Microeconomic Consequences and Macroeconomic Causes of Foreign Direct Investment in Southern African Economies
The causes and consequences of foreign direct investment (FDI) in developing countries remains a subject of debate among researchers and policymakers alike. The authors use international data and a new micro-data set of firms in thirteen Southern A...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100927084937 http://hdl.handle.net/10986/3915 |
| Summary: | The causes and consequences of foreign
direct investment (FDI) in developing countries remains a
subject of debate among researchers and policymakers alike.
The authors use international data and a new micro-data set
of firms in thirteen Southern African Developing Countries
(SADCs) to investigate the benefits and determinants of FDI
in this region. FDI appears to have facilitated local
development in the SADC region. Foreign firms tend to
perform better than domestic firms, tend to be larger, are
located in richer and better-governed countries and in
countries with more competitive financial intermediaries,
and they are more likely to export than domestic firms. They
also exhibit positive spillover effects to domestic firms.
Relying on a standard model to predict the country-level FDI
inflows per capita, the authors find that SADC is attracting
their expected level of FDI inflows, at least relative to
its income level, human capital, demographic structure,
institutions, and economic track record. There are some
differences between SADC and the rest of the world in FDI
behavior: in SADC, the income level is less important and
openness more so. The authors use two comparison groups to
compare with SADC to shed light on why other regions have
attracted more FDI per capita than SADC. The factors that
explain SADC s low FDI inflows are economic fundamentals
(e.g., previous growth rates, average income, phone density,
and the adult share of population). |
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