Does foreign direct investment influence R&D activity in the host country? Evidence from Vietnam

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Van Ha ◽  
Mark J. Holmes ◽  
Gazi Hassan
Keyword(s):  
Foreign Direct Investment ◽  
Foreign Investment ◽  
Direct Investment ◽  
Probit Model ◽  
Innovation Activity ◽  
Heckman Selection Model ◽  
Content Type ◽  
Domestic Firms ◽  
The Impact ◽  
Local Firms

PurposeThis study focuses on the linkages between foreign direct investment and the research and development (R&D) and innovation activity of domestic enterprises in Vietnam.Design/methodology/approachThe Heckman selection model approach is applied to a panel dataset of nearly 7,000 Vietnamese firms for the 2011–2015 study period to investigate the impact of foreign presence on the R&D of local firms through horizontal and vertical linkages. Probit model estimation is employed to examine how foreign investment influences the innovation activity of local companies.FindingsWhile there are a small number of firms carrying out R&D activities in Vietnam, foreign or joint domestic–foreign venture firms are less inclined than domestic firms to undertake R&D. Domestic factors that include capital, labor quality, location and export status of firm have a significant effect on the decision of domestic firms to participate in R&D activity. Only forward linkages and the gross firm output are found to have an impact on the R&D intensity of domestic enterprises, while other factors appear to have no significant influence on how much firms spend on R&D activities.Practical implicationsIn order to promote the R&D activity of domestic firms, policy should focus on (1) the backward linkages between local firms in downstream sectors with their foreign suppliers in upstream sectors, and (2) the internal factors such as labor, capital or location that affect the decisions made by domestic firms.Originality/valueGiven that foreign investment may affect R&D and innovation activity of local firms in host countries, the impact is relatively unexplored for many emerging economies and not so in the case of Vietnam. The availability of a unique survey on Vietnamese firm technology and competitiveness provides the opportunity to address this gap in the literature.

Does foreign direct investment spillover total factor productivity growth? A study of Indian drugs and pharmaceutical industry

2017 ◽  
Vol 24 (7) ◽  
pp. 1937-1955 ◽  
Author(s):  
Nitin Arora ◽  
Preeti Lohani
Keyword(s):  
Foreign Direct Investment ◽  
Pharmaceutical Industry ◽  
Total Factor Productivity ◽  
Direct Investment ◽  
Spillover Effect ◽  
Foreign Firms ◽  
Factor Productivity ◽  
Content Type ◽  
Domestic Firms ◽  
Tfp Growth

Purpose Foreign firms have certain advantages which may spillover to domestic firms in the form of improvements in total factor productivity (TFP) growth. The purpose of this paper is to empirically observe the presence of TFP spillovers of foreign direct investment (FDI) to domestic firms through analyzing source of TFP growth in Indian drugs and pharmaceutical industry. Design/methodology/approach This paper examines the sources of TFP spillovers of FDI in Indian drugs and pharmaceutical industry over the period 1999 to 2014. The data of 304 firms has been used for estimation of the growth rates of TFP and its sources under stochastic frontier analyses based Malmquist productivity index framework. For frontier estimation, the Wang and Ho (2010) model has been executed using translog form of production function. Findings The results show that there exists significant TFP spillover effect from the presence of foreign equity in drugs and pharmaceutical industry of India. The results also show that the major source of TFP fluctuations in the said industry is managerial efficiency that has been significantly affected by FDI spillover variables. In sum, the phenomenon of significant Intra-industry (horizontal) efficiency led productivity spillovers of FDI found valid in case of Indian drugs and pharmaceutical industry. Research limitations/implications The number of foreign firms is very less to imitate the significant impact of foreign investment on TFP growth of Indian pharmaceutical industry at aggregated level; and the Wang and Ho (2010) model is failing to capture direct impact of FDI on technological change under Malmquist framework. Practical implications Since, there exists dominance of domestic firms in Indian drugs and pharmaceutical industry, the planners should follow the policy which not only attract FDI but also benefit domestic firms; for example, developing modern infrastructure and institution which will further help domestic firms to absorb spillovers provided by the Multinational Corporations and also accelerate the growth and development of the economy. Social implications In no case, the foreign firms should dominate the market share otherwise the efficiency spillover effect will be negative and the domestic firms will be destroyed under the self-centric approach of foreign firms protected by the recent patent laws. Originality/value The study is a unique attempt to discuss the production structure and sources of TFP spillovers of FDI in Indian drugs and pharmaceutical industry with such a wide coverage of 304 firms over a period of 16 years under Wang and Ho (2010) model’s framework. The existing studies on TFP spillovers are using either a small sample size of firms or based upon traditional techniques of measuring spillover effects.

