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.

Economic and legal instruments for the realization of foreign direct investment in infrastructure sectors of the economy

2020 ◽  
pp. 47-55
Author(s):  
Orshanska Marіana
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
High Growth ◽  
Well Being ◽  
Gradual Improvement ◽  
Fdi Inflows ◽  
Investment Projects ◽  
Analysis And Synthesis ◽  
High Level ◽  
Fdi Attraction

The purpose of the article is to determine the nature, characteristics and keyproblems of the main types of economic and legal instruments for the realizationof foreign direct investment (FDI). the methodological basis of the study is asystematic approach to the processing and compilation of statistics and indicators,as well as methods for their comparison, analysis and synthesis and a method offorecasting decisions on the use of investment potential to increase the attractivenessand volume of FDI attraction. The scientific novelty of the research lies in theanalysis of greenfield and brownfield strategies as the main forms of FDIimplementation, the disclosure of the content and interpretation of data on thereal state of FDI attraction, the search for opportunities to improve the investmentclimate and effective mechanisms for attracting foreign investors. conclusions. Itis confirmed that the investment attractiveness and rating of the country in theinternational market are the main factors for attracting investors. Inaccessibleinfrastructure, inefficient judicial system, high level of corruption and imperfectlegislation are the main obstacles that need to be overcome in order to attractforeign investors’ funds, providing a full package of assistance and support ateach stage of the implementation of investment projects. Greenfield and brownfield(M&A) are the most effective forms of FDI in order to achieve high growth ratesof the domestic economy, improve the level of population well-being andinternationally enter Ukraine. An analysis of the statistics on the effectiveness ofinnovative enterprise development projects, the characteristics of economic andlegal instruments indicate the gradual improvement of the investment climate andthe promotion of FDI inflows into the region’s economy through the implementationof greenfield and brownfield strategies. Examples of effective implementation ofthese strategies in the creation of new enterprises, companies of foreignrepresentation, which are expanding their capacity and entering new domesticmarkets are given. Examples of the brownfield strategy have been analyzed torestart existing and high-quality structural and organizational changes in inefficiententerprises, which have given impetus to improving the economic environment,investment attractiveness of the economy of the region and the country as a whole.

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.

scholarly journals FOREIGN DIRECT INVESTMENT AND EXPORT PERFORMANCE OF THE PAKISTAN COINTEGRATION AND CAUSALITY APPORACH

2015 ◽  
Vol 11 (1) ◽  
Author(s):  
Abdur Rahman Aleemi ◽  
Keyword(s):  
Growth Rate ◽  
Foreign Direct Investment ◽  
Interest Rate ◽  
Interest Rates ◽  
Direct Investment ◽  
Export Performance ◽  
Gdp Growth ◽  
Local Market ◽  
Long Run ◽  
Gdp Growth Rate

FDI is a bridge between the world markets and local market and works as a way to increase the capabilities of the host country through investments that help in transfer of technology and creation of employment opportunities. The aim of this paper was to investigate the nexus of Foreign Direct Investment and the Export performance in the economic settings of Pakistan along in the presence of explanatory variables, based on well-established economic theory and long standing relationships. Supplementing the variables into a linear regression model, tested under the OLS and checked for the assumptions of normally and identically distributed errors, it was found that exports are positively affected by FDI and CPI whereas negatively affected by the interest rates in the case of Pakistan. Furthermore the long run relationship between the variables has been tested under the Johensen Cointegration test, which suggest that a long run relationship exist between the variables. Finally the direction of causality has been investigated with the help of Granger Causality test, indicating a bidirectional causality between CPI and interest rate, exports and interest rate, unidirectional causality from exports to CPI, CPI to GDP growth rate, interest rate to GDP growth rate, exports to FDI and exports to GDP growth rate.

Global Outward Foreign Direct Investment and Economic Development: Panel Regression Approach

2015 ◽  
Vol 5 (4) ◽  
Author(s):  
K. V. Bhanumurthy ◽  
Manoj Kumar Sinha
Keyword(s):  
Developing Countries ◽  
Economic Development ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Principal Component ◽  
Developed Countries ◽  
Annual Growth Rate ◽  
Panel Regression ◽  
Outward Foreign Direct Investment ◽  
Regression Approach

