FDI and Local Linkages : Evidence from Selected African Countries

This paper investigates the determinants of backward linkages of foreign manufacturing firms in 19 Sub-Saharan African countries. We shed light on the micro and macro level factors which contribute to a higher degree of interactions between foreign subsidiaries and local firms. Our results indicate that the time since entry of foreign firms, the presence of a local partner in the ownership structure and a final market orientation are associated with higher local linkages. Finally, we lend further support to the idea that good institutions and in particular a reliable legal system are pre-conditions for boosting the linkages generated by foreign firms