Effects of Foreign Direct Investment on Industrial Performance in Sub-Saharan Africa: An Empirical Analysis using Spatial Econometric Methods

This paper rigorously analyzes the effects of
foreign direct investment inflows on the industrial
performance in the Sub-Saharan African (SSA)
economies. Applying the Durbin spatial method (SDM)
on a two-sector model to account for spatial effects, the
empirical results show that the higher the capacity of SSA
countries to attract foreign investments, the higher is the
job-inducing effect and value-added created in the
industrial sector, while no technology transfer was
induced. This finding highlights the importance for the
countries of sub-Saharan Africa to direct foreign direct
investment towards strategic sectors where they benefit
from comparative advantages and improve the business
climate to attract more FDI, a pledge of any industrial
development.