 I'm going to talk about some of the research that we did trying to disentangle the learning effects from FDI. And we tried to come up with a novel idea of how to collect the data, because a lot of the literature on how to identify the effects of FDI on domestic firm capabilities goes more through indirect effects. So basically, we are looking at if there is a high presence of FDI firms or foreign M&E's in a sector, we look at whether the productivity levels are higher of domestic firms in those sectors. That is basically how the studies go in the econometric studies. And we have received a lot of critique as economists from business economists on analyzing these spillovis in this way. I will come back to that in just a moment. But we know that in our literature on the economics literature, we know that attracting FDI is a policy priority in many developing countries. We know it provides jobs, it provides capital, but we also talk about this, that it provides new technology and knowledge. Whether it's managerial knowledge or it's technical knowledge, we are not so precise in the economics literature about that, that we leave to the business side of discussion. But basically, the assumption we have is that the M&E's are superior in terms of knowledge, in terms of management capabilities. And it's not given that this is the case that we also saw in some of the literature we went through. But I'm going to disregard this issue in this talk. We also know that the interactions and linkages can lead to knowledge transfers. We have a lot of literature on this. Berta Jawolsic from Oxford is one of the leading authors on this in different parts of the world. And she has a recent paper in EJ in 2018 also confirming that we have a lot of linkages leading to productivity increases in domestic firms. And also some of our own work on Vietnam shows the same. We have different mechanisms and there's a lot of discussion on how to identify the mechanisms. I will not go much into that discussion, but we can talk about that during the discussion afterwards if you want to go into detail. But we have a small disagreement in the literature whether it's forward linkages or backward linkages driving these mechanisms more and improving the productivity of local firms. But I would like to make a conceptual distinction. And that is basically based on the critique. I've presented this quite a lot of times and received a lot of critique. And one of the things that we do not distinguish much about in economics is whether we are considering innovation or diffusion of technologies. A lot of the theoretical framework that we are following is actually looking at existing technologies that diffuses to African firms. So we have an M&E coming into the country establishing an affiliation to local firms and then it diffuses existing technology to the local firms, both horizontally and vertically along this plagey. However, it's not very clear. In some of the literature we say that they become more innovative, more entrepreneurial, the local firms by having M&E presence. And that is more linked to the innovation literature and not so much the diffusion literature. What we tried in this research project is actually to make this distinction very, very clear and not merge the two ideas and we try to focus on diffusion only. Carol also mentioned this with the localization versus the urbanization effects. What is going to matter is if we get the M&E's into a specific sector and we have a lot of local firms in the same sector, will we see a lot of spillovers locally or horizontally, locally, maybe in cities, outside cities? Or will we have more like these vertical integration effects that we see in urban areas in developed countries? What are we pushing for? We have a lot of discussion on that in the book, but I'm not going into detail again about this. I just want to make this distinction to facilitate our discussion afterwards. What I will talk about is this, that a lot of the literature is focusing on the indirect effects of having multinationals entering the country, spilling over knowledge to local firms. They do it either horizontally within the same sector or vertically along the supply chain. As I mentioned in the introduction, these are often done, these analysis in an indirect way. We do not ask specific firms whether they actually received any knowledge transfers from the multinationals or whether they learned from a multinational company. We just take it as given that because there is an M&E in the sector, they automatically learn by just either through competition or through demonstration effects. That is the basic assumption that we do in a lot of the econometric analysis. Here the business literature, management literature, they disagree a lot with us. They actually say that it's not a common thing that you just learn automatically just by having a firm with high capabilities lying beside you. There are other mechanisms at play and we dig a little bit deeper into this. It actually dates a long time back that we need to distinguish between what we call indirect spillovers and direct spillovers that often is contractual. So you actually have a contract between an M&E and a domestic firm in order for these technology transfers to happen. It actually dates back to Arrow who talked about that knowledge diffusion often requires direct interaction. Knowledge diffusion is not an automatic process. We need to stimulate it via industrial policy. We also have Hirschman from 58 saying that in countries with less absorptive capacity and