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The panel presentation titled “South-South FDI vs. North-South FDI: Southern Perspectives” explored the hypothesis that South-South FDI differs from North-South FDI in two main respects: (i) because the investing firms are less risk-averse given their familiarity (in their home country) with similar operating environments to that of the receiving country; and (ii) because the efficiency, technology, skill, product quality, etc. 'gaps' between investor and receiving country are smaller.  IDRC project participants in the panel included Stephen Gelb (Edge Institute, South Africa), Nguyen Thang (Vietnam Academy of Social Sciences), and Rajiv Kumar (Indian Council for Research on International Economic Relations).

 

The session, chaired by David Kaplan of University of Cape Town, focused on two questions: are southern firms more willing to invest in other developing countries, and do they provide more potential for positive spillovers and benefits to host countries?  Dr. Gelb noted that analysis of inward FDI inflows (investment coming into a country by foreign firms) in Kenya, Uganda and South Africa does not support an affirmative response to either question. Similarly, Dr. Thang’s analysis of inward FDI inflows into Vietnam does not provide clear evidence on the technology spillover advantages, although familiarity with the region and with the culture seem to have played a vital role in shaping the FDI landscape in Vietnam.

 

The session featured preliminary results of the following IDRC supported projects: 1) Foreign Direct Investment Behaviour in Low and Middle Income Countries, and 2) South-South Links: Third World Multinationals and Development in South Africa, East Africa and India (for an overview on the work of these projects, click on the links above).

 

The panel was held on June 10 in Cape Town as part of the Annual Bank Conference on Development Economics (ABCDE).  The ABCDE conference as a whole was on the overarching theme of “People, Politics & Globalization” and combined plenary sessions with over 20 parallel sessions on a wide range of topics.  For the full conference agenda and papers presented, please visit the conference website.

News 3 of 9