Foreign Direct Investment and Poverty Reduction

2017 ◽  
Vol 18 (2) ◽  
pp. 135-157 ◽  
Author(s):  
Manmohan Agarwal ◽  
Pragya Atri ◽  
Srikanta Kundu
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Poverty Reduction ◽  
Developing Economies ◽  
Capital Controls ◽  
Capital Inflows ◽  
Capital Account Liberalization ◽  
Fdi Inflows ◽  
The Impact ◽  
Free Movement Of Capital

It is widely proclaimed that capital account liberalization would immensely benefit developing economies because once capital controls are lifted, developing economies create a potential for movement of capital. And, this free movement of capital could possibly increase growth thereby lifting millions out of poverty. India has been gradually liberalizing since the 1980s and throughout more capital inflows were observed compared to outflows. Also, the composition of capital flows has been changing since the 1980s–with Foreign Direct Investment (FDI) inflows rising steadily post-1991compared to portfolio and debt flows. However, since 2000, FDI outflows from India were also witnessed. In this paper we empirically test the impact of FDI flows on poverty in India for 1980–2011. To provide a correct perspective to India’s performance we also analyze the link between FDI flows and poverty for SAARC countries. For a better understanding of how FDI flows impact poverty, we analyze the outflows and inflows separately. The results show both similarities and contrasts in the behaviour of India in comparison with the other SAARC countries.

scholarly journals THE ROLE OF POLITICAL STABILITY IN FOREIGN DIRECT INVESTMENT ATTRACTION: CROSS-COUNTRY ANALYSIS

2020 ◽  
Vol 1 ◽  
pp. 76-83
Author(s):  
Rogneda Groznykh ◽  
Oleg Mariev ◽  
Sergey Plotnikov ◽  
Maria Fominykh
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Positive Impact ◽  
Political Stability ◽  
Primary Objective ◽  
Fdi Inflows ◽  
Cross Country ◽  
The Impact ◽  
Foreign Direct Investment Inflows

This study is devoted to the evaluation and scrutiny of political stability as a determinant of foreign direct investment (FDI) inflows to different countries. The primary objective of the research is to estimate the impact and influence of various indicators of political stability on foreign direct investment inflows. The analysis is delivered based on a database on cross-country FDI inflows of 66 FDI-importer countries and 98 FDI-exporter countries, in the period between 2001-2018. This article uses the assumption that the impact of political stability might be different for both the groups of developed and developing countries. As the developed economies have higher political stability, they tend to attract larger amounts of foreign direct investment compared to developing economies, where the political situation can be less stable. Furthermore, the estimation applies the gravity approach, while the main method used for the econometric calculations is the Pseudo Poisson Maximum Likelihood (PPML) regression. The outcome revealed that in most cases the indicators of political stability had a positive impact on the foreign direct investment inflows. However, the results are not constant for all groups of countries. Therefore, if a developed country is an importer of investment, then most of the indicators of political stability become significant and have a positive influence on the foreign direct investment. At the same time, if the importer is a developing country, then for the investor-developed economy, political stability becomes a significant factor. Similarly, if the FDI-exporter is a developing economy, then determinants of political stability are insignificant. Based on these results, possible recommendations for refined government policies can be suggested.

scholarly journals THE IMPACT OF INSTITUTIONAL FACTORS ON FOREIGN DIRECT INVESTMENT INFLOWS: CROSS-COUNTRY ANALYSIS

2019 ◽  
Vol 7 ◽  
Author(s):  
Rogneda Groznykh ◽  
Igor Drapkin ◽  
Oleg Mariev
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Institutional Development ◽  
Institutional Factors ◽  
Fdi Inflows ◽  
Positive Effects ◽  
Cross Country ◽  
The Impact

