scholarly journals THE IMPACTS OF CORRUPTION ON ATTRACTING FOREIGN DIRECT INVESTMENT

2020 ◽  
Vol 4 ◽  
pp. 10-14
Author(s):  
Najibullah Zaki
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Financial Resources ◽  
Foreign Investors ◽  
Fdi Inflows ◽  
Long Period ◽  
Different Types ◽  
Sustainable Economic Growth ◽  
Growth Economic

Investment is a macroeconomic variable and its well-known as the engine of economy that boosts economic growth, economic development and sustainable development. Investment plays an important role in the livelihood welfare of citizens. All economies require different types of investments particularly Foreign Direct Investment/ FDI in different sectors. Based on empirical researches, mostly FDI has positive impacts on the sustainable economic growth of the host economies. On one hand, FDI transfers technologies, skills, innovations, experiences, techniques and knowledge to the host economies. On the other hand, it provides host economies with stable financial resources for long period of time. Thus, it is the responsibility of governments to open their borders toward FDI inflows in order to attract this valuable financial resource. Despite the fact that countries require FDI but corruption is one of the main obstacles against it. Theoretically, there is a negative correlation between corruption and FDI inflows. In other words, corruption negatively impacts the FDI inflows and decreases FDI volume. Because, corruption increases costs and decreases benefits of FDI, corruption deteriorates the competitive trade environment; corruption discourages foreign investors through protecting domestic investors and corruption negatively effects the productivity of foreign investors. In practice, although most of the empirical researches showed that corruption negatively impacts the FDI flows. But some empirical researches also confirmed that there is a positive correlation between corruption and FDI flows. Hence, countries are responsible in fighting against corruption to attract more FDI and in return benefits their sustainable economic growth.

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 Foreign direct investment as a factor of growth: The experience of European Union countries

2004 ◽  
Vol 56 (4) ◽  
pp. 409-446 ◽  
Author(s):  
Radovan Kovacevic
Keyword(s):  
Economic Growth ◽  
European Union ◽  
Human Capital ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Empirical Literature ◽  
Domestic Saving ◽  
Foreign Investors ◽  
Fdi Inflows ◽  
New Eu Members

The empirical literature on the growth impact of foreign direct investment (FDI) suggests a strong positive relationship between the two. Yet, the lack of evidence of a clear causality from FDI to growth impedes our ability to firmly conclude that FDI inflows are a driver and not just a consequence of higher economic growth. Just as a higher return on investment typically attracts more fixed investment, it should be no surprise that it also attracts more foreign investors. Having said that, we need to acknowledge that the difficulty of finding unambiguous evidence of causality from FDI to growth does not refute the notion that such a relationship nevertheless exists. As the growth literature suggests, many different factors combine to create an environment conducive to higher economic growth. Proper policies and institutions have been found to be particularly important over longer periods of time. In this context, we need to view FDI from a broader perspective than its direct and immediate impact on growth itself. Could it not be the case, for example, that foreign investors are more demanding than indigenous firms as regards a stable and favourable policy environment, good infrastructure and an appropriate human capital stock? If governments introduce policies and create institutions with the purpose of attracting FDI, they may create an environment more generally favourable to growth even though some of this growth is not the result of FDI per se. The evidence is stronger that FDI has been boosting growth directly in Central and Eastern European countries (CEE) than in the 15 countries of the European Union (EU-15). The reason, as we have argued, is that while these countries needed to bridge the technology gap to the more advanced countries, they nevertheless met some key conditions - especially in terms of human capital - which helped them bridge this gap more quickly with the help of FDI. In addition, the sheer magnitude of net FDI inflows helped sustain a higher level of domestic investment than would have been possible on the basis of domestic saving and debt-creating capital inflows alone. While FDI is expected to continue to contribute to economic growth in the CEE countries that have joined the EU, it is less clear whether the economic gains from FDI will be as high as during the transition from plan to market. The more the new EU members come to resemble EU-15 countries in terms of inward FDI stocks as a share of GDP, productivity, efficiency and level of technology, the less likely it is that FDI will have a positive influence on economic growth beyond what is observed in more advanced market economies. That said, FDI and the associated activities of transnational corporations will undoubtedly remain an important welfare-enhancing force - both inside and outside an enlarged European Union.

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 Agricultural Sector FDI and Economic Growth in Saarc Countries

2019 ◽  
Vol 8 (2S10) ◽  
pp. 116-121
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Agricultural Sector ◽  
South Asians ◽  
Secondary Data ◽  
Agricultural Products ◽  
Fdi Inflows ◽  
Important Relationship ◽  
The Relationship

The study seeks to establish the relationship between foreign direct investment to Saarc region agricultural sector and economic growth with secondary data. SAARC comprises 3% of the world's area, 21% of the world's population and 3.8% (US$2.9 trillion) making up a total of 3% of the world’s area. The country has second in all over the world in terms of agriculture position. The population obliquely all of the member states is over 1.7 billion, accounting for 21% of the world’s total population. In their 42% of the agricultural operation in SAARC nations and also 51% source of livelihood of the South Asians. The study has revealed that India alone accounts for 52 per cent of the agricultural products using the SAARC region peoples. For the present study, a total of 34 groups related to the agricultural products were selected out of the total groups. The techniques employed to analyze the data include descriptive statistic, correlation and linear forecast method. The study also revealed a positive and important relationship between economic growth and foreign direct investment flow to the agricultural sector. Thus, the study recommends that policy should focus on flexible trade policies to attract more foreign direct investment (FDI) inflows to SAARC nations. i.e. Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka including India

scholarly journals Determinant of FDI Inflows in OIC Countries

2021 ◽  
Vol 4 (1) ◽  
Author(s):  
Tania Megasari ◽  
Samsubar Saleh
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rates ◽  
Direct Investment ◽  
Trade Openness ◽  
Political Stability ◽  
Fixed Effect Model ◽  
Fdi Inflows ◽  
Macroeconomic Variables ◽  
Effect Model

