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

TY - JOUR

T1 - Linked-in by FDI: The Role of Firm-Level Relationships for Knowledge Transfers in Africa and Asia

AU - Newman, Carol

AU - Page, john

AU - Shimeles, Abebe

AU - Söderbom, Måns

AU - Tarp, Finn

PY - 2020/3/3

Y1 - 2020/3/3

N2 - 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.

AB - 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.

M3 - Journal article

SN - 0022-0388

JO - Journal of Development Studies

JF - Journal of Development Studies

ER -