This research paper is devoted to analysis of various institutional factors as determinants of foreign direct investment (further – FDI) inflows to different countries. The objective of the research is to estimate the effect of institutions on FDI inflows. The analysis is provided on a database of cross-country FDI inflows on 72 countries FDI-importers and 112 countries FDI-exporters in the period from 2001 to 2016. It is supposed in the paper that the impact of institutional factors might be different for the groups of developed and developing countries; since developed economies have higher institutional indicators, they tend to attract larger amounts of foreign direct investment compared to developing economies, where institutional development is at the lower level. The estimation is based on the gravity approach, which considers the positive effects of countries’ GDP and the negative effect of the distance between them. The main method used for the econometric estimation is the Pseudo Poisson Maximum Likelihood (PPML) regression, which is considered to be one of the adequate methods for estimating such data. During the research the problems of zero-observations and correlation between institutional indicators are solved. The results have shown that higher quality of institutions tends to attract more foreign direct investment to a country. Thus, institutions in developed countries have positive and significant impact on FDI attraction. At the same time, the analysis of developing countries has shown that some institutions have less significant influence on the FDI inflows. Based on the results of the research, possible recommendations for government policy on institutional improvement can be suggested.

scholarly journals Corruption and Foreign Direct Investment: Empirical investigation of Asian Developing Economies

2020 ◽  
Vol 13 (4) ◽  
pp. 68-81
Author(s):  
Mahnaz muhammad Ali ◽  
Mariam Abbas Soharwardi ◽  
Rozina Sadiq
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Empirical Investigation ◽  
Developing Economies ◽  
Positive Impact ◽  
The Other ◽  
Fdi Inflows ◽  
System Gmm ◽  
The Impact ◽  
Potential Recipient

Developing economies have different cultural and economic characteristics, but they often experience similar levels of corruption. At one side developing economies are facing the issue of corruption; on the other hand, they are a potential recipient of FDI. The present study used the data of 31 developing Asian economies from 2000 to 2017 to determine the impact of host country’s level of corruption on inward FDI. System GMM technique is applied for empirical investigation since the problem of endogeneity and heteroscedasticity are found in the models. Results reveal that corruption has a positive and statistically significant impact on inward FDI; corruption also has a positive impact on FDI inflows to GDP ratio for the panel countries. Hence the results of the study endorse the grease the wheel hypothesis of corruption. It is concluded countries should focus their resources to create business friendly environment instead to focus on anti-corruption policies only.   

scholarly journals Foreign Direct Investment as a Driver of Economic Recovery and Business Innovation

2021 ◽  
Vol 100 ◽  
pp. 01015
Author(s):  
José Manuel Macedo Botelho ◽  
Irina Maksymova ◽  
Oleg Padalka ◽  
Mansur Mamanazarov ◽  
Volodymyr Kulishov
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Global Economy ◽  
Developing Economies ◽  
Capital Inflows ◽  
Economic Recovery ◽  
Great Effort ◽  
Fdi Inflows ◽  
Business Innovation ◽  
Developed Economies

Global economy is expected to contract, consequence of a collapse of international trade with millions of failed businesses and lost jobs. Foreign Direct Investment (FDI) flows are fundamental to support the economic recovery. Developed economies and developing economies in particular must make a great effort to restore and increase capital inflows, especially in form of foreign direct investment. FDI inflows have long been the largest source of finance investment. FDI is an opportunity to support the crucial economic recovery. An internationalization model of FDI is built in order to be a driver to governments and firms to implement a success strategy to attract FDI to the country.

scholarly journals THE IMPACT OF REPETITIVE XENOPHOBIC ATTACKS ON FUTURE FOREIGN DIRECT INVESTMENT: A CASE OF SOUTH AFRICA

2021 ◽  
pp. 14-20
Author(s):  
Wellington Garikai Bonga
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Capital Inflows ◽  
Foreign Direct Investments ◽  
Investment Climate ◽  
Fdi Inflows ◽  
Long Term Impact ◽  
The Impact

