Stabilisation Clauses and Foreign Direct Investment: Presumptions versus Realities

2015 ◽  
pp. 88-121 ◽  
Author(s):  
Sotonye Frank
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Empirical Studies ◽  
Developed Countries ◽  
Extractive Industries ◽  
The Political ◽  
Foreign Investors ◽  
Political Risks ◽  
Current Trends

Stabilisation clauses are widely portrayed as an essential tool which developing countries use to attract foreign direct investment (FDI) to their extractive industries. However, this view of stabilisation clauses is based on two presumptions. The first is that developing countries compete to attract FDI. The second is that developing countries have higher levels of political risks. This article argues that neither presumption is true as such. The available evidence points to intense competition among foreign investors, backed by their home governments, for access to the extractive industries in developing countries. The political risks that stabilisation clauses are aimed at also exist at least in equal measure, in developed countries. The article then relies on the findings of previous empirical studies and an analysis of current trends in stabilisation practices to argue that contrary to popular belief, stabilisation clauses do not play an ‘essential’ role in attracting FDI into developing countries.

scholarly journals Factors affecting the attraction of foreign direct investment: A study in northwest of Vietnam

Accounting ◽  
2021 ◽  
Vol 7 (6) ◽  
pp. 1257-1264
Author(s):  
Phuong Tran Hoa ◽  
Ha Nguyen Thi Thu ◽  
Duong Nguyen Duc
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
New Technologies ◽  
Empirical Studies ◽  
Economic Restructuring ◽  
Developed Countries ◽  
Policy Implications ◽  
Fdi Inflows ◽  
Factors Affecting

Foreign direct investment (FDI) plays an important role in economic growth for developing countries where there is always a shortage of investment capital. Its role is manifested through promoting economic restructuring, expanding markets, promoting exports, developing human resources and providing new technologies for development. Therefore, FDI has always been addressed as the top concern of governments in developing countries. However, FDI inflows often fluctuate because of many factors related to the competitive environment, such as market size, economic openness, competition in labor resources, etc. There are many empirical studies related to FDI inflows. However, most of these studies are carried out in developed countries. Meanwhile, in developing countries, there is not as much as this kind of study. On the other hand, the empirical research results are not consistent. This article will analyze the factors affecting FDI in the Northwest region of Vietnam in the context of global economic integration in the period of 2000 - 2019, from which we draw out the policy implications that can be applied to Vietnam.

The Rise of Transnational Corporations from Developing Countries in the Second Half of the 20th Century

Istoriya ◽  
2021 ◽  
Vol 12 (11 (109)) ◽  
pp. 0
Author(s):  
Alexey Kuznetsov
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Global Economy ◽  
World Order ◽  
Developed Countries ◽  
Global South ◽  
Business Environment ◽  
Outward Foreign Direct Investment ◽  
Foreign Direct Investment Stock

The article highlights three stages of the formation of multinationals from developing countries. Although first Argentine TNCs appeared at the turn of the 19th — 20th centuries, in the majority of the Global South countries TNCs appeared in the 1960s — 1980s. With the collapse of the bipolar world order, which in many developing countries was accompanied by significant internal political and economic transformations, the second stage of foreign expansion of TNCs from the Global South began. Indeed, in 1990 they accounted for 6 % of global outward foreign direct investment stock, while the figure was 10 % by the end of 2005. We date the beginning of the third stage to the financial and economic crisis of 2007—2009, since multinationals from developing countries as a whole are more successfully overcoming the period of turbulence in the global economy. By the end of 2020, they accounted for 22 % of global outward foreign direct investment stock, and during the COVID-19 pandemic crisis they generally exported more than 50% of the capital. The modern foreign expansion of such TNCs has many reasons, differs greatly from country to country, and often differs slightly from the specifics of Western multinationals. At the same time, initially, “late internationalization” in developing countries had two main vectors — the use of new opportunities for South — South cooperation and overcoming, through the creation of subsidiaries in highly developed countries, the shortcomings of the business environment of “catching up” countries.

