IMF Working Papers

FDI, Global Value Chains, and Local Sourcing in Developing Countries

By Vito Amendolagine, Andrea F Presbitero, Roberta Rabellotti, Marco Sanfilippo, Adnan Seric

December 21, 2017

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Vito Amendolagine, Andrea F Presbitero, Roberta Rabellotti, Marco Sanfilippo, and Adnan Seric. FDI, Global Value Chains, and Local Sourcing in Developing Countries, (USA: International Monetary Fund, 2017) accessed November 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The local sourcing of intermediate products is one the main channels for foreign direct investment (FDI) spillovers. This paper investigates whether and how participation and positioning in the global value chains (GVCs) of host countries is associated to local sourcing by foreign investors. Matching two firm-level data sets of 19 Sub-Saharan African countries and Vietnam to country-sector level measures of GVC involvement, we find that more intense GVC participation and upstream specialization are associated to a higher share of inputs sourced locally by foreign investors. These effects are larger in countries with stronger rule of law and better education.

Subject: Balance of payments, Economic sectors, Exports, Foreign corporations, Foreign direct investment, Global value chains, Globalization, International trade, Production, Production growth

Keywords: Africa, Exports, FDI spillover, Firm, Firm level, Firm propensity, Foreign corporations, Foreign Direct Investment, Foreign investor, Global, Global value chain, Global Value Chains, GVC indicator, GVC involvement, GVC position, Investor, Local Sourcing, Production growth, Sub-Saharan Africa, Supplier, Vietnam, WP

Publication Details

  • Pages:

    40

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2017/284

  • Stock No:

    WPIEA2017284

  • ISBN:

    9781484335109

  • ISSN:

    1018-5941

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