Linked in by foreign direct investment: The role of firm-level relationships in knowledge transfers in Africa and Asia

TY - UNPB

T1 - Linked in by foreign direct investment

T2 - The role of firm-level relationships in knowledge transfers in Africa and Asia

AU - Newman, Carol

AU - Page, john

AU - Rand, John

AU - Shimeles, Abebe

AU - Söderbom, Måns

AU - Tarp, Finn

PY - 2018/12

Y1 - 2018/12

N2 - This study combines evidence from interviews in seven countries with (i) government institutions responsible for attracting foreign direct investment (FDI), (ii) 102 multinational enterprises (MNEs), and (iii) 226 domestic firms linked to these foreign affiliates as suppliers, customers, or competitors.The purpose of the interviews was 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 with linked-in firms in Asia.Finally, we do not find that direct knowledge/technology transfers are more likely to occur via FDI than through trade. As such, our results are not consistent with the view that tacit knowledge transfers are more likely to occur through localized linkages.

AB - This study combines evidence from interviews in seven countries with (i) government institutions responsible for attracting foreign direct investment (FDI), (ii) 102 multinational enterprises (MNEs), and (iii) 226 domestic firms linked to these foreign affiliates as suppliers, customers, or competitors.The purpose of the interviews was 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 with linked-in firms in Asia.Finally, we do not find that direct knowledge/technology transfers are more likely to occur via FDI than through trade. As such, our results are not consistent with the view that tacit knowledge transfers are more likely to occur through localized linkages.

KW - Faculty of Social Sciences

KW - FDI linkages

KW - technology transfer

KW - Africa

KW - Asia

M3 - Working paper

T3 - UNU WIDER Working Paper Series

BT - Linked in by foreign direct investment

ER -