scholarly journals What worth is a BIT? Impact of BITs on FDI Inflows into India

2018 ◽  
Vol 4 (02) ◽  
Author(s):  
Anshuman Kamila ◽  
Mitali Chinara
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Best Practice ◽  
Foreign Investors ◽  
Fdi Inflows ◽  
New Model ◽  
Indian Model Bit ◽  
The Government

Developing countries often consider foreign direct investment (FDI) as an engine to boost economic growth. Therefore they try to promote investment inflow by various means. One approach is to offer investment guarantees to foreign investors using Bilateral Investment Treaties (BITs). Following international best practice, India has signed a number of BITs to stimulate inflow of FDI. Till date, the Government of India has signed BITs with 83 countries. These BITs were largely negotiated on the basis of the Indian Model BIT of 1993. There have been recent moves that point in the direction of India fundamentally altering the text of its BITs with countries, including calling off existing BITs and approving a new model BIT. However, concerns have been raised as to the possible pernicious impact of these changes on the inflow of FDI into India. This paper investigates whether the concern is warranted at all – by asking if BITs significantly impact the inflow of FDI. It is established that BIT is indeed a veritable boost to FDI inflow, and the estimated coefficient remains significant and robust across econometric specifications. Therefore, a note of caution is sounded for the rejigging exercise involving BITs that has been initiated by India.

scholarly journals Determinants of Absorptive Capacity: a systematic literature review

2021 ◽  
Vol 16 (2) ◽  
pp. 122-152
Author(s):  
Naijela Janaina Costa Silveira ◽  
Diogo Ferraz ◽  
Diego Scarpa de Mello ◽  
Eduardo Polloni-Silva ◽  
Daisy Aparecida do Nascimento Rebelatto ◽  
...  
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Literature Review ◽  
Systematic Literature Review ◽  
Absorptive Capacity ◽  
Direct Investment ◽  
Design Methodology ◽  
Empirical Studies ◽  
Productivity Spillovers ◽  
Level Of Knowledge

Purpose – To conduct a literature review on the determinants of Absorptive Capacity (AC), which allows for productivity spillovers from Foreign Direct Investment (FDI) in developed and developing countries. Theoretical framework – This study is based on the literature indicating that before benefiting from spillovers, companies need a certain level of knowledge and expertise. Design/methodology/approach – A Systematic Literature Review (SLR) of empirical studies on AC and productivity spillovers is presented. A total of 60 articles were reviewed. Findings – The SLR revealed that human capital and R&D investments are the most frequently cited determinants of AC. R&D is especially important for developing countries. Research, Practical & Social implications – Public policies targeting R&D development may be a valuable strategy to facilitate productivity spillovers in developing countries. Originality/value – This paper analyzes the determinants of AC while verifying how both developed and developing countries can benefit from FDI, which is of great importance considering the growth of FDI in developing countries. Keywords - Foreign Direct Investment. Productivity. Spillover.

Global Outward Foreign Direct Investment and Economic Development: Panel Regression Approach

2015 ◽  
Vol 5 (4) ◽  
Author(s):  
K. V. Bhanumurthy ◽  
Manoj Kumar Sinha
Keyword(s):  
Developing Countries ◽  
Economic Development ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Principal Component ◽  
Developed Countries ◽  
Annual Growth Rate ◽  
Panel Regression ◽  
Outward Foreign Direct Investment ◽  
Regression Approach

Outward Foreign Direct Investment (OFDI) is in the nature of international relocation of production. OFDI acts as a complementary input in the host country and hence aims at rational allocation of global resources. The pattern of economic development on a multilateral scale would, thus, determine the pattern of OFDI. We consider the effect of economic development on OFDI originated from developing countries, with the help of a set of socio-economic variables. With the help of Principal Component Analysis we construct a set of six composite indices, namely, human resource, infrastructure, labour, market, trade openness and resource, as determinants of OFDI. We use a panel regression approach both in terms of OFDI stock and flow. The period of study is 1990-2009. Empirical results indicate that developing countries outflow has not been growing significantly. The annual growth rate of global FDI outflows is 3.2 percent. FDI outflow is mainly from developed countries. Resource is most important determinant because it has elasticity greater than one. Resource and market variables indicate that in long run FDI focused on resource seeking and market-seeking.

