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FDI in Côte d’Ivoire: Are local firms better off?

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  • Olurotimi, Osaretin
  • Foltz, Jeremy
  • Traore, Nouhoum

Abstract

Developing countries often articulate the desire to attract more foreign direct investment (FDI) in their development and industrial policy to generate productivity spillovers. Does this policy achieve its aims? This work draws on unique firm panel data in Côte d’Ivoire and the latest techniques of estimating productivity to provide evidence about whether FDI benefits domestic firms’ productivity and export performance across all sectors. On average, we find no significant effects of FDI on productivity, but that masks significant heterogeneity. We see a significant impact of FDI on the productivity of small firms, firms older than five years, firms located outside Abidjan, and firms with above-median initial productivity. Horizontal FDI increases domestic firms’ intensive and extensive export margins, although we do not see the effects of downstream or upstream FDI on exports, on average. Our results imply that domestic firms gain export capabilities by observing foreign firms in the same industry.

Suggested Citation

  • Olurotimi, Osaretin & Foltz, Jeremy & Traore, Nouhoum, 2025. "FDI in Côte d’Ivoire: Are local firms better off?," Journal of Development Economics, Elsevier, vol. 174(C).
    • Handle: RePEc:eee:deveco:v:174:y:2025:i:c:s0304387824001901
    DOI: 10.1016/j.jdeveco.2024.103441
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    More about this item

    Keywords

    Foreign direct investment; Spillovers; Domestic firms; Productivity; Exports; Africa;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts

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