Presenters: Bernard Hoekman, European University Institute; and Marco Sanfilippo, Universita degli Studi di Torino

Discussant: Max Mendez-Parra, Overseas Development Institute

Chair: Ingo Borchert, University of Sussex, UKTPO

Abstract: Foreign Direct Investment (FDI) can be a driver of economic development. FDI is generally undertaken by multinational enterprises, which in turn are often lead firms that are at the core of most Global Value Chains (GVCs). This paper explores novel information on the distribution of FDI across and within African countries, distinguishing between sectors and the specific business activity performed in a given location. It investigates two sets of related research questions. First, what types of FDI are more likely to influence a country’s involvement and relative positioning in GVCs, distinguishing between backward and forward integration? Second, what is the association between FDI in different types of activities and locations with the performance of domestic firms located in the same geographic region as the foreign investment projects – e.g., the degree of participation in international markets? The paper uses World Bank Enterprise Survey data, the EORA dataset and information on inward FDI by sector/activity/location sourced from the fdiMarkets database to explore these two research questions.

This presentation was delivered on Wednesday 3 November 2021 as part of the UK Trade Policy Observatory’s fourth annual conference on Inclusive Trade Policy.