scholarly journals Inward FDI: Characterizations and Evaluation

Encyclopedia ◽  
2021 ◽  
Vol 1 (4) ◽  
pp. 1026-1037
Author(s):  
Aneta Bobenič Hintošová
Keyword(s):  
Foreign Direct Investment ◽  
Host Country ◽  
Direct Investment ◽  
Home Country ◽  
Business Interests ◽  
Business Operations ◽  
New Business ◽  
Material Information ◽  
A Company

Definition: Foreign direct investment can be defined as an investment made by an entity (usually a company) incorporated in a home country in the business interests of a host country, in the form of either establishing new business operations or acquiring controlling interest in existing business assets. Foreign direct investment is expected to meet the following characteristics: (1) the capital movement is typically accompanied by further technological, material, information, financial or personnel flows; (2) the foreign direct investor effectively controls facilities abroad; and (3) the investor has a long-term interest in the host country.

Evaluating Foreign Direct Investment Projects

2018 ◽  
pp. 193-239
Keyword(s):  
Foreign Direct Investment ◽  
Host Country ◽  
Direct Investment ◽  
Home Country ◽  
Investment Project ◽  
Cash Flows ◽  
Parent Company ◽  
Investment Projects ◽  
Country Level ◽  
At Home

As explained in the foregoing chapter, once the relevant cash outflows and inflows associated with a foreign direct investment project are estimated so as to calculate the net cash flows, the desirability of the investment project should then be determined in terms of its economic profitability. Therefore, in this chapter the methods widely used in evaluating investment projects are discussed and their advantages as well as shortcomings are highlighted. Later in the chapter, evaluating foreign direct investment projects from the viewpoint of the parent company is elaborated in terms of profit and/or income transferred to the home country. The same investment evaluation techniques were applied to the net cash flows transferred to the home country of the parent company. The possible income and/or dividends to be remitted to the home country of a parent company are identified and discussed so as to reflect the viewpoints of investing parent companies when planning foreign direct investments. This two-level evaluation approach is generally followed in practice to make sure that direct investments are profitable at both host and home country levels, since an investment project that is not profitable at host country level would not be profitable at home country level either or a project that is profitable at host country level may not be profitable at home country level.

Tracing the Legacy: China's Historical Aid and Contemporary Investment in Africa

2019 ◽  
Vol 63 (3) ◽  
pp. 558-573 ◽  
Author(s):  
Pippa Morgan ◽  
Yu Zheng
Keyword(s):  
Social Capital ◽  
Foreign Direct Investment ◽  
Foreign Aid ◽  
Direct Investment ◽  
Home Country ◽  
Host Countries ◽  
Foreign Investments ◽  
Long Term Consequences ◽  
Fdi Determinants

Abstract In this article we depart from the classic model of foreign direct investment (FDI) determinants and examine the effect of sociohistorical factors on FDI. We argue that past foreign aid projects confer social capital that constitutes specific resources available to investors in the present, increasing their preferences for host countries in which their home country has accumulated more social capital. We use new data on China's historical aid in Africa to test these contentions, uncovering a positive, significant connection between China's historical aid program in Africa (1956–1999) and contemporary (2000–2015) investments by Chinese companies. While China's historical aid may have been politically driven, it has had important long-term consequences for its commercial investors. More broadly, these findings suggest a sociohistorical explanation of the puzzle of why Chinese foreign investments deviate from conventional FDI patterns.

The Effect of Home-country and Host-country Corruption on Foreign Direct Investment

2012 ◽  
Vol 16 (4) ◽  
pp. 640-663 ◽  
Author(s):  
Josef C. Brada ◽  
Zdenek Drabek ◽  
M. Fabricio Perez
Keyword(s):  
Foreign Direct Investment ◽  
Host Country ◽  
Direct Investment ◽  
Home Country

scholarly journals Challenges and Problems in the Kosovo Reality Related to Foreign Direct Investment

2015 ◽  
Vol 5 (1) ◽  
pp. 81
Author(s):  
MSc. Nexhat Shkodra ◽  
MSc. Nermin Xhemili ◽  
Dr.Sc. Myrvete Badivuku-Pantina
Keyword(s):  
Economic Development ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Technological Development ◽  
Foreign Direct Investments ◽  
Wide Range ◽  
Service Projects ◽  
Local Company ◽  
A Company

Economic development is a goal aspired by many countries of the world, Kosovo included. In attaining such goals, many countries face numerous difficulties. Amongst the most often taken paths by various countries is the attraction of foreign direct investments to the country.The term investment includes a wide range of human activities in engaging financial means into one of the areas: immoveable property, bonds and shares, manufacturing and service projects, scientific research, technological development, personnel education, etc.Different from internal investment which is engaged by domestic investors in their own territories, Foreign Direct Investment, the topic of our study, is a form of investment which generates revenues by a company in the country and an affiliate branch outside the investor’s seat. Foreign Direct Investments generate relations through the local company and its branches outside the country. Foreign Direct Investments (FDIs) are considered to be a strength giving life to economic development of a country, and especially the developing countries.They have an important role to play in a long-term development of a country, and not only as a capital source, but also in increasing competitive abilities of the domestic economy, by technological transfers, strengthening infrastructure, increased productivity and generation of new employment opportunities.

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.