weaker industrial linkages, M&Es are less likely to generate positive externalities. And we have a risk of creating what he calls enclave economies by introducing FDI to rapidly into a non-developed economy. And as Carol mentioned that manufacturing is not that well-developed in most of the African countries that we look at. So there might be a potential risk of just relying on these automated mechanisms of having FDI into the country. So we looked a little bit into this. Just to continue the conceptual distinctions, we are basically looking at both these forward linkages and backward linkages and ask whether these vertical linkages happen through direct or indirect interactions between M&Es and domestic firms and whether this industrial structure or economic complexity matter for the linkages that we realize. So does it matter how complex the industrial structures are in the country for whether we experience the linkages? That is basically what we ask in the research. So do direct indirect spillovers and the mechanisms depend on inter-industry linkages and underlying economic structures following the literature of Hausmann and Hidalgo on economic complexity? And do we actually see is there from the outset or should we expect less of FDI in Africa than we did in Asia due to the lack of linkages before FDI is entered into the economy? So should we expect less of FDI? And then we also ask is there room for industrial policy in terms of promoting what we call direct contractual linkages? Can we actually facilitate these links between M&Es and domestic firms make it part of a contractual agreement to start with basically force M&Es to enter into these relationships? Is that a good idea? As far as we know, we have not seen a lot of people discussing this. So the simple questions are are we able to methodologically distinguish between these indirect and direct mechanisms and spillovers? We have a more thorough paper in the European Economic Review from 2015 on this. And if we can identify this, are we able to observe cross-country differences in the property of a local manufacturing firm receiving direct technology transfers from FDI M&Es? And finally, direct knowledge transfers are more likely to occur through FDI than through trade. There is no if we have these relationships between M&Es and domestic firms, why is it that we believe that these transfers only occur through FDI? And why do they maybe facilitate more learning through localized linkages than through trade linkages? We basically don't know. That we also study in this work. Carol mentioned the books. So we'll not go into the detail about this. But basically, what we did just to highlight the methodology that we followed is that we did some purpose sampling. That is very uncommon in today's literature in economics that we actually went out to the investment promotion agencies in all the countries to start with and asked them to identify the most successful multinationals located in the country in terms of providing technology transfers. We identified 20 or we tried to identify 20 multinationals having linkages to the local economy within manufacturing. Then we went after identifying the number of firms, we went to the M&Es, interviewed them, asked them whether they had any relationships with domestic firms. Because one thing is that the politicians and the civil servants may have an idea of who's the most successful, but we actually went to the companies and identified whether it was true that they were linked to the local economy. You'll see in just a moment that we got a little bit of a surprise here. And then we went in the first step, we went to the domestic enterprises that the FDIs mentioned that they had a local relationship engaged with either vertically or horizontally in terms of transferring knowledge. And then we asked the domestic firm whether they actually received any benefits from interacting with the multinationals. So this three-step approach, we can discuss that, whether it's the way to pursue it and there is a lot of biases that this creates. But it's a new way of actually looking at this issue. So keep that in mind, especially regarding the direct linkages. The outcome we got was a little bit surprising. We got a lot of data reports from every country on the direct FDI mechanisms and we got information on 102 M&E's and 226 domestic firms having linkages, either directly with foreign direct invested firms or via trade with the multinational outside the country. What we found, the first conclusion that is very surprising in our view is that it was not straightforward to find linked firms. We are talking a lot about linkages and spillovers from FDI, but it was very difficult to identify the firms that actually can see the benefits of being linked to a foreign direct invested firms. They were difficult to find. I will just illustrate it. This is Vietnam. Here we have 15, let's see if I can just, can you see? I'll just, here we, whoa. Here we have 15 multinationals and they say who supplies them and who is their customers and who is their competitors. And remember, we also interviewed all of those firms on the right-hand side and what they produce. So here what you should notice is that a lot of domestic firms in Vietnam, they are linked to these multinationals. Keeping this in mind, look at when we went to Kenya. This is how it looked for the 10 firms that we were able to identify in Nairobi. Very empty cells. A lot of them are not linked to domestic firms. It's actually difficult to find local firms that are linked