scholarly journals The machination of foreign direct investment flow to emerging markets – a focus on Africa

2018 ◽  
Vol 9 (4) ◽  
pp. 430-448 ◽  
Author(s):  
Rafiu Adewale Aregbeshola
Keyword(s):  
Foreign Direct Investment ◽  
Emerging Markets ◽  
Direct Investment ◽  
Data Set ◽  
Content Type ◽  
Capital Productivity ◽  
Lm Test ◽  
Macroeconomic Fundamentals ◽  
Productivity Gains

Purpose The deterministic role of various macroeconomic fundamentals on the attractiveness of countries to inflow of FDI is well documented in literature. The role of market size, infrastructural development, inflation and exchange rates differential have been supported as determinants of FDI direction. However, no documented study has benefited from diverse measures of institutional adequacy as presented in this study. The paper aims to discuss these issues. Design/methodology/approach The paper adopts various econometric approaches that include descriptive statistics, fixed effects models, LM test of independence, feasible generalised least squares regression and SUR estimations. Findings This study unveils the specific impacts and explanatory power of each of the variables along country lines, and the author compares the results of some emerging markets in Asia, Eastern Europe, and South America to some selected countries in Africa. Using data set from various sources over a period of 44 years in a seemingly unrelated regression environment, this study suggests that poor technological capability, inadequate political system, weak productivity gains are major deterrents to the attractiveness of African countries to inflow of FDI. Research limitations/implications The major limitation of this study revolves around availability of usable data, which compels the researcher to limit the focus and the span of time series. Practical implications The study suggests the need to improve institutional quality in emerging economies, especially countries in Africa in order to enhance their attractiveness to FDI inflow. More importantly, the study found that low capital productivity gains hinder the attractiveness of African emerging markets to FDI inflow. Social implications To alleviate poverty, attraction of FDI is considered important, and the improvement of institutional functionality in that regard is found to be important. The need to augment technological improvement is considered very important and critical. Originality/value This serves to confirm that the article entitled “The Machination of Foreign Direct Investment Flow to Emerging Markets – A focus on Africa” is my own original work, envisaged to contribute to the debate about the role of macroeconomic fundamentals, especially capital productivity gains as determinants of a country’s attractiveness to inflow of foreign capital in academic literature. All the sources used and consulted have been fully acknowledged by a way of complete referencing. The author hereby agrees to the terms and conditions as stipulated by the publisher and the editorial board of this prestigious journal.

Frontier’s Bright Economic Outlook

2016 ◽  
Author(s):  
Marko Dimitrijević ◽  
Timothy Mistele
Keyword(s):  
Foreign Direct Investment ◽  
Emerging Markets ◽  
Current Account ◽  
Direct Investment ◽  
Fast Growth ◽  
Current Account Deficits ◽  
Macroeconomic Fundamentals ◽  
Economic Outlook ◽  
Debt Levels

Describes frontier markets’ fast growth (71 of the world's 75 fastest-growing economies are frontier markets) and argues that the strong macroeconomic fundamentals of today’s frontier markets, including shrinking or well-financed current account deficits, lower debt levels, moderate inflation, and increased foreign direct investment, will help these markets mimic and accelerate the path to emergence taken by today’s mainstream emerging markets

On the Relationship between Informal and Formal Institutions, Foreign Direct Investment, and Innovation in Emerging Markets

2016 ◽  
pp. 176-197
Author(s):  
Natalya Smith ◽  
Ekaterina Thomas
Keyword(s):  
Foreign Direct Investment ◽  
Emerging Markets ◽  
Direct Effect ◽  
Direct Investment ◽  
Non Linear ◽  
Innovation Output ◽  
Positive Direct ◽  
The Relationship ◽  
India And China

This chapter examines innovation in socio-institutional environments of three largest and most diverse emerging markets: Russia, India and China over the period 1990-2014. It considers formal (proxied by corruption) and informal (proxied by trust) institutions and non-linear forces. It also examines the role of Foreign Direct Investment (FDI) in (the likelihood of) fostering innovation and of two research and development (R&D) inputs: R&D expenditures and personnel. A significantly positive direct effect of trust and a negative direct effect of corruption are confirmed, whilst there is a significant non-linear decreasing relationship with trust and increasing relationship with corruption. Interestingly, FDI and R&D expenditures are found to decrease innovation, whilst R&D personnel increase innovation output across the sample.

