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Foreign Direct Investment from China, India and South Africa in Sub-Saharan Africa: A New or Old Phenomenon?

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  • Henley, John
  • Kratzsch, Stefan
  • Kulur, Mithat
  • Tandogan, Tamer
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    Abstract

    The burgeoning literature on outward foreign direct investment from emerging markets has largely focused on analysing the motives of investors as reported by parent companies. This paper, instead, focuses on firm-level investments originating from China, India or South Africa in fifteen host countries in sub-Saharan Africa (SSA). The analysis is based on a sub-set of firms drawn from the overall sample of 1,216 foreign-owned firms participating in the UNIDO Africa Foreign Investor Survey, carried out in 2005. The sample of investments originating from China, India and South Africa is analysed in terms of firm characteristics, past and forecast performance in SSA over three years and management?s perception of ongoing business conditions. Comparisons are made with foreign investors from the North. The paper concludes that while investors in SSA from the three countries are primarily using their investment to target specific markets, they are largely operating in different sub-sectors. While there appear to be specific features that firms from a given country of origin share, there are no obvious operating-level features they all share apart from market seeking.

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    File URL: http://www.wider.unu.edu/stc/repec/pdfs/rp2008/rp2008-24.pdf
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    Bibliographic Info

    Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number RP2008/24.

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    Length: 28 pages
    Date of creation: 2008
    Date of revision:
    Handle: RePEc:unu:wpaper:rp2008-24

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    Keywords: South-South FDI; market-seeking; sub-Saharan Africa; China; India; South Africa;

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    References

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    1. Shaker A Zahra, 2005. "A theory of international new ventures: a decade of research," Journal of International Business Studies, Palgrave Macmillan, vol. 36(1), pages 20-28, January.
    2. Morisset, Jacques, 2000. "Foreign direct investment in Africa : policies also matter," Policy Research Working Paper Series 2481, The World Bank.
    3. Dunning, John H., 2000. "The eclectic paradigm as an envelope for economic and business theories of MNE activity," International Business Review, Elsevier, vol. 9(2), pages 163-190, April.
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    5. World Bank & International Finance Corporation, 2006. "Doing Business 2007 : How to Reform," World Bank Publications, The World Bank, number 7245.
    6. Michael A Witt & Arie Y Lewin, 2007. "Outward foreign direct investment as escape response to home country institutional constraints," Journal of International Business Studies, Palgrave Macmillan, vol. 38(4), pages 579-594, July.
    7. Igor Filatotchev & Roger Strange & Jenifer Piesse & Yung-Chih Lien, 2007. "FDI by firms from newly industrialised economies in emerging markets: corporate governance, entry mode and location," Journal of International Business Studies, Palgrave Macmillan, vol. 38(4), pages 556-572, July.
    8. Erkko Autio, 2005. "Creative tension: the significance of Ben Oviatt's and Patricia McDougall's article ‘toward a theory of international new ventures’," Journal of International Business Studies, Palgrave Macmillan, vol. 36(1), pages 9-19, January.
    9. Benjamin M Oviatt & Patricia P McDougall, 2005. "The internationalization of entrepreneurship," Journal of International Business Studies, Palgrave Macmillan, vol. 36(1), pages 2-8, January.
    10. John S Henley, 2004. "Chasing the dragon: accounting for the under-performance of India by comparison with China in attracting foreign direct investment," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(7), pages 1039-1052.
    11. Jan Johanson & Jan-Erik Vahlne, 1977. "The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments," Journal of International Business Studies, Palgrave Macmillan, vol. 8(1), pages 23-32, March.
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    Cited by:
    1. Jean Claude Berthélemy, 2011. "Working Paper 129 - China’s Engagement and Aid Effectiveness in Africa," Working Paper Series, African Development Bank 295, African Development Bank.

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