Outward Foreign Direct Investment (OFDI) is in the nature of international relocation of production. OFDI acts as a complementary input in the host country and hence aims at rational allocation of global resources. The pattern of economic development on a multilateral scale would, thus, determine the pattern of OFDI. We consider the effect of economic development on OFDI originated from developing countries, with the help of a set of socio-economic variables. With the help of Principal Component Analysis we construct a set of six composite indices, namely, human resource, infrastructure, labour, market, trade openness and resource, as determinants of OFDI. We use a panel regression approach both in terms of OFDI stock and flow. The period of study is 1990-2009. Empirical results indicate that developing countries outflow has not been growing significantly. The annual growth rate of global FDI outflows is 3.2 percent. FDI outflow is mainly from developed countries. Resource is most important determinant because it has elasticity greater than one. Resource and market variables indicate that in long run FDI focused on resource seeking and market-seeking.

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.

scholarly journals Does Corruption Act as a Deterrent to Foreign Direct Investment in Developing Countries?

2020 ◽  
Vol 11 (1) ◽  
pp. 18-34
Author(s):  
Sanjib Guha ◽  
Niazur Rahim ◽  
Bhagaban Panigrahi ◽  
Anh D. Ngo
Keyword(s):  
Growth Rate ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Growth Rates ◽  
Growth And Development ◽  
Direct Investment ◽  
High Growth ◽  
High Growth Rate ◽  
Foreign Firms ◽  
Gdp Growth

Developing countries institute policies to attract Foreign Direct Investment (FDI) that promotes growth and development. Corruption disrupts and complicates the implementation of policies that govern the inflows of FDI and the operations of foreign firms; such interference with policies is more than likely to disrupt and lower the inflows of FDI. This paper evaluates whether or not corruption reduces inflows of FDI into each and every developing country. Our study shows that developing countries with high growth rate (> 6% annual GDP growth) attract more FDI than countries with low growth rates although they are both steeped in corruption. Multi-national Corporations (MNCs) seem willing to cope with corruption in countries with high growth rates.

scholarly journals FOREIGN DIRECT INVESTMENT AND EXPORT PERFORMANCE OF THE PAKISTAN COINTEGRATION AND CAUSALITY APPORACH

2015 ◽  
Vol 11 (1) ◽  
Author(s):  
Abdur Rahman Aleemi ◽  
Keyword(s):  
Growth Rate ◽  
Foreign Direct Investment ◽  
Interest Rate ◽  
Interest Rates ◽  
Direct Investment ◽  
Export Performance ◽  
Gdp Growth ◽  
Local Market ◽  
Long Run ◽  
Gdp Growth Rate

FDI is a bridge between the world markets and local market and works as a way to increase the capabilities of the host country through investments that help in transfer of technology and creation of employment opportunities. The aim of this paper was to investigate the nexus of Foreign Direct Investment and the Export performance in the economic settings of Pakistan along in the presence of explanatory variables, based on well-established economic theory and long standing relationships. Supplementing the variables into a linear regression model, tested under the OLS and checked for the assumptions of normally and identically distributed errors, it was found that exports are positively affected by FDI and CPI whereas negatively affected by the interest rates in the case of Pakistan. Furthermore the long run relationship between the variables has been tested under the Johensen Cointegration test, which suggest that a long run relationship exist between the variables. Finally the direction of causality has been investigated with the help of Granger Causality test, indicating a bidirectional causality between CPI and interest rate, exports and interest rate, unidirectional causality from exports to CPI, CPI to GDP growth rate, interest rate to GDP growth rate, exports to FDI and exports to GDP growth rate.

scholarly journals Determinants Of Foreign Direct Investment In MENA Region: Panel Co-Integration Analysis

2013 ◽  
Vol 29 (4) ◽  
pp. 1103 ◽  
Author(s):  
Abdelkarim Jabri ◽  
Khaled Guesmi ◽  
Ilyes Abid
Keyword(s):  
Growth Rate ◽  
Foreign Direct Investment ◽  
North Africa ◽  
Direct Investment ◽  
Structural Breaks ◽  
Mena Region ◽  
Fdi Inflows ◽  
Long Run ◽  
The Relationship ◽  
Integration Analysis

<p>This paper aims<strong> </strong>to investigate the relationship between Determinants of Foreign Direct Investment (FDI) inflows and their determinants in MENA (Middle East and North Africa) region during the period 1970- 2010. Using panel data techniques, we take into account the both hypothesis economic dependencies and structural breaks. We find that the macro determinants like openness, growth rate, exchange rate, and economic instability have a long-run impact on FDI inflows in our panel.</p>

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.

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