Does the origin matter? The effects of cross-border mergers and acquisitions in France

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Federico Carril-Caccia
Keyword(s):  
Foreign Direct Investment ◽  
Mergers And Acquisitions ◽  
Direct Investment ◽  
Developed Countries ◽  
Emerging Countries ◽  
Intangible Asset ◽  
Data Set ◽  
Content Type ◽  
Cross Border ◽  
The Impact

PurposeThe present article analyses the effects of cross-border mergers and acquisitions (CBM&As) on targets' total factor productivity (TFP), employment, wages and intangible-asset investment. The author investigates whether the impact of CBM&As differs depending on the origin of the investing multinational (MNE). The author distinguishes between CBM&As from European countries, other developed countries and emerging countries.Design/methodology/approachThe author makes use of a unique firm-level data set of foreign direct investment in the French manufacturing sector. The authors applies propensity score matching and difference in differences to estimate the effect of CBM&As.FindingsThe results show that the consequences of CBM&As differ strongly depending on the origin. CBM&As from European MNEs have a positive impact on TFP, wages and intangible-asset investment, and those from emerging countries seem to increase wages and intangible-asset investments. In contrast, CBM&As that originate from MNEs from other developed countries do not have a significant effect.Originality/valueThis article contributes to the growing literature on the effects of foreign direct investment that highlights the relevance of accounting for the MNEs' origin. In particular, it is the first to address the impact of emerging-country MNEs' CBM&As in Europe.

The impact of foreign direct investment on trade in Pakistan: the moderating role of terrorism

2020 ◽  
Vol 47 (5) ◽  
pp. 1137-1154
Author(s):  
Syed Hasanat Shah ◽  
Hafsa Hasnat ◽  
Delpachitra Sarath
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Trade Deficit ◽  
Method Of Moment ◽  
Content Type ◽  
The Face ◽  
External Sector ◽  
Generalized Method Of Moment ◽  
The Impact

PurposePakistan suffered with the menace of terrorism for long and become a front line state in the “War on Terror”. Terrorism shattered Pakistan economy and rendered her external sector vulnerable to instability and uncertainties.Design/methodology/approachTherefore, using system generalized method of moment (GMM), this paper investigates the impact of foreign direct investment (FDI) on exports, imports and trade deficit in the face of unabated terrorism in Pakistan.FindingsThe findings of the paper suggest that as terrorism in Pakistan increased, FDI contribution to Pakistan exports decreased while FDI contribution to Pakistan imports significantly increased. Terrorism also disrupted the chain of local production and increased Pakistan reliance on imports. Thus terrorism widened Pakistan trade deficit of Pakistan and expose Pakistan to external imbalances.Originality/valueDespite rise in organized acts of terrorism and its adverse impact on various departments of economy, hardly any study bothers to check its impact on trade and investment nexus. This is the first study of its nature that looks deep down to understand how terrorism affects the relation of major economic variables.

