scholarly journals Taking stock of firm-level and country-level benefits from foreign direct investment

2018 ◽  
Vol 26 (2) ◽  
pp. 126-144 ◽  
Author(s):  
Randolph L. Bruno ◽  
Nauro F. Campos ◽  
Saul Estrin
Keyword(s):  
Foreign Direct Investment ◽  
Emerging Economies ◽  
Direct Investment ◽  
Meta Analysis ◽  
Spillover Effects ◽  
Empirical Literature ◽  
Firm Level ◽  
Content Type ◽  
Country Level ◽  
Enterprise Level

Purpose This paper aims to conduct a systematic meta-analysis on emerging economies to summarize these effects and throw light on the strength and heterogeneity of these conditionalities. Design/methodology/approach This paper proposes a new methodological framework that allows country- and firm-level effects to be combined. The authors hand collected information from 175 studies and around 1,100 estimates in Eastern Europe, Asia, Latin America and Africa from 1940 to 2008. Findings The two main findings indicate that “macro” effects are much larger than enterprise-level ones, by a factor of at least six and the benefits from foreign direct investment (FDI) into emerging economies are substantially less “conditional” than commonly thought. Originality/value The empirical literature has not reached a conclusion as to whether FDI yields spillovers when the host economies are emerging. Instead, the results are often viewed as conditional. For macro studies, this means that the existence and scale of spillover effects are contingent on the levels of institutional, financial or human capital development attained by the host economies. For enterprise-level studies, conditionality relates to the type of inter-firm linkages, namely, forwards, backwards or horizontal.

Foreign Direct Investment and Productivity Spillovers: A Firm-Level Analysis of Bangladesh in Comparison with Vietnam

2021 ◽  
Author(s):  
Arif-Ur-Rahman ◽  
Kazuo Inaba
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Spillover Effects ◽  
External Effects ◽  
Productivity Improvement ◽  
Firm Level ◽  
Fdi Spillovers ◽  
Foreign Presence ◽  
Backward Linkages ◽  
Level Analysis

Abstract Foreign direct investment (FDI) is expected to generate external effects—usually termed FDI spillovers—for a host country, and these spillovers are thought to have consequences on the productivity of domestic firms. Despite this strong expectation, the empirical findings on FDI spillover are still indecisive. This study examines firm-level panel data to determine the effects of FDI spillover on firms’ productivity in Bangladesh in comparison to Vietnam. We consider both the horizontal and vertical (backward and forward) spillover effects of FDI. We find evidence that Bangladeshi firms gain productivity improvement through intra-industry or horizontal linkages, whereas Vietnamese firms gain through backward linkages. Our findings suggest that increases in foreign presence in the same industry for Bangladesh and in downstream industries for Vietnam are related with increase in output of domestic firms.JEL Code: F2, O1, O3

scholarly journals Foreign direct investment and institutional stability: who drives whom?

2019 ◽  
Vol 24 (47) ◽  
pp. 145-156 ◽  
Author(s):  
Nihal Mahmood ◽  
Mohammad Hassan Shakil ◽  
Ishaq Mustapha Akinlaso ◽  
Mashiyat Tasnia
Keyword(s):  
Foreign Direct Investment ◽  
Financial Stability ◽  
Direct Investment ◽  
Global Financial Crisis ◽  
Institutional Development ◽  
Optimal Level ◽  
Empirical Literature ◽  
Content Type ◽  
Institutional Stability ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between foreign direct investment (FDI) flows and institutional stability. The focus country is Canada. It is one of the few countries where the economy remained relatively stable compared to other economies during the Global Financial Crisis. It is crucial for Canada to determine the optimal level of institutional development to attract more FDI and sustain the sound financial stability in future. Design/methodology/approach This study uses the auto-regressive distributive lag (ARDL) approach to understand the relationship between FDI and institutional stability along with other controlled variables, for instance, gross national product, inflation and exports. Findings The key finding of this work is that FDI and institutional stability are cointegrated in the long run. The error correction model of ARDL shed light on institutional stability being an exogenous variable, and FDI is an endogenous variable. Institutional stability affects FDI, as it is exogenous. The findings will help policymakers to implement policies to strengthen the institution’s settings, and this, in turn, will attract more investment. Originality/value Based on previous theoretical and empirical literature, most of the research points to FDI positively affect institutional stability. In some cases, the relationship does not always hold true. This study will fix the gap in the literature by investigating the relationship between FDI and institutional stability of Canada.

