ABSTRACT
This study contributes to the empirical literature by relating the economic theories of FDI to the impact of FDI inflows on productivity growth in SSA countries. In addition, the study investigates the hypothesis that FDI inflows yield positive productivity spillovers to 19 SSA countries during the period 1985–2010. Using World Bank (2013) data, the main finding of Arellano–Bond dynamic panel GMM estimators shows that FDI inflows yield weak and negative productivity spillovers to SSA countries. In addition, the growing technology gap between SSA and OECD countries negatively contributes to the productivity growth in SSA countries. These results are consistent with the internationalization of capital and the international division of labor. Attracting manufacturing and high-quality FDI remains a challenge for SSA countries.
