KCG Lunch-time Seminar

Foreign Direct Investment and Structural Transformation in Africa — Marco Sanfilippo

09 Feb 2024

12:00

13:00

24105 Kiel

Kiel Institut für Weltwirtschaft, Kiellinie 66

Sprecher

Marco Sanfilippo (University of Turin and Collegio Carlo Alberto)

Abstract

This paper analyzes the relationship between inward FDI and structural transformation of local labour markets in Africa. We combine geolocalized information on the distribution of FDI with a novel database that provides information from 40,665,627 individuals in 2,570 subnational units over the period 1987-2019. Results are suggestive of a positive effect of FDI on structural transformation. FDI contributes to an increase in employment, and shifts of workers towards modern industries and higher-skilled occupations. No effects are found on self-employment. Results are heterogeneous, reflecting the characteristics of the foreign investor and of the business activity undertaken by foreign firms in the local market. Geospatial analysis of changes in performance of domestic firms exposed to nearby FDI projects provides evidence of horizontal spillovers and inter-industry linkages, suggesting a complementary mechanism through which FDI drives structural change.

here link to the CEPR Discussion Paper No. 17838

Authors

Bernard Hoekman (Robert Schuman Centre for Advanced Studies at European University Institute, EUI and CEPR) – Marco Sanfilippo (University of Turin and Collegio Carlo Alberto) – Margherita Tambuss (University of Turin)