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.

scholarly journals European intellectual property institutions and Chinese foreign direct investment

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Constantinos Alexiou ◽  
Sofoklis Vogiazas
Keyword(s):  
Foreign Direct Investment ◽  
Intellectual Property ◽  
Direct Investment ◽  
Trade Openness ◽  
Negative Relationship ◽  
Preliminary Evidence ◽  
Institutional Distance ◽  
Content Type ◽  
Chinese Foreign Direct Investment ◽  
The Impact

PurposeWe investigate the impact of the strength of intellectual property (IP) institutions on Chinese outward foreign direct investment (OFDI).Design/methodology/approachWe use two different measures of IP on a sample of 21 European countries in the period 2003–2015. Panel quantile methodology is applied to assess the relationship at several points of the conditional distribution of OFDI.FindingsWe provide novel and robust evidence revealing a highly negative relationship between OFDI and the strength of IP institutions in Europe. This relationship which is more pronounced in the median and upper-quantiles, bolsters the conventional theoretical expectation that high institutional distance between home and host countries is inversely related to OFDI. Equally important is the preliminary evidence of the non-linear impact of IP at the median and upper-quantiles as well as the impact of other controlling variables such as GDP, population, trade openness and unit labour costs on Chinese OFDI.Originality/valueThe ensuing theoretical implications are of great significance for future studies on the institutional distance and drivers of OFDI by emerging economies as well as for European policymakers in so far as the strengthening of IP institutions constitutes a gravitational point for inward investment flows from China.

scholarly journals Does Chinese Inward Foreign Direct Investment Improve the Productivity of Domestic Firms? Horizontal Linkages and Absorptive Capacities: Firm-Level Evidence from Ethiopia

2020 ◽  
Vol 12 (7) ◽  
pp. 3023 ◽  
Author(s):  
Engidaw Sisay Negash ◽  
Wenjie Zhu ◽  
Yangyang Lu ◽  
Zhikai Wang
Keyword(s):  
Sustainable Development ◽  
Foreign Direct Investment ◽  
Absorptive Capacity ◽  
Direct Investment ◽  
Efficient Technology ◽  
Chinese Firms ◽  
Firm Level ◽  
Domestic Firms ◽  
Positive Spillovers ◽  
Local Firms

