n African Journal of Science, Technology, Innovation and Development - A firm-level analysis of technological externality of Foreign Direct Investment in South Africa

Volume 1, Issue 1
  • ISSN : 2042-1338
  • E-ISSN: 2042-1346
This article is unavailable for purchase outside of Africa



This paper examines how Foreign Direct Investment (FDI) impacts on productivity performance in host economy by raising and addressing two key questions : (i) To what extent does technological externality of FDI (FDI Spillover) rely on host economy's skill deficiency characteristic before it can be generated and appropriated? (ii) Is there a regional dimension to the level of spillovers from multinationals to domestic firms? Using establishment level data for the South African economy, we estimate regression equations for a representative sample of her manufacturing plants. Our findings reveal that regardless of the environmentally imposed skill deficit factor, foreign firms are able to generate productivity spillovers for their host. Successful diffusion to domestic firms is however mediated and significantly circumscribed by the skill factor. It also appears that some support exists for the claim that level of FDI spillovers to domestic firms relies on regional presence, i.e. closeness to the region in which foreign firms locate.

Loading full text...

Full text loading...


Article metrics loading...


This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error