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Foreign Investments in the Peripheral Global South

Appendix 2

Worldwide flows of foreign direct investment (FDI) are increasingly targeting countries in the Global South. Understanding what attracts foreign investors to the South helps shed light on how policy can support the countries in making the most of those investments in terms of their developmental impact.

Analyses of global FDI targeting the South between 2003 and 2014 (fDi Markets database) shows that the rising importance of the South in global investment networks is mainly caused by the faster growth of investments either targeting or originating in the periphery (see Figure 1 for the definition of peripheral countries). The analyses further show that the peripheries also attract investments from countries at different levels of development. They are able to satisfy the requirements of investors involved in a range of value-added activities and thereby become entangled in complex global investment networks.

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About Cities Today

The State of African Cities 2018 is published by IHS-Erasmus University Rotterdam and UN-Habitat in partnership with the African Development Bank. The aim of the report is to contribute to development policies that can turn African cities into more attractive, competitive and resilient foreign direct investment (FDI) destinations. Attracting global FDI is highly competitive and crosses various geographic scales, therefore regional cooperation by cities and nations is critical. But FDI is not a panacea since it has both positive and negative effects and careful choices need to be made by cities in their pursuit of FDI, if it is to lead to inclusive economic growth. This report aims to provide guidance on these choices and to facilitate understanding of the complexity of global investment in Africa.