Publicized as a global call for action in 2015, the United Nations General Assembly (UNGA) has forwarded an agenda of resolutions to achieve the goals of sustainable development by 2030 (SDGs). Due to the specific challenges of funding gaps and the lack of advanced technology, the majority of Sub-Saharan African (SSA) countries are still behind the standard of world development. Since foreign direct investment (FDI) has the potential to bring much-needed capital and efficient technology, FDI has often been considered as a vigorous source of development, even for sustainable development for under-developing economies experienced today. Conspicuously, Chinese outward FDI (OFDI) into SSA has seen a strong upward trend in the 21st Century, after China proclaimed its “go global” strategy. Ethiopia is one of the favored destinations of the trend of Chinese OFDI, which also substantially continues through the SSA region. The hosting economy of Ethiopia expected that Chinese inward FDI comes with capital, efficient technology, and knowledge to contribute innovations through directly improving productivity and competitiveness via technological diffusion to domestic industries and eventually for sustainable development. Against this backdrop, this study utilizes firm-level panel datasets from Ethiopia to address the following couple of research questions. The first question is: are there any productivity differences between the establishment of Chinese-affiliated and domestic firms in the manufacturing industry in Ethiopia? The second is, does the presence of Chinese-affiliated firms provide productivity spillovers for domestic firms in the same industry level for socio-economic development? The investigation was carried out using 2554 manufacturing firm census data, from which 15.04% were Chinese firms operating in Ethiopia. We used the ordinary least squares (OLS) and generalized-method-of-moments (GMM) two-step approaches for estimations. Our findings revealed that, generally, Chinese firms were more productive than local firms and their presence can bring positive potential productivity spillover effects for domestic firms. Specifically, we found that local firms have gained significant positive spillovers when they had a high absorptive capacity, whereas low-absorptive capacity firms suffered negative spillovers. We also found that non-exporting domestic firms experience significant positive spillovers from the presence of Chinese firms.

scholarly journals The long run relationship between fish production, marine trade balance and foreign direct investment

2020 ◽  
Vol 5 (3) ◽  
pp. 271-280
Author(s):  
Naseem H. Jamei ◽  
Mira Nurmakhanova ◽  
Shahbaz Mustafa ◽  
Alloysius Egbulonu ◽  
Wagdi Hadidan
Keyword(s):  
Foreign Direct Investment ◽  
Trade Balance ◽  
Direct Investment ◽  
Design Methodology ◽  
Fish Production ◽  
Content Type ◽  
Gulf Countries ◽  
Long Run ◽  
Short Run ◽  
The Impact

Purpose This paper aims to focus on testing the long-run relationship between fish production and two main variables, the foreign direct investment inflow and the marine trade balance in Oman, which is one of the Arab Gulf countries, during the period 1985-2016. Design/methodology/approach This study uses what known as the two-step Engle–Granger cointegration test to give evidence for the long-run relationship among the variables. Findings The results show that there are a negative long- and short-run relations between fish production and marine trade balance; moreover, any shocks will be corrected within two periods at the most.  Originality/value This study is one of few studies in using the econometric models to study the impact of fish production on marine trade balance and foreign direct investment.

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.

Fading FDI faces increasing challenges in Chile

2016 ◽  
Keyword(s):  
Foreign Direct Investment ◽  
Foreign Investment ◽  
Direct Investment ◽  
Food Industry ◽  
Public Infrastructure ◽  
Sharp Drop ◽  
Content Type ◽  
Investment Promotion ◽  
The Government

Subject The fall in foreign investment last year. Significance The government has launched a new Foreign Investment Promotion Agency (APIE) to buck a sharp drop in foreign direct investment (FDI) last year. Breaking with the country's long-standing sector-agnostic approach, the agency will seek to attract investment to specific sectors, including energy, public infrastructure and the food industry. Impacts A more business-friendly administration in Argentina could potentially divert FDI from Chile. Critics of the new FDI regulation maintain that it will dampen inflows. Efforts to attract investment in food and mining services represent a bid to diversify from mineral exports.

scholarly journals Protection of National Sovereignty and Hindering Foreign Investment

2017 ◽  
pp. 1-14
Author(s):  
Badreddine Berrahlia ◽  
Keyword(s):  
Foreign Direct Investment ◽  
Technology Transfer ◽  
Foreign Investment ◽  
Direct Investment ◽  
Foreign Direct Investments ◽  
Business Law ◽  
National Sovereignty ◽  
Investment Projects ◽  
Recent Debate ◽  
The Impact

The article explores the recent debate regarding the rules of sovereignty and the need to acquire technology through Foreign Direct Investment (FDI) in relation to the Algerian Business Law. The article explores the 51/49 rule as an obligatory condition for direct international partnerhip projects, which requires a majority of Algerian ownership of at least 51 percent in all foreign direct investment projects (FDIP). The current research also investigates the impact of the 51/49 rule on the inflows of the foreign direct investments in Algeria as well as some other countries. The research concludes that there is no evidence that the amendment of the 51/49 rule would lead to technology transfer through the FDI.

