scholarly journals Is Russia successful in attracting foreign direct investment? Evidence based on gravity model estimation

2016 ◽  
Vol 16 (3) ◽  
pp. 245-267 ◽  
Author(s):  
Oleg Mariev ◽  
Igor Drapkin ◽  
Kristina Chukavina
Keyword(s):  
Foreign Direct Investment ◽  
Gravity Model ◽  
Host Country ◽  
Direct Investment ◽  
Recipient Country ◽  
Developed Countries ◽  
Likelihood Method ◽  
Empirical Estimation ◽  
Fdi Inflows ◽  
Russian Economy

Abstract The aim of this paper is twofold. First, it is to answer the question of whether Russia is successful in attracting foreign direct investment (FDI). Second, it is to identify partner countries that “overinvest” and “underinvest” in the Russian economy. We do this by calculating potential FDI inflows to Russia and comparing them with actual values. This research is associated with the empirical estimation of factors explaining FDI flows between countries. The methodological foundation used for the research is the gravity model of foreign direct investment. In discussing the pros and cons of different econometric methods of the estimation gravity equation, we conclude that the Poisson pseudo maximum likelihood method with instrumental variables (IV PPML) is one of the best options in our case. Using a database covering about 70% of FDI flows for the period of 2001-2011, we discover the following factors that explain the variance of bilateral FDI flows in the world economy: GDP value of investing country, GDP value of recipient country, distance between countries, remoteness of investor country, remoteness of recipient country, level of institutions development in host country, wage level in host country, membership of two countries in a regional economic union, common official language, common border and colonial relationships between countries in the past. The potential values of FDI inflows are calculated using coefficients of regressors from the econometric model. We discover that the Russian economy performs very well in attracting FDI: the actual FDI inflows exceed potential values by 1.72 times. Large developed countries (France, Germany, UK, Italy) overinvest in the Russian economy, while smaller and less developed countries (Czech Republic, Belarus, Denmark, Ukraine) underinvest in Russia. Countries of Southeast Asia (China, South Korea, Japan) also underinvest in the Russian economy.

Foreign direct investment spillovers in the Russian economy: The results of empirical estimation

2019 ◽  
pp. 97-113 ◽  
Author(s):  
I. M. Drapkin ◽  
S. A. Lukyanov
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Innovation Activity ◽  
Empirical Estimation ◽  
Industry Effects ◽  
Foreign Companies ◽  
Shape Dependence ◽  
Russian Economy ◽  
Fdi Spillovers ◽  
Regional Factors

The paper is devoted to the foreign direct investment (FDI) spillovers in the Russian economy. Using the database on 29,817 Russian enterprises for the period of 2006—2014, we empirically estimate FDI spillovers on both intra-industry and inter-industry levels. We show that the intra-industry effects and upstream inter-industry effects have the non-linear U-shape dependence on the share of foreign companies in the industry, while downstream inter-industry effects are linear and negative. Analysing regional factors influencing FDI spillovers in the Russian economy, we find stronger effects in the regions with higher level of human capital and higher level of innovation activity. We do not find the proof for the hypothesis that FDI spillovers are stronger in the western part of Russia comparing to the eastern part.

scholarly journals Causality among Foreign Direct Investment and Economic Growth: A Directed Acyclic Graph Approach

2013 ◽  
Vol 45 (4) ◽  
pp. 617-637 ◽  
Author(s):  
Yarui Li ◽  
Joshua D. Woodard ◽  
David J. Leatham
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Directed Acyclic Graph ◽  
Causal Structure ◽  
A Priori ◽  
Developed Countries ◽  
Fdi Inflows ◽  
Acyclic Graph ◽  
Causal Assumptions

With the aim of examining the causal structure between foreign direct investment (FDI) and economic growth, this study derives inductive causal inference using the directed acyclic graph approach, which makes no a priori causal assumptions. There are three major findings of this study. First, economic growth causes FDI inflows for developing countries, whereas FDI induces economic growth for developed countries. Second, trade is an important intermediary to facilitate the interaction between FDI and other factors. Third, the stock market is found to be an intermediary that amplifies the influence on FDI from many causal variables of FDI for developed countries.

