborah Winkler, 2014. "Making Foreign Direct Investment Work for Sub-Saharan Africa : Local Spillovers and Competitiveness in Global Value Chains," World Bank Publications - Books, The World Bank Group, number 16390.
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    Cited by:

    1. World Bank, 2014. "Malaysia Economic Monitor, June 2014 : Boosting Trade Competitiveness," World Bank Publications - Reports 19303, The World Bank Group.
    2. Theodore H. Moran, 2016. "Using Foreign Direct Investment to Upgrade and Diversify Exports from Morocco: Opportunities and Challenges in Comparative Perspective," Research papers & Policy papers 1603, Policy Center for the New South.
    3. Rodríguez-Pose, Andrés & Belso-Martinez, Jose Antonio & Díez-Vial, Isabel, 2021. "Playing the innovation subsidy game: experience, clusters, consultancy, and networking in regional innovation support," LSE Research Online Documents on Economics 111603, London School of Economics and Political Science, LSE Library.
    4. World Bank Group, 2015. "Fourth Ethiopia Economic Update," World Bank Publications - Reports 22317, The World Bank Group.
    5. Nina Vujanovic & Bruno Casella & Richard Bolwijn, . "Forecasting global FDI: a panel data approach," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.

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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F6 - International Economics - - Economic Impacts of Globalization

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