The Determinants of Employment of Affiliates of US Multinational Enterprises in Africa

Abstract

Employment of foreign affiliates of multinational enterprises has been shown to promote growth by boosting wages, increasing the transfer of technology and enhancing productivity in host countries. Yet, the factors affecting such multinational employment in Africa have not been studied. Using panel data, this article indicates that – in contrast to natural resource availability – good infrastructure, higher income, openness to trade and an educated labour force have a significant positive impact on employment. In order to realise the employment benefits of FDI, therefore, sub‐Saharan Africa needs to attract investments in non‐natural resource industries, and host countries need to improve their infrastructure and educate their population.