scholarly journals Foreign Direct Investment as a Driver of Economic Recovery and Business Innovation

2021 ◽  
Vol 100 ◽  
pp. 01015
Author(s):  
José Manuel Macedo Botelho ◽  
Irina Maksymova ◽  
Oleg Padalka ◽  
Mansur Mamanazarov ◽  
Volodymyr Kulishov
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Global Economy ◽  
Developing Economies ◽  
Capital Inflows ◽  
Economic Recovery ◽  
Great Effort ◽  
Fdi Inflows ◽  
Business Innovation ◽  
Developed Economies

Global economy is expected to contract, consequence of a collapse of international trade with millions of failed businesses and lost jobs. Foreign Direct Investment (FDI) flows are fundamental to support the economic recovery. Developed economies and developing economies in particular must make a great effort to restore and increase capital inflows, especially in form of foreign direct investment. FDI inflows have long been the largest source of finance investment. FDI is an opportunity to support the crucial economic recovery. An internationalization model of FDI is built in order to be a driver to governments and firms to implement a success strategy to attract FDI to the country.

Foreign Direct Investment and Poverty Reduction

2017 ◽  
Vol 18 (2) ◽  
pp. 135-157 ◽  
Author(s):  
Manmohan Agarwal ◽  
Pragya Atri ◽  
Srikanta Kundu
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Poverty Reduction ◽  
Developing Economies ◽  
Capital Controls ◽  
Capital Inflows ◽  
Capital Account Liberalization ◽  
Fdi Inflows ◽  
The Impact ◽  
Free Movement Of Capital

It is widely proclaimed that capital account liberalization would immensely benefit developing economies because once capital controls are lifted, developing economies create a potential for movement of capital. And, this free movement of capital could possibly increase growth thereby lifting millions out of poverty. India has been gradually liberalizing since the 1980s and throughout more capital inflows were observed compared to outflows. Also, the composition of capital flows has been changing since the 1980s–with Foreign Direct Investment (FDI) inflows rising steadily post-1991compared to portfolio and debt flows. However, since 2000, FDI outflows from India were also witnessed. In this paper we empirically test the impact of FDI flows on poverty in India for 1980–2011. To provide a correct perspective to India’s performance we also analyze the link between FDI flows and poverty for SAARC countries. For a better understanding of how FDI flows impact poverty, we analyze the outflows and inflows separately. The results show both similarities and contrasts in the behaviour of India in comparison with the other SAARC countries.

Outward Foreign Direct Investment: A Novel Dimension of China's Integration into the Regional and Global Economy

1999 ◽  
Vol 160 ◽  
pp. 856-880 ◽  
Author(s):  
Kevin G. Cai
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Global Economy ◽  
International Political Economy ◽  
Developing Economies ◽  
The United States ◽  
Future Trend ◽  
Open Door Policy ◽  
Outward Fdi ◽  
Existing Problems

It is now receiving wide attention that since the adoption of the open-door policy at the end of the 1970s China has been extremely successful in attracting foreign direct investment (FDI). Particularly, according to UNCTAD's World Investment Report 1997: Transnational Corporations, Market Structure and Competition Policy, China has become the second largest recipient of FDI in the world since 1993, after the United States. On the other hand, however, it seems less noticed that China has also become a growingly important FDI exporting country. According to UNCTAD's same report, China now ranks as one of the largest outward investors among developing economies in the 1990s. By the end of 1996, the cumulative stock of Chinese outward FDI had reached over $18 billion, next only to Hong Kong ($112 billion), Singapore ($37 billion) and Taiwan ($27 billion). Consequently, China increased its share in world-wide FDI outflows from less than 0.5 per cent until 1991 to an average of 1.3 percent in 1991–95. As China is rapidly rising as a new economic power, its deepening participation in the regional and global economy, through both inward and outward FDI as well as trade, will inevitably bring about significant implications in the international political economy. This article attempts to explore the development of Chinese outward FDI, its characteristics and motives, the outward FDI regime, the government's policies and existing problems, and the prospects for the future trend of Chinese outward FDI.

scholarly journals Determinants of Foreign Direct Investment in Developed and Developing Countries: Impact of Political Stability

2021 ◽  
Vol 17 (4) ◽  
pp. 1390-1404
Author(s):  
R.I. Vasilyeva ◽  
◽  
O.S. Mariev ◽  
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Political Stability ◽  
Policy Implications ◽  
Likelihood Method ◽  
Developed Economies ◽  
Development Level ◽  
The Impact

