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Title:The linkages between FDI and domestic investment: unravelling the developmental impact of foreign investment in Sub-Saharan Africa PDF Logo
Authors:Ndikumana, Léonce
Verick, Sher
Issue Date:2008
Series/Report no.:IZA Discussion Papers 3296
Abstract:While the recent increase in foreign direct investment (FDI) to African countries is a welcome development, the question remains as to the impact of these resource inflows on economic development. This study posits that a key channel of the impact of FDI on development is through its effects on domestic factor markets, especially domestic investment and employment. In this context, this study analyses the two-way linkages between FDI and domestic investment in Sub-Saharan Africa. The results suggest that firstly, FDI crowds in domestic investment, and secondly, countries will gain much from measures aimed at improving the domestic investment climate. Moreover, there are alternatives to resource endowments as a means of attracting foreign investment to non-resource rich countries.
Subjects:FDI
private investment
public investment
Africa
JEL:E22
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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