scholarly journals Selected macroeconomic determinants and economic growth in Cameroon (1970–2018) “dead or alive” an ARDL approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kesuh Jude Thaddeus ◽  
Chi Aloysius Ngong ◽  
Njimukala Moses Nebong ◽  
Akume Daniel Akume ◽  
Jumbo Urie Eleazar ◽  
...  
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Government Expenditure ◽  
Human Capital Development ◽  
Content Type ◽  
Capital Development ◽  
Macroeconomic Determinants ◽  
The Impact

PurposeThe purpose of this paper is to examine key macroeconomic determinants on Cameroon's economic growth from 1970 to 2018.Design/methodology/approachData were obtained from the World Development Indicators and applied on time series data econometric techniques. The auto-regressive distributed lag (ARDL) bounds model analyzed the data since the variables had different order of integration.FindingsThe results showed long and short runs’ positive and significant connection between economic growth in Cameroon and government expenditure; trade openness, gross capital formation and exchange rate. Human capital development, foreign aid, money supply, inflation and foreign direct investment negatively and significantly affected economic growth in the short and long-runs. Hence, the macroeconomic indicators are not death.Research limitations/implicationsThe present research paper has tried to capture the impact of nine macroeconomic determinants on economic growth such as the government expenditure (LNGOVEXP), human capital development (LNHCD), foreign aids (AID), trade openness (LNTOP), foreign direct investment (LNFDI), gross capital formation (INVEST), broad money (LNM2), official exchange rate (LNEXHRATE) and Inflation (LNINFLA). However, these variables have the tendency to affect each other in a unidirectional or bidirectional manner. Further, the present research paper is unable to capture the impact of other macroeconomic variable due to the unavailability of data.Practical implicationsThe study recommends that Cameroon should use proper planning and strategic policy interventions to achieve higher sustainable economic growth with human capital development, foreign aid, money supply, foreign direct investment and moderate inflation.Social implicationsMacroeconomic indicators, if managed well, increase economic growth.Originality/valueThis paper to the best of the researcher's knowledge presents new background information to both policymakers and researchers on the main macroeconomic determinants using econometric analysis.

scholarly journals The Consequences of Foreign Direct Investments in Redefining Bilateral Trade Flow in Nigeria: A Gravity Panel Approach

2020 ◽  
Vol 10 (4) ◽  
pp. 367-379
Author(s):  
Saidu D Muhammad ◽  
Kenneth O Diyoke ◽  
Nnanna P Azu
Keyword(s):  
Foreign Direct Investment ◽  
Foreign Investment ◽  
Direct Investment ◽  
Bilateral Trade ◽  
Negative Impact ◽  
Import Substitution ◽  
Trade Flow ◽  
Foreign Direct Investments ◽  
Bilateral Trade Flow ◽  
The Impact

Most of the Nigerian government’s transformation agenda is geared toward creating and enabling business environments to attract foreign direct investment. Opinions are divided as to the impact of foreign investment on trade and this researcher believed it could be either positive or negative. Hence, this research is to ascertain the magnitude of foreign investment’s impact on Nigeria’s bilateral trade. Integrating foreign direct investment in the gravity model, we applied the PPML technique because of its robustness and ability to recognise zero trade. We segregated foreign investment into three-flow, stock and its annual growth. Our estimation revealed that foreign direct investment stock impacts negatively on bilateral trade flow in Nigeria for both exports and imports and it is robust with the overall sample. Exporters’ foreign direct investment inflow was also revealed to have an impact on bilateral trade in Nigeria. But in all ramifications the magnitude of the negative impact is relatively small but statistically significant reflecting that trade and inward foreign investment are at least substitutes. Nigeria should further encourage inward foreign investment to further stimulate economic growth and aid in creating import substitution.

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