A model of foreign direct investment flows at the municipal level in South Africa

2008 ◽  
Vol 3 (3) ◽  
pp. 249-267 ◽  
Author(s):  
Charles Okeahalam ◽  
Mark Dowdeswell
Keyword(s):  
South Africa ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Labour Productivity ◽  
Development Planning ◽  
Data Set ◽  
Content Type ◽  
Country Level ◽  
Level Data ◽  
Municipal Level

PurposeThe purpose of this paper is to assess the relationship between South Africa's foreign direct investment (FDI) and economic fundamentals at the municipal level.Design/methodology/approachThe paper develops a data set and an econometric model to analyze FDI flows at the municipal level in South Africa.FindingsThe empirical results derived from municipal level data support the findings in some of the established literature (which for the most part uses country‐level data) and indicates: that FDI tends to flow to areas with high factor (capital, labour and land) productivity; and that increases in higher labour productivity lead to higher investment.Research limitations/implicationsThis paper has used a cross‐section of municipalities. A further area of research would be to carry out a similar exercise with panel data.Practical implicationsThese findings indicate that FDI flows can be considered at the municipal level and this justifies the need for careful selection of the geographic basis for economic policy and development planning.Originality/valueWhereas most studies on FDI use country‐level data as standard geographic units of analysis, this paper analyzes FDI flows at the municipal level.

The impact of energy consumption to environmental sustainability: an extension of foreign direct investment induce pollution in Vietnam

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tehreem Fatima ◽  
Muhammad Saeed Meo ◽  
Festus Victor Bekun ◽  
Tella Oluwatoba Ibrahim
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Ecological Footprint ◽  
International Tourism ◽  
Data Set ◽  
Content Type ◽  
Root Cause ◽  
Long Run ◽  
Short Run

Purpose According to the crusade of the United Nations sustainable development goals (SDGs-6, 7,8,12 and 13) that addressed pertinent issues around, clean access to water, access to energy, responsible consumption and climate change mitigation alongside, respectively, Paris Kyoto Protocol agreement of mitigation of climate changes issues of vision 2030. Design/methodology/approach This purpose of this study aimed to assess the Environmental Kuznets Curve hypothesis following the ecological footprint perspective with a data set covering the period 1995–2018. It is well-established that anthropogenic human activities are the root cause of environmental deterioration. To this end, the current study is fitted in a multivariate framework to ameliorate for omitted variable bias for the data set from 1995–2018 on a quarterly frequency using autoregressive distributive lag methodology. Subsequently, the stationarity status of the study underlines series were examined with a conventional unit root test and the Pesaran’s bounds test for cointegration analysis. Findings Empirical evidence from the bounds test to cointegration traces the co-integration relationship between ecological footprint, conventional energy use, foreign direct investment, international tourism arrival and water resources over the sampled period. The study, in the long run, affirms the N-shaped relationship between ecological footprint and foreign direct investment in Vietnam. Additionally, the present study validates the hypothesis of energy consumption-induced pollution emissions. The relationship between international tourism arrival and quality of the environment is statistically positive in both the short-run and long-run, as 1% in international tourism arrival worsens the quality of the environment by 0.45% and 0.4% in the short-run and long-run, respectively. Interestingly, water resource's major environmental issues that have plagued the Vietnam economy are inversely related to ecological footprint. Based on findings, Vietnamese policymakers may need to consider drafting appropriate environmental policies to tackle global warming while concurrently boosting economic development. Originality/value The present study focuses on Vietnam on the determinant of environmental quality measured by a broader indicator (ecological footprint). It is well-established that anthropogenic human activities are the root cause of environmental deterioration. The present study claims to distinct from previous literature in two-folds, namely, in terms of scope. Vietnam holds a very interesting energy mix and environmental dynamics, which has been ignored in the literature. Second, we argue to be the first based on our survey to explore the theme by incorporation of water resources and foreign direct investment intensification in the conventional pollution determinant model. This is in a bid to highlights the policy blueprint for the country (Vietnam), which is currently plagued with high pollution issues and the region at large.