Stable political environment and prominent development of political institutions increase foreign direct investment flows by providing lower risks for investors. However, this impact can vary according to the development of the country. This study aims to investigate the impact of various indicators of political stability on foreign direct investment attraction for different economies distinguished by their development level. Our database includes 66 FDI-recipient countries and 98 FDI-investing countries for the period from 2001 to 2018. By applying the gravity approach and Poisson Pseudo Maximum Likelihood method with instrumental variables (IV PPML), we model bilateral FDI flows, incorporating variables reflecting various aspects of political stability formed by the principal components analysis. Interestingly, we found mixed results regarding the impact of political stability on FDI flows. In particular, political stability indicators were found to be insignificant, when analysing the bilateral FDI flows for the group of developed economies. We obtained similar result for the group of developing economies. However, political stability variables significantly influence FDI flows for countries with different development level, confirming the hypothesis that countries’ development affects bilateral FDI flows. Besides, we discover the significant difference between developed and developing countries referring to FDI-investors. Based on the obtained results, we highlight a few policy implications for developing and developed economies.

scholarly journals Foreign direct investment in Latin America and the Caribbean – the evolution of flows

2021 ◽  
Vol 7 (3) ◽  
pp. 50-63
Author(s):  
S. A. Chirkin
Keyword(s):  
Foreign Direct Investment ◽  
Latin America ◽  
Multinational Corporations ◽  
Direct Investment ◽  
Commodity Prices ◽  
Capital Inflows ◽  
South American ◽  
Fdi Inflows ◽  
Macroeconomic Conditions ◽  
The Caribbean

The article examines the flows of foreign direct investment (FDI) in the countries of Latin America and the Caribbean (LACB) for the period from 2010 to 2020. The sources of capital inflows, their structural components, as well as the distribution of attracted investments by sectors of the recipient countries ' economies are analyzed. Quantitative indicators of FDI inflows and outflows for individual countries and for the region as a whole are presented, highlighting general trends. The trend of a decrease in the volume of attracted FDI in the LACB is emphasized. It is concluded that the decrease in foreign direct investment in South American countries confirms the direct dependence of FDI inflows on macroeconomic conditions and fluctuations in world commodity prices. Changes are noted in the approaches of multinational corporations to invest capital abroad in the context of the COVID-19 pandemic in favor of their local or cross-border use. The assessment of the actions of the authorities of the states of the region to attract foreign investment is given. The article examines the situation in the field of unresolved investment disputes involving the countries of the region and its impact on investment attractiveness. The role of Chinese FDI in the region, including its effectiveness in political terms, is considered separately.

Foreign direct investment and the environment: disentangling the impact of greenfield investment and merger and acquisition sales

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ayesha Ashraf ◽  
Nadia Doytch ◽  
Merih Uctum
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Entry Mode ◽  
Halo Effect ◽  
Empirical Literature ◽  
Content Type ◽  
Developed Economies ◽  
Mode Of Entry ◽  
Transport Industry

Purpose This study aims to examine the effect of greenfield foreign direct investment (GFDI) and mergers and acquisitions (M&A) on the environment and more specifically, on the sectoral emissions of CO2. The authors identify significant differential and income effects with various data classifications of foreign direct investment (FDI) mode of entry. Design/methodology/approach The authors use system generalized method of moments with instruments for income and GFDI and M&A, which allows us to control for present reverse causality and endogeneity of income and the two modes of FDI. Findings Evidence from the full sample reveals that GFDI increases pollution, supporting the pollution haven hypothesis, while M&As decrease pollution in line with the halo effect hypothesis. GFDI flowing into poorer countries worsens the environment, while M&As flowing to industrialized economies reduce pollution. Entry-mode effects are also present at the level of industry emissions. GFDI in developed economies decreases pollution in transport industry but increases it in poorer countries. Practical implications The authors demonstrate: first, a recipient country level-of-development effect: GFDI investment flowing into poorer countries has harmful effects on environment, but no significant effect in rich economies, while M&As flowing to industrialized economies have a beneficial effect to the environment, supporting the halo hypothesis. Second, the authors demonstrate a differential entry-mode effect at the industry level: GFDI in developed economies decreases pollution from transport industry, while both modes of entry in developing economies increase it. Social implications M&As emerge as a type of FDI that is less harmful to the environment. This is especially true in the case of developed economies. However, policymakers should oversee strictly the inbound GFDI flows and determine whether they carry “dirty” or “clean” production processes. This is the type of FDI to be regulated and scrutinized to ensure that economic development is fostered alongside environmental conservation. Originality/value In existing theoretical and empirical literature, little guidance is available on which mode of entry would have greater effect on the environment of the host country. This paper answers this issue by disaggregating FDI flows into GFDI and M&As and examining how each mode of entry impacts pollution in host countries. To the best of the knowledge, this is the first study that analyzes the environmental impact of the two modes of entry of FDI while disentangling the environmental Kuznets curve effect from the halo effect.