Tax Policy, Foreign Direct Investment and Spillover Effects in Africa 1

2020 ◽  
Vol 29 (3) ◽  
pp. 306-331
Author(s):  
Amadou Boly ◽  
Seydou Coulibaly ◽  
Eric N Kéré
Keyword(s):  
Foreign Direct Investment ◽  
Host Country ◽  
Direct Investment ◽  
Fixed Effects ◽  
Spillover Effects ◽  
Fdi Inflows ◽  
Strategic Complementarity ◽  
Long Run ◽  
The Impact ◽  
Dynamic Spatial Durbin Model

Abstract Foreign direct investment (FDI) inflows are crucial for economic development. To attract them, countries have typically used reductions in corporate income tax (CIT) rates. This paper empirically assesses the impact of such CIT rate changes on FDI net inflows in Africa. Using a dynamic spatial Durbin model with fixed effects, our results show that cuts in CIT rates increase FDI net inflows in the host country and in the neighbouring countries in the short and long run. These results are robust to the use of alternative spatial weighting matrices as well as the inclusion of additional controls in the baseline specification. Furthermore, we find a strategic complementarity in FDI inflows between the countries in our sample, suggesting that an increase in FDI inflows in a host country is likely to stimulate FDI inflows of its neighbours.

scholarly journals The Determinants of Foreign Direct Investment in Pakistan: an Empirical Investigation

2003 ◽  
Vol 42 (4II) ◽  
pp. 697-714 ◽  
Author(s):  
Zahir Shah ◽  
Qazi Masood Ahmed
Keyword(s):  
Growth Rate ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
High Growth ◽  
Developed Countries ◽  
Annual Growth Rate ◽  
Managerial Control ◽  
Fdi Inflows ◽  
Gdp Growth Rate ◽  
International Transactions

The changing modes of international transactions and the cross-border mobilisation of factor resources, in pursuance of transnational production, constitute new dimensions for sustained economic growth. Foreign Direct Investment (an influential element of this process) is defined as the source of acquisition of managerial control by a business enterprise of a foreign country over a business activity in a host country [Graham (1982)]. The changing perceptions and more attractive policies of the host developing nations have changed the destinations of FDI flows from industrially developed countries to high growth developing centres. FDI stock held by developing countries has risen from $ 132.95 billion in 1980 to $ 1438.48 billion in 1999. Their share in inward stock has reached to 30.14 percent in 1999 as against 26.2 percent in 1980. FDI inflows during this period were raised from $ 4.42 billion to $ 208.0 billion, at an annual growth rate of 22.5 percent while GDP growth rate for that period was 3.9 percent.

Determinants of foreign direct investment inflow to the agricultural sector: a panel-data analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Seyed Reza Zeytoonnejad Mousavian ◽  
Seyyed Mehdi Mirdamadi ◽  
Seyed Jamal Farajallah Hosseini ◽  
Maryam Omidi NajafAbadi
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Panel Data ◽  
Host Country ◽  
Direct Investment ◽  
Agricultural Sector ◽  
Fdi Inflows ◽  
Content Type ◽  
Main Determinants ◽  
Determinants Of Fdi

PurposeForeign Direct Investment (FDI) is an important means of boosting the agricultural sectors of developing economies. The first necessary step to formulate effective public policies to encourage agricultural FDI inflow to a host country is to develop a comprehensive understanding of the main determinants of FDI inflow to the agricultural sector, which is the main objective of the present study.Design/methodology/approachIn view of this, we take a comprehensive approach to exploring the macroeconomic and institutional determinants of FDI inflow to the agricultural sector by examining a large panel data set on agricultural FDI inflows of 37 countries, investigating both groups of developed and developing countries, incorporating a large list of potentially relevant macroeconomic and institutional variables, and applying panel-data econometric models and estimation structures, including pooled, fixed-effects and random-effects regression models.FindingsThe general pattern of our findings implies that the degree of openness of an economy has a negative effect on FDI inflows to agricultural sectors, suggesting that the higher the degree of openness in an economy, the lower the level of agricultural protection against foreign trade and imports, and thus the less incentive for FDI to inflow to the agricultural sector of the economy. Additionally, our results show that economic growth (as an indicator of the rate of market-size growth in the host economy) and per-capita real GDP (as an indicator of the standard of living in the host country) are both positively related to FDI inflows to agricultural sectors. Our other results suggest that agricultural FDI tends to flow more to developing countries in general and more to those with higher standards of living and income levels in particular.Originality/valueFDI inflow has not received much attention with respect to the identification of its main determinants in the context of agricultural sectors. Additionally, there are very few panel-data studies on the determinants of FDI, and even more surprisingly, there are no such studies on the main determinants of FDI inflow to the agricultural sector. We have taken a comprehensive approach by studying FDI inflow variations across countries as well as over time.