directly domestically with the M&E's present in Kenya. And this is a general picture. This is just an illustration. If we allow interaction with other multinationals, that is joint ventures in this case, we get more cells filled out. So more linkages. So a lot of the firms in Africa, they are linked to other M&E's in Africa, but not with domestic firms solely owned by local Kenyans. This was the same picture that we found in every African country that we analyzed in this study. So there is clearly a case that there are fewer linkages between domestic firms and M&E's in Africa than we see in Asia. This, according to Hausmann and Dalgo, is due to the lack of economic complexity, lack of linkages between industries in Africa compared to Asia. I don't know how much time. I think I will skip a lot of these things here due to time constraint, but I just want to mention that because we have what we call M&E domestic firm, match data, we can actually analyze how consistent are the answers given by the domestic firms and the multinationals. And there was a surprisingly high percentage of consistency. So when the M&E is saying that we are providing technology transfers, the domestic firm is actually also stating that they received a technology transfer. And that is the 86% where we found consistency between the answers given by the domestic firm and the multinationals. That actually came as a somewhat of a surprise to us. I also want to highlight this that we had this relations with customers and suppliers required additional investments. You can see here that it was between 19 and 30%, depending on whether it's upstream or downstream linkages in the total sample. But we also saw a tendency that these linkages are fewer. They made fewer investments in Asia than in Africa in order to make these linkages happen. So it required more investment by the local African firms than the Asian firms to actually start the interaction with the multinationals. Moreover, what we saw is that a direct transfer, so basically the firms in Asia stating that they received a transfer from the multinationals that they engaged with, we saw very few cases of that in Asia. Whereas in Africa, we saw fewer linkages, but when we saw the linkages, they were more likely to transfer knowledge directly and both parties stating that it was part of the contract. That is highlighted in this slide that the direct technology transfer from FDI actually happened more frequently. In this case, I highlighted Kenya against Vietnam and you can also see that in Kenya, it's more likely that they have a contractual agreement of transferring knowledge. So there is no doubt about that there are fewer linkages, but when the linkages are present in Africa, it often happens through contractual arrangements between the M&E and the local domestic firm. So it's not an automated process as we often analyze it in the econometric analysis. So if we follow the traditional analysis econmetrically, it is not a surprise that we do not find as much effect, so many effects of transfers from FDI to local firms using traditional approaches in, for example, the papers published by Bayata Yavuzic. If we follow those approaches because they do not capture the direct effects. So the results that we have, we find very few direct linkages between M&E's and domestic firms in Sub-Saharan Africa compared to Asia, but when the linkages are present, they are more likely to lead to direct knowledge transfers from M&E's to domestic firms. This direct knowledge transfer is also more likely to occur through FDI than through trade. I think there is some of the technical things that I left out here, but in the paper that we are currently revising for a journal, there is a clear tendency that the knowledge transfer is localized. It does happen more frequently if it happens through FDI than through trade. This is also consistent with the view of Arrow who also says that this tacit knowledge of these tacit knowledge transfer are more likely to occur through localized linkages than through global linkages. So it's according to theory as well. So we shouldn't be that surprised, even though the literature, the empirical literature is actually trying to state otherwise. And then we have to discuss whether economic complexities should be our focus and not so much whether we should facilitate spillovers because whether we should follow the Asian example, trying to facilitate, create industries where we are not really doing much in Africa. So basically facilitate the linkages in the economic complexity sense of Hausmann and Delgo or whether we should facilitate learning from FDIs, that is a policy discussion worth having. So basically what I think we should discuss is should we expect as much of FDI in terms of improving capabilities in Africa? In my view, no, that is clear from our research. We need to do more than just facilitating the FDI. We need to have a discussion whether FDI is going to facilitate innovation. Clearly there is scope for that, but if we are going for FDI facilitating diffusion, we need to do much more. So we need to have that discussion and our target is industrial policies even more important in Africa than it was in Asia. In my view, yes, given that we have such severe lack of economic complexity, I think it's worth discussing whether we could target industrial policies much more than we did in Asia. John might disagree here, but this is one of the key points is to facilitate linkages between industries in order for them to learn from the FDI that is coming into the region.