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Foreign direct investment, productivity and the technology gap in African economies

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  • Christopher Malikane

    (University of the Witwatersrand)

  • Prosper Chitambara

    (Labour and Economic Development Research Institute of Zimbabwe (LEDRIZ))

Abstract

This paper investigates the impact of foreign direct investment on total factor productivity conditional on relative backwardness in a panel of 45 African countries over the period 1980–2012. We use two measures of relative backwardness, namely: the distance from technological frontier and the income gap. We apply the fixed-effects and two-step system GMM methods. We find a generally positive but weak effect of FDI on productivity growth. Meanwhile, the results do not support the convergence theory of Findlay (1978) and Wang and Blomstrom (1992), that relative backwardness would result in higher productivity growth via the adoption of foreign technologies.

Suggested Citation

  • Christopher Malikane & Prosper Chitambara, 2017. "Foreign direct investment, productivity and the technology gap in African economies," Journal of African Trade, Springer, vol. 4(1), pages 61-74, March.
    • Handle: RePEc:spr:jouafr:v:4:y:2017:i:1:d:10.1016_j.joat.2017.11.001
    DOI: 10.1016/j.joat.2017.11.001
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    More about this item

    Keywords

    Foreign direct investment; Total factor productivity; Technology gap; Africa;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • 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
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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