scholarly journals THE ROLE OF POLITICAL STABILITY IN FOREIGN DIRECT INVESTMENT ATTRACTION: CROSS-COUNTRY ANALYSIS

2020 ◽  
Vol 1 ◽  
pp. 76-83
Author(s):  
Rogneda Groznykh ◽  
Oleg Mariev ◽  
Sergey Plotnikov ◽  
Maria Fominykh
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Positive Impact ◽  
Political Stability ◽  
Primary Objective ◽  
Fdi Inflows ◽  
Cross Country ◽  
The Impact ◽  
Foreign Direct Investment Inflows

This study is devoted to the evaluation and scrutiny of political stability as a determinant of foreign direct investment (FDI) inflows to different countries. The primary objective of the research is to estimate the impact and influence of various indicators of political stability on foreign direct investment inflows. The analysis is delivered based on a database on cross-country FDI inflows of 66 FDI-importer countries and 98 FDI-exporter countries, in the period between 2001-2018. This article uses the assumption that the impact of political stability might be different for both the groups of developed and developing countries. As the developed economies have higher political stability, they tend to attract larger amounts of foreign direct investment compared to developing economies, where the political situation can be less stable. Furthermore, the estimation applies the gravity approach, while the main method used for the econometric calculations is the Pseudo Poisson Maximum Likelihood (PPML) regression. The outcome revealed that in most cases the indicators of political stability had a positive impact on the foreign direct investment inflows. However, the results are not constant for all groups of countries. Therefore, if a developed country is an importer of investment, then most of the indicators of political stability become significant and have a positive influence on the foreign direct investment. At the same time, if the importer is a developing country, then for the investor-developed economy, political stability becomes a significant factor. Similarly, if the FDI-exporter is a developing economy, then determinants of political stability are insignificant. Based on these results, possible recommendations for refined government policies can be suggested.

scholarly journals THE IMPACT OF INSTITUTIONAL FACTORS ON FOREIGN DIRECT INVESTMENT INFLOWS: CROSS-COUNTRY ANALYSIS

2019 ◽  
Vol 7 ◽  
Author(s):  
Rogneda Groznykh ◽  
Igor Drapkin ◽  
Oleg Mariev
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Institutional Development ◽  
Institutional Factors ◽  
Fdi Inflows ◽  
Positive Effects ◽  
Cross Country ◽  
The Impact

This research paper is devoted to analysis of various institutional factors as determinants of foreign direct investment (further – FDI) inflows to different countries. The objective of the research is to estimate the effect of institutions on FDI inflows. The analysis is provided on a database of cross-country FDI inflows on 72 countries FDI-importers and 112 countries FDI-exporters in the period from 2001 to 2016. It is supposed in the paper that the impact of institutional factors might be different for the groups of developed and developing countries; since developed economies have higher institutional indicators, they tend to attract larger amounts of foreign direct investment compared to developing economies, where institutional development is at the lower level. The estimation is based on the gravity approach, which considers the positive effects of countries’ GDP and the negative effect of the distance between them. The main method used for the econometric estimation is the Pseudo Poisson Maximum Likelihood (PPML) regression, which is considered to be one of the adequate methods for estimating such data. During the research the problems of zero-observations and correlation between institutional indicators are solved. The results have shown that higher quality of institutions tends to attract more foreign direct investment to a country. Thus, institutions in developed countries have positive and significant impact on FDI attraction. At the same time, the analysis of developing countries has shown that some institutions have less significant influence on the FDI inflows. Based on the results of the research, possible recommendations for government policy on institutional improvement can be suggested.

scholarly journals Impact of Taxation on Foreign Direct Investment: Empirical Evidence from Pakistan

2021 ◽  
Vol 9 (1) ◽  
pp. 10-18
Author(s):  
Muhammad Nouman Shafiq ◽  
Liu Hua ◽  
Muhammad Azhar Bhatti ◽  
Seemab Gillani
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Developing Economies ◽  
Trade Openness ◽  
Vital Role ◽  
Series Data ◽  
Fdi Inflows ◽  
Distributed Lag ◽  
The Government

