Research papers

Please find below a list of recent publications produced by the UNIDO Institute – Research.

The Demand for Foreign Workers by Foreign Firms: Evidence from Africa

Foreign workers play a crucial role in channeling resources and information flows both within the boundaries of firms and between foreign firms and the host country economy. Employing a novel firm-level database (UNIDO Africa Investor Survey 2010), this paper investigates the factors that determine the employment of foreign workers by foreign firms in Sub-Saharan African countries. It sheds light on important firm-level as well as host–home country characteristics which shape the demand of foreign workers in developing countries. Differences in the propensity to hire foreign workers are largely explained by the role played by economic, geographical and institutional distance between FDI home and host countries. Particular findings include that host country workers, who have better knowledge of the local socio-economic environment, helps foreign firms in reducing the ‘liability of foreignness’, that origin employees as gatekeepers of knowledge within complex international operation and that foreign firm’s tendency to employ a large number of expatriates is significantly reduced when the institutional quality of the host country is high.

Author(s): Nicola Coniglio, Rezart Hoxhaj, and Adnan Seric
Year: 2016
Type: Journal article

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https://link.springer.com/article/10.1007%2Fs10290-016-0272-y

When Do Multinational Companies Consider Corporate Social Responsibility? A Multi-Country Study in Sub-Saharan Africa

While African countries are becoming more and more relevant as host countries for suppliers of multinational companies, little is known about corporate social responsibility (CSR) in this region. Adopting a stringent definition of CSR engagement, namely whether environmental or social concerns are the most important determinant of the local supplier choice, this paper explores CSR considerations of foreign affiliates of multinational companies when choosing local African suppliers. The paper suggests a model of three types of determinants, namely firm characteristics, exports, and intra-trade. Analyses of a large-scale and quite unique firm level data for more than 2,000 foreign owned firms in 19 Sub-Saharan African countries demonstrate that firms importing intermediates from their parent company abroad are more likely to implement CSR. Similarly, CSR plays a larger role for affiliates that export to developed countries. This suggests that CSR is more important if the global supply chains are short and direct. Overall, the paper highlights the vast scope for improvement in CSR activities in supply chains involving multinationals and local suppliers in Sub-Saharan African countries.

Author(s): Holger Görg, Aoife Hanley, Stefan Hoffmann and Adnan Seric
Year: 2016
Type: Journal article

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http://cadmus.eui.eu/handle/1814/38411

FDI and Migration of Skilled Workers Towards Developing Countries: Firm-Level Evidence from Sub-Saharan Africa

This paper investigates the determinants of the employment of foreign skilled workers by firms operating in Sub-Saharan African countries. Using original firm-level data on a large sample of foreign and domestic firms collected through UNIDO’s Africa Investor Survey 2010, the paper finds evidence of a strong complementarity between FDI and the employment of foreign skilled workers. While lack of skilled labour in the destination country induces firms to employ more foreign workers, over time, foreign firms tend to favour native over foreign skilled workers, in countries more abundant with skilled labour. The paper also suggests that interventions in improving the working regulation and skilled workers immigration regimes may stimulate foreign skilled workers transfer by firms, and thereby foreign direct investments.

Author(s): Rezart Hoxhaj, Léa Marchal, and Adnan Seric
Year: 2015
Type: Journal article

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https://academic.oup.com/jae/article/25/2/201/2357563/FDI-and-Migration-of-Skilled-Workers-Towards

Foreign Direct Investment, Employment and Wages in Sub-Saharan Africa

Job creation is one of the main challenges for developing countries. The aim of this paper is to analyse the relation between foreign ownership and employment using an original firm-level dataset that covers 19 sub-Saharan African countries. It finds that although foreign firms are generally larger than local ones, the employment they generate is relatively more unskilled labour intensive compared with that generated by domestic firms. Substantial differences are found between foreign investors from the north and the south, in terms of both skill intensity and wage premiums. The paper also suggests, ceteris paribus, that Chinese firms employ more workers (mostly bluecollar workers) and pay lower wages for both skilled and unskilled workers compared with both domestic firms and other foreign investors.

Author(s):  Nicola Coniglio, Francesco Prota and Adnan Seric
Year: 2015
Type: Journal article

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http://onlinelibrary.wiley.com/doi/10.1002/jid.3044/abstract

Multinationals in Sub-Saharan Africa: Domestic Linkages and Institutional Distance

Focusing on the establishment of domestic linkages by multinational enterprises (MNEs) and their relevance in promoting industrial development, this paper analyses the role of institutional distance, i.e. the institutional environment between the host and source country, in a cross-section of 19 sub-Saharan countries. Investors’ familiarity with formal and informal procedures in the host country reduces uncertainty and facilitates networking with local firms. A similar degree of institutional development boosts linkages between domestic firms and multinationals. Using original data from UNIDO’s 2010 Africa Investor Survey, the paper finds that institutional distance carries more weight for multinationals from the north and is conditional on the degree of attractiveness of local sourcing. It contributes to the emerging literature on the role of institutions for the development of inter-firm linkages and to the relatively scarce literature on South-South FDI in least developed countries and thus contributes to the definition of clearer targets for foreign investment policies.

