Equity Ownership Determination in Foreign Direct Investments of Developing Economies: The Case of Korean Outward FDIs

2012 ◽  
Vol 15 (01) ◽  
pp. 1250003
Author(s):  
Sung C. Bae ◽  
Kyungwon Ju ◽  
Kyoo H. Kim ◽  
Taek Ho Kwon
Keyword(s):  
Host Country ◽  
Joint Venture ◽  
Developing Economies ◽  
Manufacturing Sector ◽  
Developed Countries ◽  
Foreign Direct Investments ◽  
Competitive Advantages ◽  
Industry Sector ◽  
Equity Ownership ◽  
Technology Level

In this paper, we develop an international joint venture model and examine the equity ownership determination of Korean outward FDIs, one of the major developing economies (DEs), into both developed countries (DCs) and other DEs. We do this by explicitly considering the cost of technology leakage and the potential profits from FDI projects. Our results show that the relation between equity ownership and technology level depends on both the host country and industry sector. Regarding the host country, this relation is positive for FDIs into DEs but negative for FDIs into DCs. Regarding industry, this relation is positive and insignificant for the manufacturing sector but negative and significant for the nonmanufacturing sector. Combined together, these results indicate that Korean firms benefit most from competitive advantages through their FDIs into the manufacturing sector of DEs. In contrast, such competitive advantages of Korean firms diminish in their FDIs into DCs regardless of the industry sector.

Australia—The Hidden Jewel

2018 ◽  
Author(s):  
Mahesh K. Joshi ◽  
J.R. Klein
Keyword(s):  
Natural Resources ◽  
Value Chain ◽  
Global Economy ◽  
Good Governance ◽  
Developing Economies ◽  
Raw Materials ◽  
Manufacturing Sector ◽  
Developed Countries ◽  
The United States ◽  
Dutch Disease

The twenty-first century is being touted as the Asian century. With its stable economy, good governance, education system, and above all the abundant natural resources, will Australia to take its place in the global economy by becoming more entrepreneurial and accelerating its rate of growth, or will it get infected with the so-called Dutch disease? It has been successful in managing trade ties with fast-developing economies like China and India as well as developed countries like the United States. It has participated in the growth of China by providing iron ore and coal. Because it is a low-risk country, it has enabled inflow of large foreign capital investments. A lot will depend on its capability and willingness to invest the capital available in entrepreneurial ventures, its ability to capture the full value chain of natural resources, and to export the finished products instead of raw materials, while building a robust manufacturing sector.

BUSINESS SERVICE, INTERNATIONAL OUTSOURCING, AND WAGE INEQUALITY

2018 ◽  
Vol 63 (05) ◽  
pp. 1175-1182
Author(s):  
CHU-PING LO
Keyword(s):  
Wage Inequality ◽  
Service Sector ◽  
Developing Economies ◽  
Manufacturing Sector ◽  
Developed Countries ◽  
Business Service ◽  
International Outsourcing ◽  
Business Services ◽  
Production Externalities ◽  
The Impact

This paper adds business services to Feenstra and Hanson’s (1996) model to show that if a country is more prosperous in business services, tending to carry out less international outsourcing activities than it would otherwise. In this model, the more varieties of specialized business services a country endows, the more welfare gains arise in the presence of positive production externalities to the manufacturing sector. Since developed countries are more prosperous in business service sector, this model helps to explain why the impact of opening trade on the dispersion of both wages and unemployment is stronger in developing economies.

scholarly journals DETERMINANTS OF FOREIGN DIRECT INVESTMENTS OUTFLOW FROM A DEVELOPING COUNTRY: THE CASE OF TURKEY

2013 ◽  
Vol 11 (2) ◽  
pp. 241-255 ◽  
Author(s):  
Gokhan Onder ◽  
Zeynep Karal
Keyword(s):  
Host Country ◽  
Inflation Rate ◽  
Home Country ◽  
Developed Countries ◽  
The Other ◽  
Foreign Direct Investments ◽  
Tax Rate ◽  
Factors Affecting ◽  
Negative Relation ◽  
Positive Effects

Foreign direct investments (FDI) outflows of Turkey have remarkably been raising over the last decade. This rapid increase brings about the need for questioning the determinants of FDI outflows. The aim of this paper is to estimate the factors affecting outflow FDI from Turkey from 2002 to 2011 by using Prais-Winsten regression analysis. According to estimation results, population, infrastructure, percapita gross domestic product of the host country, and home country exports to the host country are the factors having positive effects on outflow FDI. We found, on the other hand, that the annual inflation rate of the host country, its tax rate collected from commercial profit, and its distance from Turkey have a negative relation with investment outflows. Moreover our results show that while investment outflows to developed countries are in the form of horizontal investments, investment outflows to developing countries are in the form of vertical investments.

Foreign direct investment, smart policies and economic growth

2017 ◽  
Vol 17 (3) ◽  
pp. 245-256 ◽  
Author(s):  
Murat Yulek ◽  
Nurullah Gur
Keyword(s):  
Host Country ◽  
Capital Accumulation ◽  
Developing Economies ◽  
Foreign Direct Investments ◽  
Domestic Investment ◽  
Host Countries ◽  
Fdi Inflows ◽  
Investment Policies ◽  
Net Benefits ◽  
Fdi Policies

Developing economies need foreign direct investments to complement domestic investment with a view to increase capital accumulation, productivity and growth rates. But, foreign direct investments (FDIs) may have costs in addition to the well-known benefits to the host country. Generating higher net benefits from FDI necessitates design and implementation of ‘smart’ investment policies by the host countries rather than the current orthodoxy of ‘neutral’ FDI policies, which is based on liberalizing the FDI inflows and aim to attract ‘any’ kind of FDI. In this article, we discuss such polices and how they relate to host country circumstances.

