Foreign Direct Investment; Emerging Markets; Debt Markets; Labor Policies; Investment and Investment Climate
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Summary: Foreign Direct Investment (FDI) is becoming an increasingly significant catalyst for output and trade in developing countries, in part due to a major expansion in the scope of Global Value Chains (GVCs). FDI delivers a number of important contributions to economic development in terms of investment, employment, and foreign exchange. However, it is FDI's spillover potential-the productivity gain resulting from the diffusion of knowledge and technology from foreign investors to local firms and workers-that is perhaps its most valuable input to long-run growth and development. While substantial empirical evidence has been amassed over the past decade on the existence and dynamics of FDI spillovers, the results are mixed-simply attracting FDI by no means guarantees that a country will benefit from spillovers. This chapter provides an overview of the objectives of the research for which the results are presented in this book. The aim of the research is to identify the critical factors for the realization of FDI-related spillovers including dynamic interactions between FDI and local suppliers, service providers, workers, local producers, customers, and institutions. The research involved detailed field surveys in three industries, characterized by GVCs, across eight countries, with a specific focus on low-income countries in Sub-Saharan Africa.
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