The impact of foreign direct investment on emission reduction targets: Evidence from high- and middle-income countries

There is a significant debate underway regarding the risks and rewards of foreign direct investment (FDI) for countries in the Global South. These discussions are particularly relevant to the people of Latin America, where the use of inward FDI as a mechanism to support economic development has had dramatic results, both positive and negative. One of the key works in the study of FDI is Robert I. Rotberg’s argument that FDI is critical to support the development of weak states; however, the applicability of this theory faces difficulty in the context of Latin America, where middle-income countries have extractive institutions (Rotberg, 2002). I use the cases of Mexico and Peru to demonstrate that for middle-income countries, extractive institutions can hamper the rewards of FDI and even exacerbate development problems or create new ones. In this regard, the sector of FDI will determine the nature of the impact. In states with extractive institutions, FDI in the natural resource sector is prone to stimulating social conflict. In states with extractive institutions, FDI in the manufacturing sector begets a situation of stagnated development, as the jobs that are introduced are of poor quality and low wages.

Download Full-text

Do Governance, Foreign Direct Investment and Human Capital Matter to Bolster Trade Liberalization? Fresh Insight from Developing Countries

Review of Economics and Development Studies ◽

10.47067/reads.v7i3.369 ◽

2021 ◽

Vol 7 (3) ◽

pp. 325-341

Author(s):

Muhammad Umar ◽

Imran Sharif Chaudhry ◽

Muhammad Faheem ◽

Fatima Farooq

Keyword(s):

Developing Countries ◽

Human Capital ◽

Foreign Direct Investment ◽

Trade Liberalization ◽

Direct Investment ◽

Foreign Direct Investments ◽

Lower Income ◽

Middle Income ◽

Middle Income Countries ◽

The Impact

This study aims to explore the impact of governance, foreign direct investment and human capital on trade liberalization in developing countries (lower income, middle income and upper middle income). The study employed fixed effect for the period of 2000 to 2019. Results show governance, foreign direct investment and human capital are highly significant with trade liberalization in the case of lower-income countries. In the case of middle-income countries, empirical findings demonstrate governance and foreign direct investment are highly significant with a negative sign, while human capital has positive on trade liberalization. In the case of upper-middle-income countries, results show human capital and foreign direct investment affect positively, while governance has a negative effect on trade liberalization. On the behalf of results it is suggested that in the countries where human capital is high, most of the inflows of foreign direct investment happen. It means that the government can develop human resources to attract more foreign direct investments. The governments of developing countries should also concentrate on education, including training facilities and other quality educational facilities for human skill development.

Download Full-text

The Influence of Political and Social Globalisation on Foreign Direct Investment Inflow in Developing Countries: The Role of Financial Development as a Moderating Factor

Asia-Pacific Management Accounting Journal ◽

10.24191/apmaj.v16i1-11 ◽

2021 ◽

Vol 16 (1) ◽

pp. 297-322

Author(s):

Marhamah Mohd Rafidi ◽

◽

Jamaliah Said ◽

Naila Erum ◽

Farha Abdol Ghapar ◽

...

Keyword(s):

Developing Countries ◽

Foreign Direct Investment ◽

Financial Development ◽

Direct Investment ◽

Cross Sectional ◽

Middle Income ◽

Middle Income Countries ◽

Cross Sectional Dependence ◽

The Impact

This study presents the effect of political and social globalisation on Foreign Direct Investment (FDI) inflow in developing countries. The eminence of decomposed globalisation element in the FDI area is argued here. New insights into empirical evidence are offered by dropping economic globalisation as one of the decomposed components. A panel data of 42 developing countries from 1984 until 2016 was used by applying the CSARDL approach. The study is also on the impact of political and social globalisation in developing countries by splitting them into two income stratification: Upper Middle-income Countries and Lower Middle-Income Countries by incorporating financial development as a moderating variable. It documents that political globalisation postulates a U-shaped relationship after addressing the Cross-Sectional Dependence (CD) problem, while social globalisation reverses the U-shaped relationship. It was found that political globalisation and social globalisation are conditional to the level of income rather than the overall developing countries’ stream. Besides, the prominent role of financial development in promoting FDI inflow, especially to income level, was observed. We suggest that developing countries should increase the capacity to absorb political and social globalisation in promoting FDI. Keywords: FDI inflow, globalisation, political globalisation, social globalisation, financial development, CS-ARDL

