Premium
Foreign Investment and Technological Spillovers in K enya: Extent and Mode of Occurrence
Author(s) -
Gachino Geoffrey G.
Publication year - 2014
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12025
Subject(s) - spillover effect , foreign direct investment , context (archaeology) , competition (biology) , kenya , linkage (software) , multinational corporation , knowledge spillover , business , industrial organization , investment (military) , manufacturing , economic geography , economics , marketing , microeconomics , paleontology , ecology , biochemistry , chemistry , macroeconomics , finance , politics , political science , gene , law , biology
This paper uses a uniquely designed analytical framework based on technological learning and capability development to examine the extent of multinational company spillover occurrence in the Kenyan manufacturing industry. Using a firm‐level survey data, we examined the kind of spillovers occurring, extent of occurrence as well as the channels through which such spillovers occurred. The results obtained showed that the main kinds of spillovers occurring were product and process spillovers followed by marketing, management and organisation. Results of t ‐tests analysis showed significant differences between competition and demonstration, and linkage and labour mobility implying that the first two mechanisms were extremely important in spillover occurrence compared with the latter two in the Kenyan context. These have implications that linkage and labour mobility have weaker learning effects, hence weak in stimulating capability building. T ‐test analysis showed that more spillovers occurred from foreign firms than from locally owned firms. The results also showed that spillovers were likely to occur due to foreign presence, firm and machine age, skill level, research and development, training and participation in imports. Based on the results generated, the paper portends that foreign direct investment can play an important role in the country's manufacturing industry by stimulating learning and capability development via spillover occurrence.