Foreign direct investment plays a vital role in promoting economic growth, especially for developing economies. It causes improvement in the different sectors such as education, healthcare, manufacturing industries, and creates more jobs. The speed of FDI inflows has been increasing in Pakistan each year. In order to attract more FDI, many countries try to reframe their tax policies by introducing different tax incentives such as tax holidays, investment allowances, exemptions, deductions etc. The purpose of the present paper is to find the implication of taxation in the decision of FDI inflows in Pakistan. Time series data is used spanning over 1985 to 2020. The data was obtained from two sources: the “World Development Indicator” (WDI) and “Economic Survey of Pakistan”. “Auto-Regressive Distributed Lag” (ARDL) and “Error Correction Model” (ECM) techniques are used for empirical analysis. The study concludes that low taxes motivate foreign investors' investment contribution and the long-run relationship between taxes and FDI in Pakistan. Other control variables, including GDP growth, trade openness and exchange rate, positively impact FDI. It is suggested that decision-makers should direct policies to reduce the taxes to welcome FDI in Pakistan. In this regard, the government needs to reconsider its priorities while making policies favouring FDI.

scholarly journals Corruption and Foreign Direct Investment: Empirical investigation of Asian Developing Economies

2020 ◽  
Vol 13 (4) ◽  
pp. 68-81
Author(s):  
Mahnaz muhammad Ali ◽  
Mariam Abbas Soharwardi ◽  
Rozina Sadiq
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Empirical Investigation ◽  
Developing Economies ◽  
Positive Impact ◽  
The Other ◽  
Fdi Inflows ◽  
System Gmm ◽  
The Impact ◽  
Potential Recipient

Developing economies have different cultural and economic characteristics, but they often experience similar levels of corruption. At one side developing economies are facing the issue of corruption; on the other hand, they are a potential recipient of FDI. The present study used the data of 31 developing Asian economies from 2000 to 2017 to determine the impact of host country’s level of corruption on inward FDI. System GMM technique is applied for empirical investigation since the problem of endogeneity and heteroscedasticity are found in the models. Results reveal that corruption has a positive and statistically significant impact on inward FDI; corruption also has a positive impact on FDI inflows to GDP ratio for the panel countries. Hence the results of the study endorse the grease the wheel hypothesis of corruption. It is concluded countries should focus their resources to create business friendly environment instead to focus on anti-corruption policies only.   

scholarly journals THE IMPACT OF REPETITIVE XENOPHOBIC ATTACKS ON FUTURE FOREIGN DIRECT INVESTMENT: A CASE OF SOUTH AFRICA

2021 ◽  
pp. 14-20
Author(s):  
Wellington Garikai Bonga
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Capital Inflows ◽  
Foreign Direct Investments ◽  
Investment Climate ◽  
Fdi Inflows ◽  
Long Term Impact ◽  
The Impact

The debate of the link between xenophobia and importance of foreign direct investment is of interest. A phrase says it all, “One cannot want foreign money and hate foreign businesses at the same time.” Does South Africa, as a country, love foreign investment, and by extension, foreign investors? A ‘yes’ and a ‘no’ answer will do for this question. Foreign direct investments are the most desirable form of capital inflows to emerging and developing countries. Many benefits are linked to accrue to a nation because of FDI inflows. FDI is climatic sensitive, and usually goes where it is wanted most and where conducive environment prevails. The South African nation is dominated by unending violence that also targets foreigners including their businesses. Effective policies to curb xenophobia seems to be lacking. There exist xenophobia denialism among the political leaders, making it more difficult to halt the problem. Letting the nation continue turning into a hostile destination for foreigners may pose a great investment challenge in the longer term. The path that South Africa is walking today, of protecting and failing to address issues of xenophobia, have a long term impact to investment in the country. Conflicts and violence attacks, hence xenophobia, continue to affect FDI flows several years into the future. The trend of net FDI has already shown a downward trend that may be attributed to issues of unrest persistent in the economy. The study strongly indicate that repetitive xenophobic attacks significantly impact future FDI inflows negatively. Immediate action is required to minimize the damage caused by xenophobia in the country. Investment climate restoration is required to ensure favorable economic growth path for the country. KEYWORDS: Economic Growth, Foreigners, Foreign Direct Investment, Instability, Investment, Investment Climate, Socio-economic Development, Violence, Xenophobia, South Africa

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