Author(s): Lucia Perez-Villar and Adnan Seric
Year: 2015
Type: Journal article

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www.sciencedirect.com/science/article/pii/S2110701714000341

Diaspora Investments and Firm Export Performance in Selected Sub-Saharan African Countries

Diasporans can contribute to the development of their home countries by investing their capital in existing businesses and/or setting up new ventures in their countries-of-origin. Based on firm-level data from 19 Sub-Saharan Africa countries, this paper analyzes whether these growingly important investors differ from domestic firms and foreign investors in terms of export behavior. Its results indicate that diaspora firms are more likely to be exporters, to export more intensively and toward more destinations compared to domestic firms; their export performance is not substantially dissimilar to that of multinational enterprises. Moreover, they have a higher labor productivity compared to domestic firms. One of the key comparative advantages of diaspora firms is their better access to information. The presence of diaspora investors and entrepreneurs may contribute to boost the internationalization of developing countries.

Author(s): Amadou Boly, Nicola Coniglio, Francesco Prota and Adnan Seric
Year: 2014
Type: Journal article

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www.sciencedirect.com/science/article/pii/S0305750X14000515

Factors Affecting the Adoption of Energy Efficiency in the Manufacturing Sector of Developing Countries

This paper analyzes the drivers for and barriers to the adoption of energy efficient technologies among a sample of firms based in Viet Nam, the Philippines, and Moldova. The current debate on the fight against climate change emphasizes the need to adopt environmentally friendly measures at the global level. We therefore need to better understand the obstacles to the adoption of energy saving measures, especially in developing countries. By applying discrete choice modeling techniques, the paper finds that firms’ internal management and organizational factors rather than top down or other external market conditions increase firms’ likelihood to invest in energy efficient technologies. Moreover, experience in the adoption of energy efficient technologies and the commitment of top management is also crucial in this regard.

Author(s): Nicola Cantore
Year: 2016
Type: Journal article

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https://link.springer.com/article/10.1007/s12053-016-9474-3

Does Energy Efficiency Improve Technological Change and Economic Growth in Developing Countries?

Does a trade-off exist between energy efficiency and economic growth? This question underlies some of the tensions between economic and environmental policies, especially in developing countries that often need to expand their industrial base to grow. This paper contributes to the debate by analyzing the relationship between energy efficiency and economic performance at the micro- (total factor productivity) and macro-level (countries’ economic growth). It uses data on a large sample of manufacturing firms across 29 developing countries to find that lower levels of energy intensity are associated with higher total factor productivity for the majority of these countries. Among its main findings, the paper concludes that total factor productivity is an accurate proxy of technological change, that energy efficiency triggers total factor productivity, especially in manufacturing, and that technological change via energy efficiency in manufacturing is an engine of growth.

Author(s): Nicola Cantore, Massimiliano Calì, and Dirk Willem te Velde
Year: 2016
Type: Journal article

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www.sciencedirect.com/science/article/pii/S0301421516300404

Promoting Renewable Energy and Energy Efficiency in Africa: A Framework to Evaluate Employment Generation and Cost-Effectiveness

The on-going debate over the cost-effectiveness of renewable energy (RE) and energy efficiency (EE) deployment often hinges on the current cost of incumbent fossil-fuel technologies versus the long-term benefit of clean energy alternatives. This debate is often focused on mature or ‘industrialized’ economies and externalities such as job creation. In many ways, however, the situation in developing economies is at least as or even more interesting due to the generally faster current rate of economic growth and of infrastructure deployment. On the one hand, RE and EE could help decarbonize economies in developing countries, but on the other hand, higher upfront costs of RE and EE could hamper short-term growth. The methodology developed in this paper confirms the existence of this trade-off for some scenarios, yet at the same time provides considerable evidence about the positive impact of EE and RE from a job creation and employment perspective. By extending and adopting a methodology for Africa designed to calculate employment from electricity generation in the U.S., this study finds that energy savings and the conversion of the electricity supply mix to renewable energy generates employment compared to a reference scenario. It also concludes that the costs per additional job created tend to decrease with increasing levels of both EE adoption and RE shares.

Author(s): Nicola Cantore, Patrick Nussbaumer, Max Wei, and Daniel M. Kammen
Year: 2017
Type: Journal article

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http://iopscience.iop.org/article/10.1088/1748-9326/aa51da/meta

Industrial Structural Change, Growth Patterns, and Industrial Policy, in “The Industrial Policy Revolution II: Africa in the Twenty-first Century” edited by J. Esteban, J. Stiglitz, and J. Lin Yifu

This chapter, in a book exploring the effectiveness of political institutions and economic policies in place in developing countries, investigates the relationship between growth patterns and the changing composition of manufacturing, also called inter-industry structural change, in large countries. Evidence suggests that while some industries can and will initially grow on the basis of adding labor resources more rapidly, it is only those industries that improve productivity substantially that will survive in the long run. While the chapter identifies several patterns of growth for industries, only one prioritizing technological change and innovation raised the degree of efficiency in the use of resources — which is what is behind the industries that have come to dominate the industrial landscape.  

