Foreign Direct Investment and Local Development: The Role of Outsourcing, Supplier Development and Entrepreneurship in the Danone Algeria Case

Abstract

Foreign Direct Investment (FDI) can act as a catalyst for local development when multinational corporations become embedded within regional economic systems. This study examines the contribution of Danone Algeria to the local development of the municipality of Akbou, one of Algeria’s most dynamic agro-industrial areas. Based on thirty semi-structured interviews with managers, suppliers, subcontractors, local authorities, former employees, and other stakeholders, complemented by documentary analysis, the research investigates how outsourcing, subcontracting, supplier development, entrepreneurship, and corporate social responsibility (CSR) initiatives contribute to territorial development. The findings indicate that Danone Algeria has stimulated entrepreneurial initiatives, supported the emergence of several spin-off firms, generated substantial direct and indirect employment effects, and strengthened the regional dairy value chain. The company has also facilitated technology transfer, supplier upgrading, and organizational learning through long-term relationships with local partners. In addition, CSR and environmental initiatives have contributed to community welfare and sustainable development. The study demonstrates that the developmental impact of foreign subsidiaries extends beyond capital investment and depends largely on the quality of local linkages established with firms, institutions, and communities. The case of Danone Algeria illustrates how multinational corporations can function as catalysts of sustainable local development when their strategies are aligned with local economic and social networks.