Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/229227 
Year of Publication: 
2020
Series/Report no.: 
WIDER Working Paper No. 2020/3
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
Countries' economic complexity, and the associated diversification and sophistication of their exports, is a key determinant of economic growth. Understanding how South African firms learn to export more sophisticated products is, therefore, an important policy issue. Using administrative data covering the entire tax-paying population of firms in South Africa, we argue that foreign direct investment can stimulate export upgrading in manufacturing firms. We find that the level of sophistication of the most complex product exported by local firms increases in tandem with the presence of multinational enterprises located in upstream, supplying sectors within the same province. The study is the first within the associated literature to (i) provide firm-level evidence of export upgrading induced by foreign direct investment in Africa, (ii) employ the fitness algorithm to measure export complexity, and (iii) detect spillover effects from foreign direct investment materializing at the top line of domestic firms' export basket.
Subjects: 
economic complexity
foreign direct investment (FDI)
spillovers
export upgrading
manufacturing
South Africa
JEL: 
C38
D22
F61
O31
Persistent Identifier of the first edition: 
ISBN: 
978-92-9256-760-6
Document Type: 
Working Paper

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