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Outward Foreign Direct Investment, Exporting and Firm-Level Performance in Sub-Saharan Africa

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  • Neil Foster-McGregor

    ()
    (The Vienna Institute for International Economic Studies, wiiw)

  • Anders Isaksson
  • Florian Kaulich

Abstract

This paper adds to the small but growing literature that considers a relationship between the way a firm serves foreign markets and its subsequent performance. The current paper is the first to consider this issue for a sample of sub-Saharan African countries and includes data on both manufacturing and services firms. Results from a number of parametric and non-parametric tests for manufacturing industries indicate that there is a clear productivity ordering with firms undertaking outward FDI performing best, followed by exporters with domestically oriented firms performing least well. The results for services firms are more nuanced and indicate that while exporters and firms undertaking outward FDI are more productive than domestically oriented firms, there is no significant difference in productivity between these two types of firms. Despite this, average productivity and point estimates from the regression analysis on services firms suggest that the productivity of exporting firms is larger than that for firms undertaking outward FDI.

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Bibliographic Info

Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Working Papers with number 97.

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Length: 23 pages including 9 Tables and 9 Figures
Date of creation: Mar 2013
Date of revision:
Publication status: Published as wiiw Working Paper
Handle: RePEc:wii:wpaper:97

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Keywords: exports; foreign direct investment; productivity; services firms;

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  1. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, October.
  2. Sourafel Girma & Holger Görg & Eric Strobl, 2003. "Exports, International Investment, and Plant Performance: Evidence from a Non-Parametric Test," Discussion Papers of DIW Berlin 379, DIW Berlin, German Institute for Economic Research.
  3. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  4. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages F134-F161, 02.
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  8. Keith Head & John Ries, 2004. "Exporting and FDI as Alternative Strategies," Oxford Review of Economic Policy, Oxford University Press, vol. 20(3), pages 409-423, Autumn.
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  10. Bhattacharya, Rudrani & Patnaik, Ila & Shah, Ajay, 2011. "Export versus FDI in services," Working Papers 11/77, National Institute of Public Finance and Policy.
  11. Arnold, Jens Matthias & Hussinger, Katrin, 2005. "Exports versus FDI in German Manufacturing: Firm Performance and Participation in International Markets," ZEW Discussion Papers 05-73, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  12. Davide Castellani & Antonello Zanfei, 2007. "Internationalisation, Innovation and Productivity: How Do Firms Differ in Italy?," The World Economy, Wiley Blackwell, vol. 30(1), pages 156-176, 01.
  13. Sourafel Girma & Richard Kneller & Mauro Pisu, 2005. "Exports versus FDI: An Empirical Test," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(2), pages 193-218, July.
  14. S. Lael Brainard, 1993. "A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration," NBER Working Papers 4269, National Bureau of Economic Research, Inc.
  15. David Powell, 2010. "Unconditional Quantile Regression for Panel Data with Exogenous or Endogenous Regressors," Working Papers 710-1, RAND Corporation Publications Department.
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