INCONSISTENCIES IN ICSID AWARDS ON DISPUTES RELATED TO MFN AND UMBRELLA CLAUSE

2021 ◽  
Vol 6 (2) ◽  
pp. 247-264
Author(s):  
Herliana Herliana
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Case Study Method ◽  
Host Countries ◽  
Foreign Investors ◽  
Investment Arbitration

Investment arbitration has been acclaimed as an important part of Foreign Direct Investment (FDI) movement around the globe because it provides a neutral and trustable forum for settling investment dispute. However, many argue that investment arbitration often becomes advocates of foreign investors and neglect the developing country’s interests as the host of investment. This paper aims at studying the investment arbitration awards rendered by International Center for Settlement of Investment Dispute (ICSID) tribunals launched against developing countries. The question is whether and to what extent those awards have equally observed the interests of foreign investors and host states of investments. To answer the questions, this paper employs case study method and use publicly available ICSID cases. This research shows that some ICSID tribunals have inconsistent reasoning which led to contradictory decisions. Apparently, as some cases indicate ICSID tribunals gave more weight to the need to protect foreign investors rather than host countries’ development interests. As a consequence, inconsistency and ambiguity have led to uncertainty and unpredictability of the forum. This is not only disadvantaged the parties due to inability to foresee the likely outcome of the disputes but also endanger the ICSID tribunals’ credibility as neutral and reliable forum.

The Effects of the Trade-related Investment Measures Agreement on the Egyptian Economy

2019 ◽  
Vol 33 (3) ◽  
pp. 209-246
Author(s):  
Lourna El-Deeb ◽  
Ahmed Labeeb
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developed Countries ◽  
Foreign Investments ◽  
Current Period ◽  
Investment Law ◽  
The Government ◽  
The Impact

Abstract The Trade-Related Investment Measures (TRIMs) Agreement aims to balance the interests of developed countries seeking to protect their investments as well as developing countries trying to attract more foreign investments to finance national projects. This article assesses the TRIMs Agreement and the compatibility of Egyptian economic legislation, especially the provisions of the Investment Law No. 72/2017, alongside the impact of this agreement on the Egyptian economy. We conclude that Egyptian legislation as a whole is in line with the TRIMs Agreement, with the exception of some provisions enacted under exceptional circumstances in Egypt since January 2011. As a result of these circumstances, it is impossible accurately to assess the extent to which the Egyptian economy was affected by the implementation of TRIMs during the current period, since the policies adopted by the Government of Egypt have succeeded in increasing the volume of foreign direct investment to Egypt.

Patterns of South Korea's Foreign Direct Investment Flows into China

Asian Survey ◽  
2006 ◽  
Vol 46 (6) ◽  
pp. 881-897 ◽  
Author(s):  
Eun Mee Kim ◽  
Jai S. Mah
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Outward Foreign Direct Investment ◽  
Foreign Investors

South Korea's growth as an outward foreign direct investment (OFDI) player is an example of developing countries becoming major foreign investors. China has become the largest destination for Korean OFDI, which appears to complement Seoul's exports to China.

scholarly journals Investment Policy of the European Union. Empirical Evidence of the Effects of Foreign Direct Investment on The European Union Economy

2021 ◽  
Vol 2021 (1) ◽  
pp. 1-10
Author(s):  
Corneliu Russu
Keyword(s):  
European Union ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Empirical Studies ◽  
Investment Policy ◽  
The European Union ◽  
Foreign Investors ◽  
Community Economy ◽  
Definition Of ◽  
Main Effects

The paper deals with the evolution during a period of over 60 years of the investment policy of the European Union, pointing out the main moments that marked the steps taken towards the progressive shaping of an increasingly unitary character of this policy. The increase of the interest of foreign investors for strategic, sensitive sectors of the economy of the member countries determined, after 2017, a change in the philosophy of establishing and applying the Union's investment policy, materialized in the more precise definition of "foreign investor" and in implementing a more rigorous mechanism of control of foreign direct investment. Further on are presented the main effects of foreign investment in the Community economy, resulting from empirical studies on this topic, the conclusions reached by these studies being sometimes divergent.

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