Download Full-text

The effect of population health on foreign direct investment inflows to low- and middle-income countries

World Development ◽

10.1016/j.worlddev.2005.09.006 ◽

2006 ◽

Vol 34 (4) ◽

pp. 613-630 ◽

Cited By ~ 65

Author(s):

Marcella Alsan ◽

David E. Bloom ◽

David Canning

Keyword(s):

Foreign Direct Investment ◽

Population Health ◽

Direct Investment ◽

Middle Income ◽

Middle Income Countries ◽

Low And Middle Income ◽

Foreign Direct Investment Inflows

Download Full-text

Do Remittances Attract Foreign Direct Investment? An Empirical Investigation

Global Economy Journal ◽

10.1515/gej-2013-0052 ◽

2014 ◽

Vol 14 (1) ◽

pp. 1-9 ◽

Cited By ~ 8

Author(s):

Hem C. Basnet ◽

Kamal P. Upadhyaya

Keyword(s):

Foreign Direct Investment ◽

Latin American ◽

Direct Investment ◽

Asia Pacific ◽

African Countries ◽

Middle Income ◽

Middle Income Countries ◽

Negative Effect ◽

Using Data ◽

Latin American Countries

Remittances are a major source of household income in many Asian, African, and Latin American countries. Households spend a significant portion of remittances on health and education. Given that human capital is one of the primary determinants of foreign direct investment (FDI) inflow, this study develops a model in which remittances are one of several determinants of the observed variation in FDI. The model is estimated using data from a group of 35 middle-income countries from Latin America, Asia–Pacific, and Africa. The estimated results ascribe no significance to remittances in explaining cross-country variation in FDI. However, geographically-disaggregated estimated results do establish a positive effect for African countries, no significant effect for Latin American countries, and a negative effect for the Asia–Pacific region.

Download Full-text

Corporate Income Tax Rate and Foreign Direct Investment: A Cross-Country Empirical Study

Economics and Finance in Indonesia ◽

10.47291/efi.v66i1.679 ◽

2020 ◽

Vol 66 (1) ◽

pp. 25

Author(s):

Amalia Indah Sujarwati ◽

Riatu Mariatul Qibthiyyah

Keyword(s):

Foreign Direct Investment ◽

Low Income ◽

Income Tax ◽

Direct Investment ◽

Corporate Income Tax ◽

Low Income Countries ◽

Tax Havens ◽

Middle Income ◽

Tax Rate ◽

The Impact

This study aims to explore the impact of Corporate Income Tax Rate (CITR) on Foreign Direct Investment (FDI), specified based on income levels of countries. Using an unbalanced fixed-effect method of 112 countries over the period of 2003–2017, our finding shows that CITR has no significant impact on FDI. Corporate Income Tax (CIT) is levied on all firms, and as CIT is generally more complex than other types of taxes, its influences on FDI are in question. Excluding tax havens from the sample, our findings show that CITR has a weak significance only in the lower-middle-income and low-income countries.

Download Full-text

Economic Determinants of Foreign Direct Investment in Middle-Income Countries: Fuzzy Regression Analysis

Ekonomik Yaklasim ◽

10.5455/ey.18000 ◽

2021 ◽

Vol 32 (119) ◽

pp. 89

Author(s):

Nurdan Değirmenci

Keyword(s):

Foreign Direct Investment ◽

Regression Analysis ◽

Direct Investment ◽

Fuzzy Regression ◽

Middle Income ◽

Economic Determinants ◽

Middle Income Countries ◽

Fuzzy Regression Analysis

Download Full-text

THE EFFECT OF TAX TREATY ON FOREIGN DIRECT INVESTMENT IN INDONESIA

JURNAL AKUNTANSI BERKELANJUTAN INDONESIA ◽

10.32493/jabi.v1i3.y2018.p278-288 ◽

2018 ◽

Vol 1 (3) ◽

pp. 278

Author(s):

