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 Do Large Foreign Direct Investment Inflows Behave Differently From Smaller Inflows? Evidence from Developing Countries

2020 ◽  
Vol 14 (1) ◽  
pp. 86-106
Author(s):  
Jagadish Prasad Sahu
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Conditional Distribution ◽  
Jel Classification ◽  
Regression Method ◽  
Fdi Inflows ◽  
Push And Pull Factors ◽  
Push And Pull ◽  
Quantile Regression Method

This article examines whether large inflows of foreign direct investment (FDI) behave differently from smaller inflows in a sample of 56 developing countries for the period 1990–2017. We use the quantile regression method to investigate whether the responsiveness of FDI inflows to various push and pull factors differs across the conditional distribution of the former. Our results show that the magnitudes of the coefficients are significantly different across quantiles of FDI inflows for a number of covariates. That is to say, the coefficients are significantly larger for the upper quantiles compared to the lower ones. The interquantile regressions, which estimate the quantile differences, confirm the finding that large FDI inflows are more responsive to their covariates than smaller inflows. Our results suggest that large inflows of FDI are indeed different, both quantitatively and qualitatively, from smaller inflows. Therefore, it is necessary to investigate the causes of large and smaller inflows separately for a better understanding of the determinants of FDI inflows to developing countries. JEL Classification: F21, F23, F41

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.

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.

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 Dynamic Causal Relationships among GDP, Exports, and Foreign Direct Investment (FDI) in the Developing Countries

2013 ◽  
Vol 14 ◽  
pp. 1-19 ◽  
Author(s):  
Mohsen Mehrara ◽  
Amin Haghnejad ◽  
Jalal Dehnavi ◽  
Fereshteh Jandaghi Meybodi
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Strong Evidence ◽  
Direct Investment ◽  
The Other ◽  
Fdi Inflows ◽  
Long Run ◽  
Short Run ◽  
Growth Hypothesis

Using panel techniques, this paper estimates the causality among economic growth, exports, and Foreign Direct Investment (FDI) inflows for developing countries over the period of 1980 to 2008. The study indicates that; firstly, there is strong evidence of bidirectional causality between economic growth and FDI inflows. Secondly, the exports-led growth hypothesis is supported by the finding of unidirectional causality running from exports to economic growth in both the short-run and the long-run. Thirdly, export is not Granger caused by economic growth and FDI inflow in either the short run or the long run. On the basis of the obtained results, it is recommended that outward-oriented strategies and policies of attracting FDI be pursued by developing countries to achieve higher rates of economic growth. On the other hand, the countries can increase FDI inflows by stimulating their economic growth.

scholarly journals Foreign Direct Investment in the West African Region: Analyses on the Values of Inflow and Outflow

2020 ◽  
Vol 2 (1) ◽  
pp. p15
Author(s):  
Yeboah Evans ◽  
Yu Jing
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developed Countries ◽  
West African ◽  
Least Developed Countries ◽  
Outward Fdi ◽  
African Region ◽  
The West ◽  
Investment Policies ◽  
West African Region

With regards to the ongoing development in investment activities in the Economic Community of West African States(ECOWAS) and the entire African continent is because of institutional reforms and initiation of sound investment policies. Foreign direct investment(FDI) inflow and outflow severs as a source of capital formation for most developing and least developed countries. This paper provides an overview and analyses of the flow of FDI to the ECOWAS region by considering 16 nations under this region in determining their performance towards FDI attraction and their contribution to outward FDI across the globe by the use of the quantitative method. The outcome shows that there is a continuous decline in FDI inflow to the ECOWAS region over the past 10 years. The result also proves that Ghana and Nigeria are the major recipients of foreign direct investment inflows in the West African region. The result further indicates that Nigeria is the major contributor of outward FDI from the ECOWAS region. It is recommended that the region should increase its outward FDI.

Regional and Sectoral Disparities in Inflow of FDI in India

2012 ◽  
pp. 149-162 ◽  
Author(s):  
Behrooz Shahmoradi
Keyword(s):  
Developing Countries ◽  
Economic Development ◽  
Foreign Direct Investment ◽  
Developing Country ◽  
Direct Investment ◽  
Steady Increase ◽  
Policy Makers ◽  
Fdi Inflows ◽  
Reform Period ◽  
Micro Level

During the last two decades, Foreign Direct Investment (FDI) has become increasingly important in the developing world, with a growing number of developing countries seeking in attracting substantial and rising amounts of inward FDI. Furthermore, FDI has become the most important source of finance that can contribute to economic development. Recognizing this, all the governments want to attract it. India as a developing country is not an exception in this regard therefore study the different aspects of FDI can be helpful for policy makers in macro as well as micro level. Since 1990, FDI has been considered as the most powerful driver of economic development. While India has seen a steady increase in FDI inflows in the post-reform period, therefore, this study tries to analyze the regional and sectoral disparities in Inflow of FDI in India since 1990. The analysis showed that there is a disparity between states in India and it also indicates a shift from primary and secondary sectors to tertiary sectors and pervasive computing areas.