scholarly journals Level of development, foreign direct investment and domestic investment in food manufacturing

F1000Research ◽  
2021 ◽  
Vol 10 ◽  
pp. 72
Author(s):  
Justice Gameli Djokoto
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Manufacturing Sector ◽  
Developed Countries ◽  
Domestic Investment ◽  
Food Manufacturing ◽  
Economies In Transition ◽  
Long Run ◽  
Crowd Out

Background: Whilst the literature on the complementarity and substitutability of foreign direct investment (FDI) on domestic investment (DI) is not uncommon, the facet of food manufacturing is non-existent. This paper fills this void by investigating the effect of FDI on DI in the food manufacturing sector for developing, economies in transition and developed countries. Methods: Using an unbalanced panel data of 49 countries from 1993 to 2016, from FAOSTAT, estimated by the system generalised method of moments (GMM), the Wald statistics for the short and long-run effects of FDI on DI were computed for the development groups. Results: Developed economies experienced a crowd-out effect of FDI on DI in the short run, whilst the others experienced no significant effect. In the case of the long run, food manufacturing sectors of all three development groups exhibited a crowd-out effect. The effect in the long run for all development groups together is a crowd-in. Analysing all country groups together could mask the results of the various country groups. Conclusions: A review of investment policies to priorities FDI entry mode that favour domestic investment is needed. Improvement of the investment regulatory and administrative efficiency among others are recommended.

scholarly journals Determinants of linkages between foreign direct investment firms and domestic firms in Vietnam

2021 ◽  
Vol 8 (6) ◽  
pp. 94-102
Author(s):  
Dao Hoang Tuan ◽  
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Negative Impact ◽  
Positive Impact ◽  
Manufacturing Sector ◽  
Domestic Firms ◽  
Growth Firms ◽  
Technology Level

Foreign direct investment (FDI) is an important sector of many developing economies in general and of Vietnam in particular. In Vietnam, the FDI sector contributed up to 27.7% of the average economic growth rate of 6.0% per year from 2010 to 2018. Besides this contribution, operations of FDI in Vietnam reveal many limitations, the most noticeable of which is the weak linkage between FDI and Vietnamese firms. This article examines determinants of FDI-domestic firms linkage in Vietnam. This research looks at all three types of linkage, including horizontal linkage, vertical linkage, and supply-backward linkage. Factors that have a positive impact on linkages are provincial economic growth, firms’ technology level, regional factors, being located in industrial zones, and operating in the manufacturing sector. Macroeconomic instability has a negative impact on linkage. The quality of economic governance, as measured by the Provincial Competitiveness Index, is important for attracting FDI, but does not affect linkages.

scholarly journals Level of development, foreign direct investment and domestic investment in food manufacturing

F1000Research ◽  
2021 ◽  
Vol 10 ◽  
pp. 72
Author(s):  
Justice Gameli Djokoto
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Manufacturing Sector ◽  
Developed Countries ◽  
Domestic Investment ◽  
Food Manufacturing ◽  
Economies In Transition ◽  
Long Run ◽  
Crowd Out

Background: Whilst the literature on the complementarity and substitutability of foreign direct investment (FDI) on domestic investment (DI) is not uncommon, the facet of food manufacturing is non-existent. This paper fills this void by investigating the effect of FDI on DI in the food manufacturing sector for developing, economies in transition and developed countries. Methods: Using an unbalanced panel data of 49 countries from 1993 to 2016, from FAOSTAT, estimated by the system generalised method of moments (GMM), the Wald statistics for the short and long-run effects of FDI on DI were computed for the development groups. Results: Developed economies experienced a crowd-out effect of FDI on DI in the short run, whilst the others experienced no significant effect. In the case of the long run, food manufacturing sectors of all three development groups exhibited a crowd-out effect. The effect in the long run for all development groups together is a crowd-in. Analysing all country groups together could mask the results of the various country groups. Conclusions: A review of investment policies to priorities FDI entry mode that favour domestic investment is needed. Improvement of the investment regulatory and administrative efficiency among others are recommended.

scholarly journals Financing Growth through Remittances and Foreign Direct Investment: Evidences from Balkan Countries

2021 ◽  
Vol 14 (3) ◽  
pp. 117
Author(s):  
Esmeralda Jushi ◽  
Eglantina Hysa ◽  
Arjona Cela ◽  
Mirela Panait ◽  
Marian Catalin Voica
Keyword(s):  
Developing Economies ◽  
Central Banks ◽  
Sustainable Growth ◽  
Time Interval ◽  
Foreign Direct Investments ◽  
Factors Affecting ◽  
Balkan Countries ◽  
To Come ◽  
Sustainable Economic Growth ◽  
The Impact

The ultimate goal of central banks, worldwide, is to promote the foundations for sustainable economic growth. In the case of developing economies, in particular, such objective requires time, huge efforts, attention, and plenty of resources in order to be accomplished to the fullest degree. This paper thoroughly investigates key factors affecting Balkan countries’ economic development (as measured by gross domestic product (GDP) growth), focusing especially on the impact of remittances. The analysis was done over an 18-year time interval (2000–2017) and builds on 144 observations. The data figures were retrieved from the World Bank database while two dummies were created to test the impact of the last financial crisis (2008–2012). Econometric tools were employed to carry out a broad analysis on the interdependencies that exist and, in particular, to determine the role of remittance income on growth. The vector auto regressive model was estimated using EViews software, and was used to come up with relevant insights. Empirical findings suggest the following: population growth, remittances, and labor force participation are insignificant factors for sustainable growth. On the other hand, previous levels of GDP, trade, and foreign direct investments (FDIs) appear to be relevant for the predictor. This research provides up-to-date conclusions, which can be considered during the decision-making process of central banks, as well as by government policymakers.

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