Hutomo Nurman Satrio, ◽

Nur Indah Lestari

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Fixed Effect Model ◽

Foreign Direct Investment Inflow ◽

Data Set ◽

Middle Income ◽

Middle Term ◽

Middle Income Countries ◽

Effect Model

This paper examines the effect of tax treaty, so called Perjanjian Penghindaran Pajak Berganda (P3B), on foreign direct investment inflow to Indonesia in short, middle and long term. From 67 countries that have P3B with Indonesia, we work only with 51 countries because of no longer P3B exist or lack of completed data. Using panel data set of 51 countries from 2000 to 2015 and applying fixed effect model, we find that P3B has insignificant relationship to foreign direct investment inflows in short term. However, tax treaty, both in middle and long term, have a positive relationship on Indonesia’s foreign direct investment inflow with 10%and 1% significant level, respectively. Furthermore, the data show that in all term there are Rp0 foreign direct investment inflow from corresponding countries, which are 58% countries in short terms, 61% in middle term, and 64% in long term. From all those countries that has no investment agreement, majority of them are lower middle income countries. So, Government should evaluate tax treaty that are present and consider more about macroeconomics factor from partner country before signing an agreement.

Download Full-text

IMPACT OF FOREIGN DIRECT INVESTMENT, IMPORTS AND TARIFF DEREGULATION ON EXPORTS AMONG PIONEERING ASEAN MEMBERS: PANEL DATA ANALYSIS

International Journal of Business and Society ◽

10.33736/ijbs.486.2017 ◽

2017 ◽

Vol 18 (1) ◽

Cited By ~ 2

Author(s):

James Asirvatham ◽

Rajah Rasiah ◽

Govindamal Thangiah ◽

Navaz Naghav

Keyword(s):

Foreign Direct Investment ◽

Panel Data ◽

South Korea ◽

Direct Investment ◽

Panel Data Analysis ◽

Import Substitution ◽

Turn Of The Millennium ◽

Middle Income ◽

Middle Income Countries ◽

Rapid Pace

Following the successful development of the first-tier Newly Industrialized economies of South Korea and Taiwan, governments have gradually moved from import-substitution policies to export-led or export-led import substitution policies. The Association of Southeast Asian nations are no exception as the rapid pace of trade liberalization has been referred to as the prime driver of economic growth in these countries. While the industrial policies of these countries may not be as effective as those of the first-tier NIEs, the pioneering ASEAN members of Indonesia, Malaysia, Philippines, Singapore and Thailand have enjoyed rapid growth and structural change since the 1970s. Indeed, Singapore’s per capita income has remained higher than that of South Korea and Taiwan. Indonesia, Malaysia, Philippines and Thailand became middle income countries by the turn of the millennium. Hence, using panel data over the period 1970-2015 this paper seeks to analyze the influence of foreign direct investment, imports and tariff deregulation on export growth among the five pioneering ASEAN members. The results show that open trade policies in general and increases in FDI, imports and tariff deregulations has helped the ASEAN-5 stimulate exports. Keywords: Exports; Foreign direct investment; Imports; Tariffs; ASEAN.

Download Full-text

China's outward foreign direct investment and bilateral export sophistication: a cross countries panel data analysis

China Finance Review International ◽

10.1108/cfri-04-2020-0040 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Faheem Ur Rehman ◽

Abul Ala Noman

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Panel Data Analysis ◽

Total Sample ◽

Income Group ◽

Sub Saharan Africa ◽

Outward Foreign Direct Investment ◽

Middle Income ◽

Content Type ◽

The Impact

PurposeChina's outward foreign direct investment (OFDI) has risen remarkably over the past two decades. Does such increase affect the sophistication of Chinese exports, is a significant issue that has surprisingly remained unaddressed? The purpose of this study is to investigate the impact of Chinese OFDI on bilateral export sophistication of China and its OFDI receiving partner countries during 2003–2017 by applying Poisson pseudo-maximum likelihood approach based on gravity model.Design/methodology/approachThe analysis has been performed for total sample, region-wise grouped sample (Europe and Central Asia, Middle East and North Africa, Latin America and Caribbean, East Asia and Pacific, South Asia, North America and sub-Saharan Africa) and income-wise grouped sample (high income, upper middle income, lower middle income and lower income group sample).FindingsThe results confirmed the significant and positive effect of Chinese OFDI on bilateral export sophistication in total sample, regions-wise and income groups sample.Originality/valueThe study provides a helpful suggestion regarding policy towards achieving more sophistication in export and thus to achieve comparative advantage in trade.

Download Full-text