scholarly journals THE EFFECT OF TAX TREATY ON FOREIGN DIRECT INVESTMENT IN INDONESIA

2018 ◽  
Vol 1 (3) ◽  
pp. 278
Author(s):  
Hutomo Nurman Satrio, ◽  
Nur Indah Lestari
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Fixed Effect Model ◽  
Foreign Direct Investment Inflow ◽  
Data Set ◽  
Middle Income ◽  
Middle Term ◽  
Middle Income Countries ◽  
Effect Model

This paper examines the effect of tax treaty, so called Perjanjian Penghindaran Pajak Berganda (P3B), on foreign direct investment inflow to Indonesia in short, middle and long term. From 67 countries that have P3B with Indonesia, we work only with 51 countries because of no longer P3B exist or lack of completed data. Using panel data set of 51 countries from 2000 to 2015 and applying fixed effect model, we find that P3B has insignificant relationship to foreign direct investment inflows in short term. However, tax treaty, both in middle and long term, have a positive relationship on Indonesia’s foreign direct investment inflow with 10%and 1% significant level, respectively. Furthermore, the data show that in all term there are Rp0 foreign direct investment inflow from corresponding countries, which are 58% countries in short terms, 61% in middle term, and 64% in long term. From all those countries that has no investment agreement, majority of them are lower middle income countries. So, Government should evaluate tax treaty that are present and consider more about macroeconomics factor from partner country before signing an agreement.

Causal Interactions Between Foreign Direct Investments, Trade, and Economic Growth

2019 ◽  
pp. 242-264
Author(s):  
Fındık Özlem Alper ◽  
Ali Eren Alper
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Panel Data Analysis ◽  
Foreign Direct Investments ◽  
Middle Income ◽  
Significance Level ◽  
Middle Income Countries ◽  
Pooled Mean Group

The main objective of this chapter is to detect the impacts of FDI and foreign trade on the economic growth of middle income countries. Therefore, this study aims to examine the relationship among economic growth, foreign direct investments, and trade in 27 middle-income countries according to the United Nations (UN) classification through panel data analysis method. According to the results of the Pedroni cointegration test, the null hypothesis suggesting no cointegration among the series at 1% significance level is rejected in all seven tests. According to pooled mean group estimator estimation results, the coefficients of foreign direct investment and trade which have long-term impacts on economic growth are also identified. Accordingly, the coefficients of both variables are statistically significant. A 1% increase in foreign direct investment and trade increase economic growth by 0.24% and 0.02%, respectively.

scholarly journals Exchange Rate, Uncertainty and Foreign Direct Investment Inflow in West African Monetary Zone

2018 ◽  
Vol 20 (1) ◽  
pp. 1-12 ◽  
Author(s):  
Perekunah B. Eregha
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Exchange Rate Volatility ◽  
Commodity Prices ◽  
Fixed Effect Model ◽  
West African ◽  
Effect Model ◽  
Exchange Rate Movements ◽  
Global Shocks

Exchange-rate movements are mostly unpredictable, and this tends to affect both trade and foreign investment flows. This is because foreign investors are unclear on the returns to investment decisions in such cases. Hence, this study examines the effect of exchange rate, its volatility and uncertainty on foreign direct investment (FDI) inflow in West African monetary zone (WAMZ). The study covers the period1980–2014, and the within estimator for the fixed effect model is employed. The study accounts for both exchange rate volatility and uncertainty measures which are anticipated and unanticipated exchange rate innovations measures, respectively. The results show that exchange-rate movements in WAMZ countries are more of unanticipated than anticipated innovations in affecting FDI inflow. Therefore, policies aimed at targeting exchange-rate stability are essential in the WAMZ countries since investors are profit maximizers; hence, investment uncertainties must be kept as low as possible. Also since WAMZ export sectors are primary products based, policies should be geared towards the diversification of the export sectors to combat unanticipated global shocks from commodity prices movement in having an effect on the exchange rate through the foreign exchange reserve channel.

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 Why Do Countries Request Assistance from International Monetary Fund? An Empirical Analysis

2021 ◽  
Vol 14 (3) ◽  
pp. 98
Author(s):  
Ifrah Siddique ◽  
Muhammad Azmat Hayat ◽  
Muhammad Zahid Naeem ◽  
Abdullah Ejaz ◽  
Cristi Spulbar ◽  
...  
Keyword(s):  
International Monetary Fund ◽  
Low Income ◽  
Positive Impact ◽  
Current Account Deficit ◽  
Fixed Effect Model ◽  
Low Income Countries ◽  
Middle Income ◽  
Middle Income Countries ◽  
Effect Model ◽  
The Imf

This paper investigates the determinants behind persistent and prolonged stays under the International Monetary Fund (IMF) program and its effectiveness, using panel data consisting of 70 countries that have requested IMF support multiple times, during the period 1980–2018. By employing panel survival analysis, we conclude that weak economic indicators, e.g., current account deficit, high debt service ratio, low GDP, are the main reasons that force a country to reach out to the IMF support program. We further extend our analysis to investigate the effectiveness of the IMF program by dividing our sample into two groups, based on income level. To overcome the issue of endogeneity, we implement the panel instrumental two-stage least squares (2SLS) fixed-effect model. In the light of our analysis, we find a contemporaneous positive impact of the IMF fund program on the economic growth of upper middle-income countries, while, for low-income countries, its contemporaneous impact is insignificant, but becomes visible over time.

