The demand for foreign workers by foreign firms : evidence from Africa

Abstract

Foreign workers play a crucial role in channelling resources and information flows both within the boundaries of firms and between foreign firms and the host country economy. In this study we employ a novel firm-level database (UNIDO Africa Investor Survey 2010) in order to investigate the factors that determine the employment of foreign workers by foreign firms in Sub-Saharan African countries. We shed light on important firm-level as well as host–home country characteristics which shape the demand of foreign workers in developing countries. We show that differences between investors are largely explained by the role played by economic and institutional distance between home–host countries as well as by firm-level heterogeneity in the degrees of knowledge intensity and local embeddedness.