The debate of the link between xenophobia and importance of foreign direct investment is of interest. A phrase says it all, “One cannot want foreign money and hate foreign businesses at the same time.” Does South Africa, as a country, love foreign investment, and by extension, foreign investors? A ‘yes’ and a ‘no’ answer will do for this question. Foreign direct investments are the most desirable form of capital inflows to emerging and developing countries. Many benefits are linked to accrue to a nation because of FDI inflows. FDI is climatic sensitive, and usually goes where it is wanted most and where conducive environment prevails. The South African nation is dominated by unending violence that also targets foreigners including their businesses. Effective policies to curb xenophobia seems to be lacking. There exist xenophobia denialism among the political leaders, making it more difficult to halt the problem. Letting the nation continue turning into a hostile destination for foreigners may pose a great investment challenge in the longer term. The path that South Africa is walking today, of protecting and failing to address issues of xenophobia, have a long term impact to investment in the country. Conflicts and violence attacks, hence xenophobia, continue to affect FDI flows several years into the future. The trend of net FDI has already shown a downward trend that may be attributed to issues of unrest persistent in the economy. The study strongly indicate that repetitive xenophobic attacks significantly impact future FDI inflows negatively. Immediate action is required to minimize the damage caused by xenophobia in the country. Investment climate restoration is required to ensure favorable economic growth path for the country. KEYWORDS: Economic Growth, Foreigners, Foreign Direct Investment, Instability, Investment, Investment Climate, Socio-economic Development, Violence, Xenophobia, South Africa

scholarly journals Impact of Foreign Direct Investment Inflows on Economic Growth; the Case of the Republic of Seychelles

2019 ◽  
Author(s):  
Yusheng Kong ◽  
Sampson Agyapong Atuahene ◽  
Geoffrey Bentum-Mican ◽  
Abigail Konadu Aboagye
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Least Square ◽  
Small Island ◽  
Host Countries ◽  
Fdi Inflows ◽  
Economic Trends ◽  
The Republic ◽  
The Impact

This paper aims to research whether there is link between FDI inflows and Economic growth in the Republic of Seychelles Island. The ordinary least square results obtained shows that in the impact of FDI inflows on economic growth is low. Small Island Developing States attracts less FDI inflow because they are limited to few resources that attracts overseas firms which results in retarded development. The research lighted that impact of foreign direct investment on host countries does not only depend on the quality and quantity of the FDI inflows but some other variables such as the internal policies and the management skills, market structures, economic trends among others.

scholarly journals Impact of Foreign Direct Investment on Human Development Index in South Africa

2020 ◽  
Vol 7 (1) ◽  
pp. 58
Author(s):  
Marius KOUNOU
Keyword(s):  
South Africa ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Poverty Reduction ◽  
Time Series Data ◽  
Empirical Studies ◽  
Sub Saharan Africa ◽  
Series Data ◽  
Long Run ◽  
The Impact

Many studies have been done on the impact of Foreign Direct Investment on economic growth and poverty reduction in developing countries, however there is a lack of empirical studies of FDI impact on poverty reduction in South Africa which is the second largest FDI recipients of one of the poorest regions in the world (sub Saharan Africa). We used time series data from 1990 to 2017 with the ARDL method to evaluate the impact of FDI Inflow on HDI in the country. The results show that FDI inflow has no significant impact on HDI both in the short run and long run on the country. This result is consistent with findings reported in the literature.

scholarly journals Impact of Foreign Direct Investment on Domestic Investment in Developing Countries

2020 ◽  
Vol 6 (9) ◽  
pp. 256-266
Author(s):  
A. Mamatkulov
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Negative Impact ◽  
Domestic Investment ◽  
Short Term ◽  
Total Investment ◽  
The Impact

Author analyzes the impact of foreign direct investment on domestic investment in host developing countries and checks whether a foreign direct investment has a “positive” or “negative” impact on domestic investment, as well as evaluating the impact of selected variables on this relationship. Using a full sample, the main conclusion of this study is that FDI does have a positive (crowding out) effect on domestic investment in this sample of developing economies. In the short term, an increase in FDI by one percentage point as a percentage of GDP leads to an increase in total investment as a percentage of the host country’s GDP of about 10.7%, while in the long term this effect is about 31% dollar terms, one US dollar represents us 1.7$ of total investment in the short term and us 3.1$ in the long term. Based on the results of this study, it was once again proved that inflation hinders domestic investment in host countries by 0.04% and 0.12% in the short and long term, respectively.