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 largest financial groups from emerging economies

2018 ◽  
Vol 13 (5) ◽  
pp. 1050-1069 ◽  
Author(s):  
J. Francois Outreville
Keyword(s):  
Foreign Direct Investment ◽  
Emerging Economies ◽  
Direct Investment ◽  
Multinational Firms ◽  
Emerging Countries ◽  
Strong Impact ◽  
Internationalization Process ◽  
Host Countries ◽  
Content Type ◽  
Financial Groups

Purpose Numerous articles contain recommendations as to how emerging countries can attract foreign direct investment on terms that are beneficial to both the investing firm and the host society but very few explore the conditions for firms from emerging countries to invest abroad. The purpose of this paper is twofold: the first is the documentation of the preferred locations of foreign affiliates for the largest financial groups headquartered in emerging countries; and, second, is to identify some of the determinants associated with the location-specific advantages of these host countries. Design/methodology/approach The analysis of the internationalization process of these groups is based on a list of top financial groups ranked by total assets. In the empirical section, the factors that explain the choice of these locations by multinational firms are categorized as resources seeking, market seeking, efficiency-seeking variables and cultural variables. Findings There is empirical evidence that institutions prefer to invest in foreign locations that minimize some dimensions of the culture. Other factors like the role of efficiency variables, i.e. trade efficiency, political risk and government effectiveness, in host countries also have a strong impact on the determinants of the internationalization process. Originality/value The paper puts forward a framework for analyzing determinants of foreign direct investment of multinational financial groups from emerging economies.

Foreign direct investment rules in selected European countries – an overview

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Geoffrey P. Burgess ◽  
Timothy McIver ◽  
Philippe Tenglemann ◽  
Rosanne Lariven ◽  
Andrea Pomana ◽  
...  
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Content Type ◽  
Criminal Sanctions ◽  
Country Level ◽  
Global Trend ◽  
The Uk ◽  
European Economies ◽  
The Impact ◽  
The Eu

Purpose To provide an overview of the national foreign direct investment (“FDI”) screening mechanisms in place across Europe including in France, Germany, Italy, the Netherlands, Spain and the UK. Design/methodology/approach This article summarizes the key elements of the national FDI screening regimes of some of the leading European economies. This includes setting out the relevant investment thresholds, protected sectors, lengths of review periods, standstill obligations and potential sanctions in each jurisdiction. Findings Many of Europe’s leading economies are following the wider global trend towards stricter reviews of foreign investment ahead of the EU Screening Regulation coming into force in October 2020. However, the approach taken to FDI screening can vary significantly at a country level in terms of both process and substance and the applicable laws are evolving rapidly, not least as a response to concerns related to the impact of COVID-19. Practical implications Investors looking to make acquisitions in Europe will need to consider whether national FDI screening will apply to their proposed investments. Depending on the jurisdiction, FDI screening can introduce lengthy review periods and require detailed information gathering as well as uncertainty as to the final outcome. Potential investors also need to consider the risk of sanctions, including criminal sanctions, for non-compliance with the screening regimes. Originality/value This article offers a summary and comparison of national FDI screening regimes across Europe.

scholarly journals Foreign direct investment in the G-20: to what extent do institutions matter?

2018 ◽  
Vol 53 (3) ◽  
pp. 404-421
Author(s):  
Jurema Tomelin ◽  
Mohamed Amal ◽  
Nelson Hein ◽  
Andreia Carpes Dani
Keyword(s):  
Decision Making ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Global Financial Crisis ◽  
Economic Factor ◽  
Topsis Method ◽  
Firm Level ◽  
Content Type ◽  
Governance Indicators ◽  
The Impact

