Determinants of Intra-Firm Trade:Evidence from Foreign Affliates in Sub-Saharan Africa

By exploiting a unique sample of foreign affliates in Sub-Saharan Africa, we study previously examined and unexamined firm-level determinants of intra-firm trade. We document that foreign affliates engaging in intra-firm trade are relatively few and that the majority of these also engage in trade at arm's length, which accounts for an important fraction of their total trade. The identified firm-level determinants of intra-firm trade are consistent with property rights and intangible assets theories of the multinational firm, with international production hierarchies theories, as well as with theories of different FDI types and of multinational activity under credit constraints

Jobs, FDI and Institutions in Sub-Saharan Africa: Evidence from Firm-Level Data

Using firm-level data, we study the differences in the quantity and quality of jobs offered by foreign-owned and domestic firms in Sub-Saharan Africa, and identify how country-level institutional factors determine these differences. After controlling for numerous firm-level characteristics in regressions, we find that foreign-owned firms, especially those whose main business purpose is to serve the home or foreign markets, offer more stable and secure jobs than domestic firms. Specifically, they have more permanent full-time workers, a lower probability of offering temporary work and employ less temporary workers. The job stability and security advantage of foreign-owned firms is smaller in countries with higher firing costs and governance quality, where domestic firms are induced to offer more stable and secure jobs. In addition, foreign-owned firms are less likely to offer unpaid work and have less of these workers. They also invest more in training, especially of managers, and pay higher wages to non-production and managerial workers, particularly those firms whose main business purpose is to serve the home or foreign markets. A higher wage to production workers is paid only by those whose owners are from high-income countries. The wage premia of foreign-owned firms are lower in countries with higher governance and social policy standards, where domestic firms are induced to pay higher wages

Industrial Clusters Promotion as a tool for private sector development: The UNIDO experience in Ethiopia

Policies aimed at boosting the interaction and cooperation of economic actors in industrial clusters might represent a crucial strategy for industrial upgrading and development in poor countries. This policy brief discusses some recent industrial cluster programmes carried out by UNIDO in Ethiopia and highlights the main advantages of cluster policies and the lessons learned

Knowledge Transfer and Intra-Firm Trade

Using a unique sample of foreign affliates in Sub-Saharan Africa, we study the relationship of the extensive and intensive margins of their intra-firm trade with knowledge transfer to them from their parent companies. We find that the engagement of foreign affliates in intra-firm trade and their share of intra-firm trade are positively associated with the probability of these receiving crucial parental assistance in the use of patents, trademarks, and brand names, technology and know-how, access to foreign supplier network, and access to global markets. Foreign afiliates which engage in intra-firm trade and those with a higher share of this type of trade also receive more important overall parental assistance. The positive associations between intra-firm trade and knowledge transfer in the form of patents, trademarks and brand names are weaker in countries with relatively strong legal rights than in countries with relatively weak legal rights. Our findings point to the interplay between property rights and intangible assets theories of the multinational firm by suggesting that the joint role of knowledge ows in production and of multinational firm boundaries as facilitators of transfers of tangibles and intangibles is crucial

Does South-South FDI Pay?

Can South-South FDI, or investment flows between institutionally comparable partners better stimulate growth through backward linkages

Spillovers from agglomerations and inward FDI : a multilevel analysis on SSA domestic firms

This paper adopts multilevel analysis to analyse the agglomeration-performance nexus for domestic firms in Sub-Saharan Africa. We show that contextual factors such as country, city and industry together explain up to 30% of the variance in firms’ productivity. Our results show also that African firms can take advantage from agglomeration externalities when they locate in cities more densely populated by firms specialized in different sectors (urbanization economies), while their performance worsen when they face direct competition from firms in the same industry. These effects are similar in the services and the manufacturing industries, even if in the latter positive spillovers are found to be conditional to the presence of backward and foreign linkages with nearby firms. Finally, we are also able to show that these effects are magnified when domestic firms locate close to foreign multinationals, especially those coming from the South

Scarcity, size and productivity advantage of foreign affiliates with intra-firm trade

We juxtapose the main characteristics of 2403 foreign affiliates with and without intra-firm trade in 19 sub-Saharan-African countries in 2010. While intra-firm trade is scarce among foreign affiliates in the sample, arm’s length trade is a very popular activity, even among those with intra-firm trade. The main distinguishing features of the average foreign affiliate with intra-firm trade are its larger size and higher productivity level. Its size premia range between 31.5% and 56.3% and its productivity premia between 25.4% and 30.7%

Diffusion of labor standards from origin to host countries : cross county evidence from multinational companies in Africa

This study empirically examines diffusion of labor standards from origin to host countries by investigating whether better labor standards of MNCs’ origin countries are correlated with higher wages of workers in host countries in Africa. MNCs originating from countries with more rights of association and collective bargain and those coming from countries with unions that have strong wage bargaining power are found to pay significantly higher wages to their workers in host countries. These findings highlight that, although domestic policies and institutions may be important determinants of labor-related standards, they do not operate in isolation from external influences coming from origin countries

Spillovers from agglomerations and inward FDI: a multilevel analysis on sub-Saharan African firms

This paper adopts multilevel analysis to study the agglomeration-performance nexus for domestic firms in sub-Saharan Africa. We show that contextual factors can explain up to 30 % of the variance in firms’ productivity, more than half of which depends on the geographic location. Our results show also that African firms’ productivity is positively correlated to the size of the agglomeration when they locate in larger cities specialized in different sectors, while the relation turns negative when they face direct competition from firms in the same industry. These effects are similar in the services and the manufacturing industries, even if in the latter positive spillovers are found to be conditional to the presence of backward and forward linkages with nearby firms. Finally, we are able to show that these effects are also confirmed when domestic firms locate close to foreign multinationals, especially those coming from the South