scholarly journals Essays on Foreign Direct Investment and Development Economics

2021 ◽  
Author(s):  
◽  
Ilkin Huseynov
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Global Financial Crisis ◽  
Geographic Distance ◽  
Trade Agreement ◽  
Risk Level ◽  
Global Risk ◽  
Access To Finance ◽  
External Finance

<p>This thesis consists of three empirical essays on Foreign Direct Investment (FDI) and Small Medium Enterprise (SME) access to finance. The first essay examines determinants of Chinese Outward Direct Investment (ODI) in infrastructure sectors. This study focuses on the role of host country institutions, macroeconomic stability and geography on attracting Chinese ODI. Utilizing micro-level project data over the years 2005 to 2016, results show that Chinese infrastructure investments are attracted to countries with a limited fiscal space but strong institutions. We also find that geographic distance, cultural proximity, Free Trade Agreement with China, country size are important factors in attracting Chinese investments. The second essay studies SME access to finance in Asia. We investigate the relative importance of external finance vis-à-vis internal finance for SME and larger firms and examine how SME characteristics associated with the extent of their bank borrowing. Results indicate that bank borrowing and line of credit availability are positively associated with financial audit, managerial experience, export participation, and ISO certificate, while it is negatively associated with foreign ownership and SME status. Our research suggests that access to finance is an important concern in Asia and government intervention targeting improvement in credit guarantee systems, monitoring and credit scoring can help easing the constraints for SME access to external finance. Finally, the third essay examines the role of infrastructure investment deals as a signaling on attracting FDI. Intriguingly, we find that infrastructure deals produce a negative signal to MNEs’ decision making for developing countries. We look for several channels in which the negative signaling effect can pass through. Findings suggest that increase in global risk aversion stemming from global financial crisis and country specific risk level are the main factors behind the negative signalling effect.</p>

scholarly journals Essays on Foreign Direct Investment and Development Economics

2021 ◽  
Author(s):  
◽  
Ilkin Huseynov
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Global Financial Crisis ◽  
Geographic Distance ◽  
Trade Agreement ◽  
Risk Level ◽  
Global Risk ◽  
Access To Finance ◽  
External Finance

<p>This thesis consists of three empirical essays on Foreign Direct Investment (FDI) and Small Medium Enterprise (SME) access to finance. The first essay examines determinants of Chinese Outward Direct Investment (ODI) in infrastructure sectors. This study focuses on the role of host country institutions, macroeconomic stability and geography on attracting Chinese ODI. Utilizing micro-level project data over the years 2005 to 2016, results show that Chinese infrastructure investments are attracted to countries with a limited fiscal space but strong institutions. We also find that geographic distance, cultural proximity, Free Trade Agreement with China, country size are important factors in attracting Chinese investments. The second essay studies SME access to finance in Asia. We investigate the relative importance of external finance vis-à-vis internal finance for SME and larger firms and examine how SME characteristics associated with the extent of their bank borrowing. Results indicate that bank borrowing and line of credit availability are positively associated with financial audit, managerial experience, export participation, and ISO certificate, while it is negatively associated with foreign ownership and SME status. Our research suggests that access to finance is an important concern in Asia and government intervention targeting improvement in credit guarantee systems, monitoring and credit scoring can help easing the constraints for SME access to external finance. Finally, the third essay examines the role of infrastructure investment deals as a signaling on attracting FDI. Intriguingly, we find that infrastructure deals produce a negative signal to MNEs’ decision making for developing countries. We look for several channels in which the negative signaling effect can pass through. Findings suggest that increase in global risk aversion stemming from global financial crisis and country specific risk level are the main factors behind the negative signalling effect.</p>

The Role of Financial Development in the Relationship Between Foreign Direct Investment and Economic Growth: A Nonlinear Approach

2019 ◽  
Vol 22 (02) ◽  
pp. 1950009 ◽  
Author(s):  
Elya Nabila Abdul Bahri ◽  
Abu Hassan Shaari Md Nor ◽  
Tamat Sarmidi ◽  
Nor Hakimah Haji Mohd Nor
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Absorptive Capacity ◽  
Direct Investment ◽  
Global Financial Crisis ◽  
Using Data ◽  
Relationship Of ◽  
The Relationship

Financial development is recognized as an absorptive capacity in the relationship between foreign direct investment (FDI) and economic growth. Therefore, FDI effect on economic growth is contingent with the level of financial development. However, existing studies also show that financial development dampens economic growth through the “too much finance harms economic growth” hypothesis. Hence, there is a question of how far financial development should be developed to optimize the benefits of FDI on economic growth. The novelty of this study is that it reexamines the role of financial development in FDI-growth relationship by including the interaction term between FDI and the nonlinearity of financial development on economic growth in the period following the 2007–2008 Global Financial Crisis. Interestingly, our results demonstrate that the nonlinear relationship of financial development on economic growth is a U-shaped curve by using data from the 2009–2013 period, for 65 developing countries, which contrast the findings from previous studies. The absorptive capacity effects work nonlinearly, in that FDI accelerates growth after reaching a certain level of financial development, and that the positive effect originates from a minimum level. The study thus suggests that the level of financial development needs to be increased since it serves as a form of absorptive capacity enabling the positive growth effects of FDI in the recipient countries.

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