UN World Investment Report 2010 - Office of Trade Negotiations

CHAPTER II Regional Trends in FDI 37
survey found that a significant amount of
new machinery brought into host African
countries – both by Chinese and Indian
TNCs – was bought in China (Broadman,
2007). At the same time, the share of developing
countries and transition economies
in joint-ventures in Africa increased from
24 per cent in 2000 to 45 per cent in 2009
(table II.5); these partnerships suggest an
increasing likelihood that FDI from developing
countries will facilitate the diffusion
of knowledge to local entrepreneurs and
contribute to the structural transformation
of African companies.
Table II.5. International joint ventures
in Africa, by home region,
2000, 2008, 2009
Home region 2000 2008 2009
Total number 76 99 33
Developed countries’ share (%) 76.3 62.6 55.3
Developing countries’ share (%) 23.7 37.4 44.7
Source: UNCTAD.
TNCs from developing countries – like
their peers from developed countries – provide
host African countries with access to
resources and markets through their international
production systems. The financial
capital generated, mobilized and invested
by those cash-rich TNCs (especially stateowned
enterprises) represents a significant
addition to domestic savings and domestic
investment in host African countries.
FDI from developing countries often carries
benefits for infrastructure: in many African
countries (Angola, Democratic Republic of
the Congo, Ghana and Nigeria), Chinese loans
backed by natural resources extracted through
FDI projects involving Chinese investment
are earmarked for infrastructure development
(Bräutigam, 2010). In addition, Asian
investors (mainly from China) are involved
in building special economic zones (SEZs)
in various African countries (Algeria, Egypt,
Ethiopia, Mauritius, Nigeria and Zambia).
These SEZs may boost industrialization and
employment, as they are expected to result in
improved infrastructure, technology transfer
and employment opportunities, as well as
new schools and hospitals (Bräutigam, 2010;
Sohlman, 2009).
Finally, investors from developing countries
are less apprehensive about the deterioration
of locational factors in Africa than investors
from developed countries (UNIDO, 2007).
This confidence has translated in more resilient
FDI, helping African countries to better
weather the global downturn. The fact that
state-owned enterprises account for a fair
share of FDI from developing countries, as
mentioned above, also suggests that FDI was
less affected by the financial crisis.
Investment from developing and transition
economies provides additional development
opportunities to Africa. These new sources
of FDI have offered a buffer against the
worst impact of the recent global crises by
offering more resilient flows and a broader
base of financial resources. It is important,
however, that African countries should be
more proactive to ensure development benefits
from investments from those economies
(UNCTAD, 2010a).