Regional and Sectoral Disparities in Inflow of FDI in India

2010 ◽  
pp. 234-246
Author(s):  
Behrooz Shahmoradi
Keyword(s):  
Developing Countries ◽  
Economic Development ◽  
Foreign Direct Investment ◽  
Developing Country ◽  
Direct Investment ◽  
Steady Increase ◽  
Policy Makers ◽  
Fdi Inflows ◽  
Reform Period ◽  
Micro Level

During the last two decades, Foreign Direct Investment (FDI) has become increasingly important in the developing world, with a growing number of developing countries seeking in attracting substantial and rising amounts of inward FDI. Furthermore, FDI has become the most important source of finance that can contribute to economic development. Recognizing this, all the governments want to attract it. India as a developing country is not an exception in this regard therefore study the different aspects of FDI can be helpful for policy makers in macro as well as micro level. Since 1990, FDI has been considered as the most powerful driver of economic development. While India has seen a steady increase in FDI inflows in the post-reform period, therefore, this study tries to analyze the regional and sectoral disparities in Inflow of FDI in India since 1990. The analysis showed that there is a disparity between states in India and it also indicates a shift from primary and secondary sectors to tertiary sectors and pervasive computing areas.

Do surges in foreign direct investment inflows lead to surges in economic growth? Evidence from developing countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jagadish Prasad Sahu
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Domestic Investment ◽  
Fdi Inflows ◽  
Content Type ◽  
Regression Methods ◽  
Recursive Bivariate Probit ◽  
Rapid Economic Growth

Purpose The purpose of this paper is to examine whether surge in foreign direct investment (FDI) inflows leads to surge in economic growth in 52 developing countries for the period 1990-2014. Design/methodology/approach The author used a threshold approach to identify surge incidences in gross domestic product (GDP) per capita growth rates and FDI inflows (measured as percentage of GDP) for each country included in the sample. Three different criteria are used to identify surge instances. As a preliminary analysis the author used the probit and complementary log–log regression methods to estimate the likelihood of growth surge occurrence. To correct the potential endogeneity problem the author jointly estimated the growth surge and FDI surge equations using the recursive bivariate probit (RBP) regression. Findings The author found that East Asia and the Pacific region has highest rate of growth surge incidences followed by South Asia. The results suggest that surge in FDI inflows significantly increases the likelihood of growth surge. The finding is robust to alternative surge definitions and methods of estimation. Practical implications The analysis reveals that inbound FDI flow is a critical driver of economic growth in developing countries. Large FDI inflows matters for achieving rapid economic growth. Therefore developing countries should adopt favourable policies to attract more FDI. Policymakers should focus on improving the investment climate of the country to boost domestic investment and to attract larger amount of FDI into the economy. Originality/value To the best of the author’s knowledge this is the first study to examine whether surge in FDI inflows stimulates surge in economic growth in developing countries. The analysis reveals that FDI surge is a robust predictor of rapid economic growth in developing countries.

Structural Economic Vulnerability, Trade Policy and FDI Inflows

2017 ◽  
Vol 08 (01) ◽  
pp. 1750005 ◽  
Author(s):  
Sèna Kimm Gnangnon ◽  
Harish Iyer
Keyword(s):  
Trade Policy ◽  
Direct Investment ◽  
Developed Countries ◽  
Trade Policies ◽  
Least Developed Countries ◽  
Host Countries ◽  
Fdi Inflows ◽  
Economic Vulnerability ◽  
National Governments ◽  
The Empirical Analysis

This paper investigates two questions: first, how does countries' structural economic vulnerability (EVI) affect their foreign direct investment (FDI) inflows; second, how does EVI influence FDI inflows when host countries further liberalize their trade policies. The empirical analysis provides evidence that EVI influences negatively FDI inflows and that, in the context of greater trade policy liberalization, this vulnerability deters FDI only when it exceeds a certain threshold. These results call for enhanced cooperation between national governments and the international community to address developing countries, least-developed countries' EVI in order to ensure greater FDI inflows, which are critical for their economic development.

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