Do Remittances Attract Foreign Direct Investment? An Empirical Investigation

2014 ◽  
Vol 14 (1) ◽  
pp. 1-9 ◽  
Author(s):  
Hem C. Basnet ◽  
Kamal P. Upadhyaya
Keyword(s):  
Foreign Direct Investment ◽  
Latin American ◽  
Direct Investment ◽  
Asia Pacific ◽  
African Countries ◽  
Middle Income ◽  
Middle Income Countries ◽  
Negative Effect ◽  
Using Data ◽  
Latin American Countries

Remittances are a major source of household income in many Asian, African, and Latin American countries. Households spend a significant portion of remittances on health and education. Given that human capital is one of the primary determinants of foreign direct investment (FDI) inflow, this study develops a model in which remittances are one of several determinants of the observed variation in FDI. The model is estimated using data from a group of 35 middle-income countries from Latin America, Asia–Pacific, and Africa. The estimated results ascribe no significance to remittances in explaining cross-country variation in FDI. However, geographically-disaggregated estimated results do establish a positive effect for African countries, no significant effect for Latin American countries, and a negative effect for the Asia–Pacific region.

scholarly journals Effect of Foreign Direct Investment on Bilateral Trade: Experience From Asian Emerging Economies

SAGE Open ◽  
2021 ◽  
Vol 11 (4) ◽  
pp. 215824402110544
Author(s):  
Hafiz M. Sohail ◽  
Mir Zatullah ◽  
Zengfu Li
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Emerging Economies ◽  
Direct Investment ◽  
Bilateral Trade ◽  
Fixed Effect Model ◽  
Effect Model ◽  
Trading Partners ◽  
Corruption Perception ◽  
The Relationship

This study examines the effects of foreign direct investment (FDI) on bilateral trade between East and South Asian emerging economies, including their related trading partners. We cover the bilateral data on trade and FDI from June 2001 to June 2019. We estimate an augmented gravity model of trade to examine the study sample. This study is the first to use the Mundlak approaches an alternative for the fixed effect model to empirically estimate the relationship between FDI and trade among the countries in the region. Results show that free trade agreements (FTAs) and the corruption perception index (CPI) significantly and positively affect bilateral trade. However, the distance variable has become insignificant after introducing the FTA variable to the model. This finding indicates that FTAs marginalize the effect of distance on bilateral trade between the member countries. Thus, policymakers in developing countries should encourage and liberalize FDI from developing countries to enhance the bilateral trade volume.

scholarly journals Foreign Direct Investment and Extractive Institutions

2019 ◽  
Vol 10 ◽  
pp. 36-49
Author(s):  
Jack Bowness
Keyword(s):  
Foreign Direct Investment ◽  
Latin America ◽  
Direct Investment ◽  
Manufacturing Sector ◽  
Poor Quality ◽  
Middle Income ◽  
Middle Income Countries ◽  
The People ◽  
Resource Sector ◽  
The Impact

There is a significant debate underway regarding the risks and rewards of foreign direct investment (FDI) for countries in the Global South. These discussions are particularly relevant to the people of Latin America, where the use of inward FDI as a mechanism to support economic development has had dramatic results, both positive and negative. One of the key works in the study of FDI is Robert I. Rotberg’s argument that FDI is critical to support the development of weak states; however, the applicability of this theory faces difficulty in the context of Latin America, where middle-income countries have extractive institutions (Rotberg, 2002). I use the cases of Mexico and Peru to demonstrate that for middle-income countries, extractive institutions can hamper the rewards of FDI and even exacerbate development problems or create new ones. In this regard, the sector of FDI will determine the nature of the impact. In states with extractive institutions, FDI in the natural resource sector is prone to stimulating social conflict. In states with extractive institutions, FDI in the manufacturing sector begets a situation of stagnated development, as the jobs that are introduced are of poor quality and low wages.

scholarly journals IMPACT OF MACROECONOMIC FACTORS ON FOREIGN DIRECT INVESTMENT IN SELECTED SOUTHEASTERN EUROPEAN COUNTRIES

TEME ◽  
2019 ◽  
pp. 1237 ◽  
Author(s):  
Jelena Andrašić ◽  
Vera Mirović ◽  
Branimir Kalaš
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Negative Impact ◽  
Positive Impact ◽  
Fixed Effect Model ◽  
European Countries ◽  
Market Size ◽  
Macroeconomic Factors ◽  
Effect Model ◽  
The Impact

Foreign direct investment has a significant role in Southeastern European countries. The aim of the paper is reflected in assessing the character and nature of the relationship between macroeconomic factors and foreign direct investment in Southeastern European countries. Further, the subject of paper includes the examination of the impact of selected macroeconomic variables on foreign direct investment in six countries for the period from 2000 to 2012. The selected countries are Albania, Bosnia and Herzegovina, Bulgaria, Macedonia, Romania and Serbia. The research includes an examination impact of market size, national competitiveness and employment on foreign direct investment. By using the Hausman test, it was confirmed that the fixed effect model is an appropriate model in panel analysis. Based on the result, it determined the positive impact of market size, while the industry's share of GDP and employment have a negative impact on this variable. Also, the results confirmed that only the market size of the countries significantly affected on the flow of foreign direct investment in Southeastern European countries.

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