Purpose This study aims to identify to what extent the economic factor effect is more salient in shaping inward foreign direct investment (IFDI) than are institutional factors in G-20 inflow patterns. Design/methodology/approach Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) method was applied using the World Bank Governance and Development Indicators, followed by a panel data technique over the period 2005-2015 to estimate the connections between the different dimensions of economics, institutions and IFDI in the G-20. Findings Results showed that countries with better economic performance contrasting with the governance indicators are more effective at attracting IFDI. However, the correlation between FDI intensity and governance indicators has been found relatively weak, which may suggest a more controversial role of institutions as determinants of IFDI. Research limitations/implications This quantitative approach uses a country-level set of variables; therefore, the authors suggest the development of more firm-level analysis of the impact of institutions. Also, the limitation of the TOPSIS method itself is based on heuristic assumptions. Practical implications The main findings point to a relatively low impact of institutions on IFDI. The authors suggest that the global financial crisis has changed the rationale of decision-making by multinational companies. Originality/value The originality of the present study was to apply a multi criteria decision-making technique on FDI’s analysis combined with institutional data.

scholarly journals Size of foreign direct investment and firm characteristics

2018 ◽  
Author(s):  
Hecht Veronika ◽  
Moritz Michael ◽  
Noska Patricia ◽  
Schäffler Johannes
Keyword(s):  
Foreign Direct Investment ◽  
Czech Republic ◽  
Direct Investment ◽  
Multinational Firms ◽  
Sample Selection ◽  
Indirect Measurement ◽  
Empirical Literature ◽  
Firm Level ◽  
Data Set ◽  
The Czech Republic

This paper focuses on the role of classifying types of foreign direct investment (FDI) for analysing the determinants of cross-border investment relationships. We base our investigation on a newly established firm-level data set of German multinational firms and their affiliates in the Czech Republic that allows various categorisations into vertical foreign direct investment (VFDI) and horizontal foreign direct investment (HFDI). Apart from data for conventional approaches to classifying FDI types, the surveyed information contained herein also includes a detailed self-assessment of the firms with respect to investment motives, and specifications on intra-firm trade and the flow of intermediate inputs. In order to correct for sample selection, we apply a two-step Heckman procedure by comparing multinational firms that have an affiliate in the Czech Republic to companies without investment abroad. The results for the direct measures of FDI types confirm theoretical expectations and previous empirical literature and stand in marked contrast to the outcome for indirect measurement concepts. Our finding leads us to the conclusion that one should be more cautious in interpreting differences between vertical and horizontal FDI when using approximative classification concepts.

A new era for foreign direct investment?

2017 ◽  
Vol 25 (1) ◽  
pp. 5-10 ◽  
Author(s):  
Steven Globerman
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Design Methodology ◽  
Empirical Literature ◽  
The European Union ◽  
Content Type ◽  
New Era ◽  
Political Events ◽  
The Usa ◽  
The Uk

Purpose The paper aims to provide an updated broad assessment of the environment for foreign direct investment (FDI) in light of the referendum vote in the UK to exit the European Union (Brexit), the election of Donald Trump as President of the USA and growing nationalist movements in Europe. Design/methodology/approach The paper uses an essay format to set out the main issues linking recent political developments to FDI. It reviews some relevant empirical literature to assess the identified linkages. Findings It seems reasonable to argue that there will be a reduction in FDI intensity on a global basis over the foreseeable future. It is also likely that the nature of FDI will move more toward being a substitute rather than a complement to trade. Originality/value The essay is original and valuable in the sense of offering a contemporary assessment of how important the recent political events may affect the FDI process.

scholarly journals Foreign direct investment and productivity spillovers: a firm-level analysis of Bangladesh in comparison with Vietnam

2021 ◽  
Vol 10 (1) ◽  
Author(s):  
Md Arif-Ur-Rahman ◽  
Kazuo Inaba
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Spillover Effects ◽  
External Effects ◽  
Productivity Improvement ◽  
Firm Level ◽  
Domestic Firms ◽  
Fdi Spillovers ◽  
Backward Linkages ◽  
Level Analysis

AbstractForeign direct investment (FDI) is expected to generate external effects—usually termed FDI spillovers—for a host country, and these spillovers are thought to have consequences on the productivity of domestic firms. Despite this strong expectation, the empirical findings on FDI spillover are still indecisive. This study examines firm-level panel data to determine the effects of FDI spillover on firms’ productivity in Bangladesh in comparison to Vietnam. We consider both the horizontal and vertical (backward and forward) spillover effects of FDI. We find evidence that Bangladeshi firms gain productivity improvement through intra-industry or horizontal linkages, whereas Vietnamese firms gain through backward linkages. Our findings suggest that increases in foreign presence in the same industry for Bangladesh and in downstream industries for Vietnam are related with increase in output of domestic firms.

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