scholarly journals Impact of Foreign Capital Inflows on Household Savings in Pakistan

2020 ◽  
Vol 5 (4) ◽  
Author(s):  
Muhammad Abdullah Idrees ◽  
Ayesha Khan ◽  
Muhammad Arsalan Khan ◽  
Muhammad Bilal Raees ◽  
Muniza Syed
Keyword(s):  
Foreign Direct Investment ◽  
Foreign Aid ◽  
Direct Investment ◽  
Foreign Capital ◽  
Capital Inflows ◽  
Household Savings ◽  
Statistical Tools ◽  
Household Saving ◽  
Foreign Capital Inflows ◽  
The Impact

This study aims to discover the impact of foreign capital inflows (FDI, RT and FA) on household savings of Pakistan. Data used in this study has been obtained from the website of State Bank of Pakistan for the period of 1981-2010. Statistical tools including multiple regressions analysis was applied for analysis. Results explain that foreign direct investment (FDI), remittances (RT) are having positive and significant impact on household saving (HS) but foreign aid (FA) is having negative and insignificant impact on household saving, so it is recommended that if a developing country like Pakistan wants to increase the household saving it should give thoughtful importance to FDI and RT than FA with respect to household savings in Pakistan.

scholarly journals The Use of Auto-Regressive Distributed Lag Method in Investigating The Impact of Interest Rate on Foreign Direct Investment in Yemen for the Period 1990-2018

2020 ◽  
Vol 26 (123) ◽  
pp. 145-157
Author(s):  
Saif Sallam Alhakimi
Keyword(s):  
Foreign Direct Investment ◽  
Interest Rate ◽  
Interest Rates ◽  
Direct Investment ◽  
Inflation Rate ◽  
Trade Openness ◽  
Fdi Inflows ◽  
Distributed Lag ◽  
Auto Regressive ◽  
The Impact

 Foreign direct investment has seen increasing interest worldwide, especially in developing economies. However, statistics have shown that Yemen received fluctuating FDI inflows during the period under study. Against this background, this research seeks to determine the relationship and impact of interest rates on FDI flows. The study also found other determinants that greatly affected FDI inflows in Yemen for the period 1990-2018. Study data collected from the World Bank and International Monetary Fund databases. It also ensured that the time series were made balanced and interconnected, and then the Auto Regressive Distributed Lag method used in the analysis. The results showed that the interest rates and inflation rate harmed FDI flows and, therefore, could not be used for policymaking purposes. The research also discovered that GDP growth and trade openness are the main determinants of foreign direct investment in Yemen. Trade openness policies should be encouraged, and GDP growth facilitated if the economy is to achieve long-term FDI flows. Purpose –The purpose of the paper is to discover the impact of interest rate on foreign direct investment with a combination of the exchange rate, inflation, gross domestic product, and trade openness. Design/methodology/approach – The paper implements the Auto Regressive Distributed Lag (ARDL)-Bounds testing approach to analyze maintaining the time series properties in terms of stationarity. Findings – The results indicate that there is a long-run equilibrium between the Foreign Direct Investment and the explanatory variables. Furthermore, the significant factors influencing, positively, FDI in Yemen are Growth domestic product, Exchange rate, and Trade openness. In contrast, both the Interest rate and Inflation rate have a substantial negative impact on Foreign Direct Investment. Practical implications – Policymakers in Yemen advised reconsidering many of the general state policies, including investment policies, financial and administrative governance, and monetary policy that focuses on maintaining an adequate interest rate and reduce the rate of inflation. Originality/value – As for the case of Yemen, this the first study empirically explores the impact of interest rate and the foreign direct investment using the Auto Regressive Distributed Lag method aiming for more reliable results.

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