FDI, Global Value Chains, and Local Sourcing in Developing Countries

Investigates how participation and positioning in the GVCs of host countries is associated to local sourcing by foreign investors

From:
Department for International Development
Published
21 December 2017
Document Type:
Working Paper
Theme:
Economic Growth
Authors:
Amendolagine, V, Presbitero, A, Rabellotti, R, Sanfilippo, M., Seric, A

Abstract

The local sourcing of intermediate products is one the main channels for foreign direct investment (FDI) spillovers. This paper investigates whether and how participation and positioning in the global value chains (GVCs) of host countries is associated to local sourcing by foreign investors. Matching two firm-level data sets of 19 Sub-Saharan African countries and Vietnam to country-sector level measures of GVC involvement, we find that more intense GVC participation and upstream specialization are associated to a higher share of inputs sourced locally by foreign investors. These effects are larger in countries with stronger rule of law and better education.

This work is part of the ‘Macroeconomics in Low-income countries’ programme

Citation

Vito Amendolagine ; Andrea Presbitero ; Roberta Rabellotti ; Marco Sanfilippo ; Adnan Seric (2017) FDI, Global Value Chains, and Local Sourcing in Developing Countries. IMF Working Paper No. 17/284

FDI, Global Value Chains, and Local Sourcing in Developing Countries

Updates to this page

Published 21 December 2017
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