Influence of foreign direct investment on domestic investment in the Russian economy

2020 ◽  
pp. 69-85
Author(s):  
I. M. Drapkin ◽  
S. A. Lukyanov ◽  
A. A. Bokova
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Crowding Out ◽  
Domestic Investment ◽  
Empirical Estimation ◽  
Negative Effects ◽  
Firm Level ◽  
Foreign Companies ◽  
Russian Economy ◽  
The Government

The paper is devoted to the empirical estimation of the effects of foreign direct investment (FDI) on domestic investment in the Russian economy. The results suggest that there are crowding-out effects of FDI on the Russian economy. Using the firm-level database for 2008—2017, we analyze the presence of foreign companies in the Russian economy on the region, industry and industry in region levels. On the regional level the statistically significant effects of crowding out domestic investment are identified for state-owned, large as well as less effective companies. On the industry level the negative effects of crowding out are observed in case when FDI share in the industry exceeds 25. Estimating the effect of FDI presence on the industry in the region level, we reveal crowding out effects mainly for private and more effective national companies. Analyzing the effects in case of different levels of FDI in the economy, we do not find support for the hypothesis of adaptation of national companies for foreign companies’ presence in the economy. The paper suggests that the government policy in FDI regulation should focus on mitigation of the effects of pushing national companies off the market, and also creating conditions for cooperation of foreign and domestic companies.

scholarly journals Effects of foreign direct investment and trade on the prevalence of tobacco consumption in Africa: a panel study

2021 ◽  
Vol 17 (1) ◽  
Author(s):  
Mustapha Immurana ◽  
Micheal Kofi Boachie ◽  
Kwame Godsway Kisseih
Keyword(s):  
Foreign Direct Investment ◽  
Method Of Moments ◽  
Direct Investment ◽  
Panel Study ◽  
Tobacco Consumption ◽  
Empirical Estimation ◽  
African Countries ◽  
Fdi Inflows ◽  
African Context ◽  
Generalised Method Of Moments

Abstract Background As African governments take measures to enhance international trade and Foreign Direct Investment (FDI) inflows, a major concern is that, these measures can make Africa more vulnerable to the strategies of the tobacco industry. This concern is based on the fact that, each year, tobacco use is estimated to be responsible for the deaths of over eight million people in the world. However, there is very little empirical evidence to refute or confirm the above concern, especially in the African context. This study therefore investigates the effects of FDI and trade on the prevalence of tobacco consumption in Africa. Methods Data on a sample of 31 African countries for the period, 2010–2018 are used. The system Generalised Method of Moments (GMM) regression model is employed as the empirical estimation technique. Results The findings show that, FDI and trade have negative and positive significant association with the prevalence of tobacco consumption respectively. These findings are robust even after using different specifications and indicators of FDI and trade. Conclusion Rising trade (and not FDI) should be of concern to African governments in the quest to reduce the prevalence of tobacco consumption on the continent.

scholarly journals Effect of the Utilization of Unilateral Trade Preferences on Foreign Direct Investment flows to Beneficiary Countries

2021 ◽  
Author(s):  
Sèna Kimm GNANGNON
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developed Countries ◽  
Jel Classification ◽  
Least Developed Countries ◽  
Fdi Inflows ◽  
Trade Regimes ◽  
High Utilization ◽  
Trade Preferences