Author(s): Ludovico Alcorta, Nobuya Haraguchi, and Gorazd Rezonja Year: 2013
Type: Book

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www.palgrave.com/us/book/9781137335227

Fast and Furious: A Kaldorian Analysis of Dynamic Industries

Entertaining Nicolas Kaldor’s claim that a growing manufacturing industry strongly fuels GDP growth, this paper finds, based on an examination of 146 countries over a 40 year period (1971-2011), evidence of this relation and for high-tech manufacturing industries to be bigger drivers of said relation than low- and medium-tech ones. In other words, countries specializing in high-tech manufacturing enjoy a growth premium, typically because of the industry’s power to spread technological capabilities and economics of scale. In contrast, a similarly significant relationship cannot be established for countries specializing in low- and medium manufacturing. On a general note, however, the paper suggests that industries at both ends of the tech-curve contribute to economic growth through the process of industrialization. Interestingly, the results did not change qualitatively when focusing on low-/ middle-income countries in a more recent timeframe.

Author(s): Nicola Cantore, and Michele Clara
Year: 2016
Type: UNIDO Working paper

Download here www.unido.org/fileadmin/user_media/Research_and_Statistics/WPs_2010/WP_5_FINAL_d.pdf

Manufacturing as an Engine of Growth: Which is the Best Fuel?

Recent contributions of the development economics literature question the role of the manufacturing sector as an engine of growth. The experience of countries like India, which is investing in the services sector, and failures of industrialization in Africa and Latin America have led to skepticism about the effectiveness of manufacturing to foster development. Based on a study of 80 countries over a 30-year period (1980-2010), this paper provides new evidence re-establishing this role and examines its drivers. We dissect the manufacturing sector’s growth rate into components of intensive and extensive industrialization. Whereas the former refers to an increase of manufacturing value added based on drivers that strengthen manufacturing industries (in terms of productivity and structural change), the latter is an increase of manufacturing value added based on a driver (total employment) that does not promote a transition in which the manufacturing sector assumes a leading role. The paper concludes that intensive rather than extensive industrialization enhances economic growth and that not every dollar for additional industrialization matters for development.

Author(s): Nicola Cantore, Michele Clara, Camelia Soare, and Alejandro Lavopa
Year: 2014
Type: UNIDO Working paper

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www.unido.org//fileadmin/user_media/Services/PSD/WP1_eBook.pdf

FDI and Structural Change in Africa: Does the Origin of Investors Matter?

The African continent represents a new frontier for global investment flows. The size and geographical coverage of FDI in Africa are steadily increasing with a rather peculiar balance of ‘old’ investors from OECD countries and ‘new’ ones from emerging and other developing economies. In this paper, the relevance and main characteristics of FDI inflows in Africa are discussed as are the relative importance of traditional OECD investors and ‘new’ investors from BRICS. Original micro-level data from UNIDO’s African Investor Survey 2010 is used to study the differences and similarities of these two groups of investors in terms of their development potential. More specifically, the paper investigates the role of investors as agents of structural change by looking at their propensity to generate (i) linkages and other market interactions with domestic firms; (ii) employment and human capital formation; (iii) knowledge transfers and development of new products and processes. Overall, the analysis sheds new light on the heterogeneous impact of FDI development in Africa and addresses important policy implications for the attraction of foreign investors to the continent.

Author(s): Vita Amendolagine, Nicola D. Coniglio, and Adnan Seric
Year: 2016
Type: UNIDO Working paper

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www.unido.org/fileadmin/user_media/Research_and_Statistics/WPs_2010/FINAL_WP_2_d.pdf

With a little help from my friends: Supplying to multinationals, buying from multinationals and domestic firm performance

Employing firm-level data for 19 African countries from UNIDO’s 2010 Africa Investor Survey, this paper examines the link between domestic firms’ business relationships with multinationals and their performance in terms of innovation and productivity. The importance for this link of support provided to domestic firms either by the government or multinational business partners is also evaluated. The data analysis shows that supplying a foreign multinational in the country (backward linkage) is positively associated with product innovation. Buying from a multinational (forward linkage) is positively linked with labor productivity. These results are independent of any form of support from the government or multinationals. The paper also finds that domestic firms’ innovation activity is only positively associated with supplying multinationals if they receive assistance from the government or from multinationals. Furthermore, it is found that supplying a multinational is only positively associated with domestic firms’ productivity if technology transfers take place from multinational customers to those firms.

Author(s): Holger Görg, and Adnan Seric
Year: 2014
Type: UNIDO Working paper

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www.unido.org/fileadmin/user_media/Services/PSD/V1401295_WIth_a_little_help_from_my_friends.pdf