This study aims to analyze the determinants of foreign direct investment (FDI) in the Organization of Islamic Cooperation (OIC) country members for the period 2005 to 2018 The determinant variables of FDI are corruption, political stability and macroeconomic variables such as inflation, exchange rates, economic growth, and trade openness. Analysis used in the study  is the fixed effect model (FEM) of the OIC data panel.The results showed that economic growth and trade openness had a significant influence on foreign direct investment (FDI), while the effects of corruption, political stability, inflation and the exchange rate have no significant effect on foreign direct investment (FDI).

scholarly journals DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN THE VISEGRAD GROUP COUNTRIES AFTER THE EU ENLARGEMENT

2018 ◽  
Vol 24 (5) ◽  
pp. 1955-1978 ◽  
Author(s):  
Weihua Su ◽  
Dongcai Zhang ◽  
Chonghui Zhang ◽  
Josef Abrhám ◽  
Mihaela Simionescu ◽  
...  
Keyword(s):  
Foreign Direct Investment ◽  
Czech Republic ◽  
Direct Investment ◽  
Labour Force ◽  
Eu Enlargement ◽  
The European Union ◽  
Macroeconomic Factors ◽  
Foreign Investors ◽  
Fdi Inflows ◽  
Visegrad Group

Considering the role of foreign direct investment (FDI) inflows in the sustainable development of a country, the main aim of this paper is to identify some macroeconomic factors that positively or negatively influence FDI in Visegrad group countries after the European Union (EU) enlargement in 2004. We employed two types of approaches in our analysis: i) time series and ii) panel data approach. According to the generalized ridge regressions estimated in Bayesian framework, the perceived corruption was a factor that influenced FDI in all the countries. In Poland, Czech Republic and Slovakia corruption came through as a serious obstacle for FDIs since 2005, but this was not the case for Hungary. Even if Hungary is perceived as a country with high influence, foreign investors seem no to care about this fact and are more interested in the quality of human resources and the possibility to increase exports. Our panel approach based on a panel ARDL model identified a significant relationship between FDI, corruption index and labour force with advanced education however this causality was only detected in the long run. According to the Granger causality in panel, the attraction of FDI inflows succeeded in generating changes in total tax rate, but the issues related to corruption were not reduced at an acceptable level for foreign investors in Poland, Slovakia, and the Czech Republic.

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.

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.

scholarly journals Foreign Direct Investment, Trade and Economic Growth: A New Paradigm of the BRICS

2015 ◽  
Vol 9 (12) ◽  
pp. 32 ◽  
Author(s):  
Akhilesh Chandra Prabhakar ◽  
Muhammad Azam ◽  
B. Bakhtyar ◽  
Yusnidah Ibrahim
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Regional Integration ◽  
Direct Investment ◽  
New Paradigm ◽  
Fdi Inflows ◽  
Long Run ◽  
Equilibrium Relationship ◽  
Development Context ◽  
Sustainable Equilibrium

<p class="zhengwen"><span lang="EN-GB">The present study begins by surveying broadly supports the assertion that regional integration in the case of the BRICS is not adequately paid attention except with very few original or significant contributions. This research examines the existing pattern in the areas of trade and investment with a view to locate in the development context. It was also essential to make a theoretical investigation on literature of trade along with the empirical one. The survey broadly supports the frequent, through usually undocumented, assertion that BRICS was an area had tended to neglect and to which they had made few if any original or significant contributions. Alongside, this study panel data on BRICSs, where the results confirm that foreign direct investment (FDI), trade and economic growth indicate the presence of long-run sustainable equilibrium relationship between them. It is thus important that policymakers to remove obstacles to FDI inflows and improve the respective absorptive capacity in order to reap maximize positive growth effects. This study also discussed that how China performed well through attracting FDI inflows and maintained trade balance. </span></p>

scholarly journals The Impacts of Bilateral Trade and Foreign Direct Investment on Malaysia’s Economic Growth: The Roles of Singapore

2021 ◽  
Vol 21 (1) ◽  
pp. 419-432
Author(s):  
Chee-Yie Wong ◽  
Hui-Shan Lee ◽  
Shyue-Chuan Chong
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Open Economy ◽  
Direct Investment ◽  
Bilateral Trade ◽  
High Income ◽  
Vector Error Correction ◽  
Vector Error ◽  
Sustainable Economic Growth ◽  
Trade And Investment

Open economy is essential for a country to achieve sustainable economic growth. There existsa bilateral tiebetween Malaysia and Singapore since 1965. Thisrelationship has made Singaporeachievedas a high-income nation that enjoys modern infrastructure and technology, skilled labour, and strong financial structure, but Malaysia is still trying to upgrade itself to become a high-income nation via open economy. Furthermore, Malaysia’s reliance on the external market has inevitablyleft the economy to be more exposed to external shock. This research analysesthe impacts of Malaysia’s bilateral trade and investment with Singapore on Malaysia’s economic growth from2008 to 2016. Vector error correction model (VECM) reveals that Malaysia’s exports to Singapore arepositive and significant on Malaysia’s economic growth and Malaysia’s OFDI in Singapore is significant but negative on Malaysia’s economic growth.However, Malaysia’s imports from Singapore and Malaysia’s inward foreign direct investment (IFDI) by Singapore have insignificant impacts on Malaysia’s economic growth. It concludes that only Malaysia’s exports to Singapore can help to increase Malaysia’s economic growth.Thus,Malaysia’sgovernment couldprovide incentives to encourage Malaysian local firms to boost the exportationsto Singapore.

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