Technological innovation policy and Chinese heterogeneity enterprises' outward foreign direct investment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jinjing Zhao ◽  
Jongchul Lee
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Innovation Policy ◽  
Local Economy ◽  
Outward Foreign Direct Investment ◽  
Central State ◽  
Chinese Enterprises ◽  
Content Type ◽  
Privately Owned

PurposeThe study aims to analyze the role of the Made in China 2025 (MIC2025) initiative in China's Outward Foreign Direct Investment (OFDI) and the factors affecting the success or failure of Chinese enterprises' OFDI from the perspectives of the heterogeneity of home country enterprises.Design/methodology/approachBased on data on China's OFDI obtained from the China Global Investment Tracker (CGIT), the study uses the difference-in-differences model to analyze 2,670 completed OFDI deals and 211 failed OFDI deals by Chinese enterprises, from 2009 to 2018.FindingsThe study found that the effect of MIC2025 on Chinese enterprises' OFDI varies according to the ownership structure of the home country's enterprises. For successful OFDI, MIC2025 significantly impacted central state-owned enterprises (CSOEs), while it did not significantly influence local SOEs and privately owned enterprises. For failed OFDI, the MIC2025 plan only increased the failure of CSOEs' OFDI for the technology-seeking motivation in high-income host countries. Further, the investment options of local SOEs differ from those of CSOEs. Considering their aim to drive the local economy and seek profits, they are more similar to those of privately owned enterprises.Originality/valueThis study used a new database (i.e. the CGIT) to analyze Chinese enterprises' OFDI. It discussed the role of MIC2025 for different enterprises from the perspectives of successful and failed OFDI. It thus provided a new basis for analyzing policy affecting the OFDI of Chinese enterprises.

Institutional determinants of foreign direct investment inflows: evidence from emerging markets

2019 ◽  
Vol 15 (2) ◽  
pp. 245-261 ◽  
Author(s):  
Justin Paul ◽  
Pravin Jadhav
Keyword(s):  
Foreign Direct Investment ◽  
Emerging Markets ◽  
Direct Investment ◽  
Multinational Enterprises ◽  
Political Stability ◽  
Strategic Decision ◽  
Content Type ◽  
Institutional Determinants ◽  
Using Data ◽  
Determinants Of Fdi

Purpose Foreign direct investment (FDI) is a strategic decision for achieving competitive advantage by multinational enterprises. The purpose of this paper is to explore the role of institutional determinants of FDI using data from 24 emerging markets including China, India, Indonesia, Turkey, Thailand, Malaysia and Pakistan. Design/methodology/approach In order to identify factors that attract FDI in emerging markets, this study has used data from sources such as the World Bank, Index of Economic Freedom and UNCTAD. Findings The findings of this research indicate that infrastructure quality, trade cost measured by tariff and non-tariff barriers, institutional quality measured by effective rule of law, political stability, regulatory quality and control on corruption are significant determinants of FDI in emerging markets. Originality/value This is the first study to analyze the sectoral institutional determinants of Inward FDI in the important emerging economies, to the best of authors’ knowledge.

A novel study on OFDI and home country exports: implications for the ASEAN region

2016 ◽  
Vol 9 (2) ◽  
pp. 131-145 ◽  
Author(s):  
Fayyaz Ahmad ◽  
Muhammad Umar Draz ◽  
Su-Chang Yang
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Home Country ◽  
Series Data ◽  
Substitution Effects ◽  
Correlation Technique ◽  
Data Set ◽  
Content Type ◽  
Asean Countries

Purpose This study aims to examine the effects of outward foreign direct investment (OFDI) on the home country exports for selected ASEAN countries during 1981-2013. Design/methodology/approach The authors have used OLS regression based on the unit root analysis, correlation technique and a series of specification tests applied to annual time series data. Findings The results reveal that the complementary effects of OFDI on exports of the home country outweigh the substitution effects for four ASEAN countries. Furthermore, trade openness, currency fluctuations and inward foreign direct investment (FDI) are also important factors for progressive home country exports. Originality/value This study provides a thorough analysis of the links between OFDI and exports of the home country on a macro level. With a data set of more than three decades from the ASEAN region, this study is the first attempt of its kind to analyze the relationship of these two variables on the aggregate level.

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