Abstract This article has explored the effect of non-reciprocal trade preferences (NRTPs) offered by the QUAD countries to developing countries on the foreign direct investment (FDI) flows to these developing countries. The analysis has used an unbalanced panel dataset of 108 beneficiary countries of NRTPs over the period 2002-2019. By means of the two-step system GMM, it has established that low utilization rates of GSP programs are associated with greater FDI flows to less advanced beneficiary countries, including, least developed countries (LDCs). However, high utilization rates of GSP programs induces greater FDI flows to advanced beneficiary countries, including NonLDCs. In addition, low (high) utilization rates of other trade preferences generate higher FDI flows to less advanced beneficiary countries (relatively advanced countries). The analysis has also shown that GSP programs and other trade preferences are strongly complementary in enhancing FDI inflows, especially for high utilization rates of other trade preferences programs. The utilization of each of these two blocks of NRTPs induces greater FDI flows to countries that endeavour to export increasingly complex products, or those with lower dependence on natural resources. Finally, the utilization of NRTPs generates higher FDI inflows to countries that substantially liberalize their trade regimes. JEL Classification: F13; F14; F20.

scholarly journals An exploratory review of foreign direct investment and economic growth in four SSA countries

2013 ◽  
Vol 11 (1) ◽  
pp. 213-220
Author(s):  
Edmore Mahembe ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Import Substitution ◽  
Developed Countries ◽  
Sub Saharan Africa ◽  
African Countries ◽  
Middle Income ◽  
Fdi Inflows ◽  
Sub Saharan

This paper highlights the status of foreign direct investment (FDI) and economic growth in four middle-income sub-Saharan Africa countries, namely: Angola, Mauritius, Namibia and Seychelles. The study examines the individual countries’ policies and strategies that were aimed at boosting FDI and economic growth. The study finds that the FDI inflows were fairly low during the period the 1980s and the 1990s. This is mainly because during this period, the policies of these countries, like many other sub-Saharan African countries, hinged mainly on import substitution, socialism and centralized economic systems. However, following the implementation of policies, such as privatisation, liberalisation, structural-adjustments, etc, in the 1990s and 2000s, the FDI inflows into these countries increased significantly, especially from developed countries. The biggest recipient of FDI inflows among the four studied countries, however, was Angola – where the FDI inflows increased from US$ 2145.5 mill in 2001 to US$ 16581.0 million in 2008.

scholarly journals The effects of large-scale sport events on foreign direct investment inflows: the results of empirical estimation

2020 ◽  
Vol 12 (6) ◽  
pp. 167-187
Author(s):  
I. M. Drapkin ◽  
S. A. Lukyanov
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Large Scale ◽  
Empirical Estimation ◽  
Fdi Inflows ◽  
Scientific Discussion ◽  
Winter Olympic Games ◽  
Sport Events ◽  
Foreign Direct Investment Inflows

The expediency of hosting large-scale sport events (LSE), such as the Summer and Winter Olympic Games, FIFA World Cup and EUFA European Championship, is a matter of public and scientific discussion. The main argument against hosting large-scale sport events is the substantial direct financial losses for an organizing country in most cases. Moreover, local residents often oppose hosting major sport events because of price increase and different inconveniences in their everyday life. At the same time the effects of hosting large-scale events have long-term nature and go beyond direct financial benefits. One of the difficulties in estimating the effects of LSE is that they are hard to measure.The literature review shows the deficit of research on how large-scale events influence the foreign direct investment inflows in the hosting country. In contrast to numerous papers on LSE influence on economic growth, foreign trade, international tourist flows, the authors found only one article devoted to LSE influence on FDI inflows. The present paper analyzes the influence of major sport events on foreign direct investment flows to the hosting country. The estimated database comprises data for 195 countries for the period of 1970–2018, 24 out of which hosted or will host 48 major sport events. The regression analysis indicates that LSE induce significant influence on foreign direct investment flows in the hosting economy. Comparing several models, we show that the most reliable is the model where hosting LSE positively influence on FDI inflows within the period starting 8 years before and ending 4 years after the event. We explain the result by the following. Firstly, fostering economic growth due to hosting LSE serves as a catalyst of foreign direct investment inflows. Secondly, LSE improves image of the hosting country abroad that positively affects the attractiveness of the country to foreign investors. Thirdly, the growing openness of the economy due to LSE (expressed for example in growth of international trade) positively affects the FDI inflows.The authors declare the absence of conflict of interests.

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