Abstract
M.A.
All countries compete to attract a larger share of FDI inflows. Developing countries,
especially in Africa, receive a relatively small share of FDI inflow. Furthermore, the FDI
inflows that Africa receives are concentrated in a small number of countries. While FDI is
regarded as the engine for growth, some studies have even shown a weak and unstable
relationship between FDI and growth in Africa, with wide variations between African
countries. Against this backdrop, this study aims to determine why developing countries
benefit differently from FDI. To achieve this aim, a comparative case study between South
Africa and Kenya was conducted. This study focused on the institutions responsible for
providing linkage support to both new and existing foreign direct investors in South Africa
and Kenya. It argues that institutions assist countries to adopt and absorb technologies
introduced in domestic economies by foreign investors. In this light, the research attempted
to compare the best practice to actual practice of the institutions in South Africa and Kenya.
At the end of the research process, it was discovered that even though South African
institutions have challenges, they perform better than their Kenyan counterparts because they
are well-funded and receive strong support from the South African government.