FOREIGN DIRECT INVESMENT OUTFLOWS AND ENVIRONMENTAL POLLUTION: HIDDEN COINTEGRATION ANALYSIS FOR TURKEY

2021 ◽  
Vol 6 (11) ◽  
pp. 165-182
Author(s):  
Ahmet Emrah TAYYAR
Keyword(s):  
Carbon Dioxide ◽  
Foreign Direct Investment ◽  
Environmental Pollution ◽  
Environmental Quality ◽  
Carbon Dioxide Emissions ◽  
Direct Investment ◽  
Causality Relationship ◽  
Cointegration Relationship

The relationship between foreign direct investment, which is a type of cross-border and long-term investment, and environmental quality is a current issue that is heavily debated. Foreign direct invesments can ensure economic growth and development of countries, while also causing a change in environmental quality. In the research conducted, it is seen that changes in carbon dioxide emissions with foreign direct capital inflows are mainly investigated from the point of view of the host countries. However, foreign direct invesment outflows may have an impact on the environmental quality of the home country. Because foreign direct invesment outflows can enable the transfer of more environmentally friendly techonogies to the country and strengthen management skills. The impact of foreign direct investment outflows on the home country's environmental pollution is shaped by many factors (scale, technique, and composition effects). In addition to these effects, it is necessary to pay attention to the regional and sectoral distribution of capital outflows. The main aim of this study is to examine the links between Turkey's foreign direct invesment outflows and carbon dioxide emissions for the period 1990-2018. For this reason, a unit root test was applied to variables whose natural logarithm was taken. Tests showed that all series are stable of the same degree. Engle&Granger(1987) and Granger&Yoon(2002) tests were used to determine the cointegration relationship between variables. The crouching error correction model(CECM) was applied to determine the causality relationship. According to the results of the analysis; i) In terms of the Engle&Granger(1987) test, there was no long-term relationship between variables. ii) According to the Granger&Yoon(2002) test, it was determined that there is a bidirectional hidden cointegration relationship between the positive shocks of carbon dioxide emissions and negative shocks of foreign direct invesment outflows. iii) There is a bidirectional asymmetric causality relationship between the positive shocks of carbon dioxide emissions and the negative shocks of foreign direct invesment outflows. iv) It is observed that 1% negative shocks in foreign direct invesment outflows reduce positive shocks in carbon dioxide emissions by 0,26%. As a result, since negative situations in foreign direct invesment outflows have an effect on improving the quality of the environment, the environmental dimension should be taken into account in the policies to be made.

FOREIGN DIRECT INVESTMENT IN SERBIA

2021 ◽  
pp. 253-265
Author(s):  
MILOŠ PJANIĆ ◽  
MIRELA MITRAŠEVIĆ
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Financial Markets ◽  
Direct Investment ◽  
Employment Growth ◽  
Home Country ◽  
New Technology ◽  
Foreign Direct Investments ◽  
Education Innovation ◽  
National Economies

In the process of globalization, the importance of foreign direct investment has changed significantly, because today they represent one of the most important factors of competitiveness, development and application of new technology, education, innovation and economic development. As a significant form of financing national economies, foreign direct investment is a form of investment that is realized outside the home country, where one of the most important goals of both developed and especially developing countries is to attract as much foreign direct investment. A large number of developing countries, including Serbia, have liberalized restrictions on foreign investment and free trade in the last two decades, liberalized national financial markets and begun privatization processes. Due to numerous problems and consequences of economic crises they have faced, many developing countries, as well as Serbia, view foreign direct investment as one of the most important factors for stimulating trade, employment growth, openness of national economies, and establishing overall macroeconomic stability. The aim of this paper is to point out the importance and dynamics of foreign direct investments in Serbia, as well as the key incentives for their attraction. Also, in addition to the theoretical review of foreign direct investments, the effects of foreign direct investments are presented in the paper.

Economic Policy Uncertainty, Bilateral Investment Treaties, and Chinese Outward Foreign Direct Investment

2021 ◽  
Vol 94 (3) ◽  
pp. 519-557
Author(s):  
Yue Lu ◽  
Linghui Wu ◽  
Ka Zeng
Keyword(s):  
Economic Policy ◽  
Foreign Direct Investment ◽  
Host Country ◽  
Direct Investment ◽  
Policy Uncertainty ◽  
Outward Foreign Direct Investment ◽  
Bilateral Investment Treaties ◽  
Economic Policy Uncertainty ◽  
Chinese Investment ◽  
Investment Treaties

This paper examines the effect of bilateral investment treaties (BITs) in promoting Chinese outward foreign direct investment (COFDI) in the presence of rising economic policy uncertainty in China's partner countries. We postulate that the signing of BITs should help stimulate COFDI because the treaties send a credible signal to foreign investors about the host country's intent to protect Chinese investment, and make it more difficult for the host country to violate its treaty obligations. BITs that contain rigorous investment protection and liberalization provisions, in particular, should be more likely to encourage COFDI as they directly influence Chinese investors' expectations about the stability, predictability, and security of the host market. However, while BITs generally promote COFDI, host country economic policy uncertainty may also limit their effectiveness. This is because uncertainty tends to undermine investor confidence, trigger capital flows from high- to low-risk countries, and dampen commercial activities. Poisson pseudo-maximum likelihood (PPML) estimation models of the determinants of COFDI to 188 countries between 2003 and 2017 lend substantial support to our conjectures.

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