The Impact Of The Economic Determinants On FDI Inflows In Developing Countries:, Algeria As A Model In The Period 1990 - 2017

PurposeThe present paper seeks to investigate the impact of International Financial Reporting Standards (IFRS) adoption on the foreign direct investment (FDI) in the Gulf Cooperation Council (GCC) region for the period 1980–2017. This study relies on the information asymmetry theory, according to which IFRS adoption, as a positive signal for investors, should attract more FDI. This research is crucial and presents an interesting framework for providing a major motivation for empirical insights since the macroeconomic evidence on the impact of IFRS adoption on FDI is still unclear in the GCC region and no empirical evidence has been provided in the existing related literature.Design/methodology/approachThe analysis was conducted based on panel data from GCC countries over the period 1980–2017 and using the autoregressive distributed lag (ARDL) modeling approach and the pooled mean group (PMG) estimation method.FindingsThe findings indicate that the decision of adopting IFRS in GCC countries has a positive impact of 3% on FDI inflows in the short run. However, the adoption of IFRS in the region leads to a decrease of 10.4 % in FDI inflows in the long run.Practical implicationsThese findings should be of a major interest to regulators and policymakers in GCC countries, practitioners and academic researchers, international investors, managers and any other interested groups about the accounting environment in GCC countries and other developing countries having an interest in the economic consequences of IFRS adoption, as a driver of FDI, in developing countries.Originality/valueThis investigation provides original empirical evidence on the effect of IFRS adoption on FDI inflows within the context of the GCC area. In fact, the current international literature is lacking empirical evidence on the effect of IFRS adoption on FDI inflows for the GCC countries as a whole. Furthermore, this study offers an original methodological contribution to the macroeconomic impact of IFRS adoption literature by using the PMG estimator since there has been no research works to date that has used this method of estimation.

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Intellectual Property Rights, Investment Climate and FDI in Developing Countries

International Business Research ◽

10.5539/ibr.v3n3p201 ◽

2010 ◽

Vol 3 (3) ◽

pp. 201 ◽

Cited By ~ 15

Author(s):

Samuel Adams

Keyword(s):

Developing Countries ◽

Intellectual Property ◽

Property Rights ◽

Intellectual Property Rights ◽

Patent Protection ◽

Investment Climate ◽

Fdi Inflows ◽

The Many ◽

The Impact ◽

Positive Effect

What is the impact of intellectual property rights (IPR) protection on foreign direct investment (FDI)? Has the coming into effect of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) had any impact on FDI inflows in developing countries? This paper answers these questions by the use of panel data for a cross – section of 75 developing countries over a period of 19 years (1985 – 2003). The results of the study indicate that: 1) strengthening IPR has a positive effect on FDI; 2) the impact of patent protection on FDI after the TRIPS agreement is far and above that of the pre – TRIPS era; 3) the degree of openness, growth rate of the economy and investment are also key determinants of FDI. The findings of the study suggest that strengthening IPR is only one component of the many factors needed to maximize the potential of developing countries to attract FDI.

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The Economic Determinants of Foreign Direct Investment in Developing Countries and Transition Economies

The Pakistan Development Review ◽

10.30541/v46i3pp.285-299 ◽

2007 ◽

Vol 46 (3) ◽

pp. 285-299 ◽

Cited By ~ 17

Author(s):

Ismail Çevis ◽

Burak Çamurdan

Keyword(s):

Developing Countries ◽

Foreign Direct Investment ◽

Transition Economies ◽

Direct Investment ◽

Inflation Rate ◽

Macroeconomic Policy ◽

Host Countries ◽

Fdi Inflows ◽

Economic Determinants ◽

Previous Period

The economic growth rates have dramatically increased in developing economies, such as in Latin American, Asian, and Eastern European countries, following the financial liberalisation attempt, especially during the 1990s. Foreign direct investment (FDI) has become an increasingly important element for economic development and integration of developing countries and transition economies in this period with the world economy. The main purpose of this study is to develop an empirical framework to estimate the economic determinants of FDI inflows by employing a panel data set of 17 developing countries and transition economies for the period of 1989:01-2006:04. In our model there are seven explanatory economic variables. They are, respectively, the previous period FDI (the pull factor for new FDI), GDP growth (measures market size), Wage (unit labour costs), Trade Rate (measures the openness of countries), the real interest rates (measures macroeconomic policy), inflation rate (as country risk and macroeconomic policy), and domestic investment (Business Climate). Hence, throughout the paper, only the economic determinants (being separated and apart from the other studies in the literature) of FDI inflows to developing countries and transition economies are studied. It is found out that the previous period FDI which is directly related to the host countries’ economic resources is important as an economic determinant. Besides, it is also understood that the main determinants of FDI inflows are the inflation rate, the interest rate, the growth rate, and the trade (openness) rate and FDI inflows give power to the economies of host countries.

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Developing Countries' Attractiveness for Foreign Direct Investment - Debt Overhang and Sovereign Risk as Major Impediments?

The Pakistan Development Review ◽

10.30541/v30i4iipp.1145-1158 ◽

1991 ◽

Vol 30 (4II) ◽

pp. 1145-1158 ◽

Cited By ~ 6

Author(s):

Peter Nunnenkamp

Keyword(s):

Developing Countries ◽

Foreign Direct Investment ◽

Direct Investment ◽

Sovereign Risk ◽

Financial Flows ◽

Fdi Inflows ◽

Debt Overhang ◽

Private Lending ◽

The Impact ◽

The Empirical Analysis

With declining debt inflows, foreign direct investment (FDI) has again become one of the major pillars of private financial flows to developing countries (Des). This has created some expectation to replace private bank olending by FDI. However, many heavily indebted countries may not only be constrained in terms of new private lending, but also in terms of FDI inflows. In order to overcome constraints in the supply of FDI, the determinants of FDI flows have to be identified in the first place. This has been done by the Kiel Institute of World Economics in a comprehensive study commissioned by the World Bank. The present paper summarizes some of the major results for details, see Agarwal et aZ. (1991). The focus is on the impact of sovereign risk on FDI and on possible disincentives for FDI arising from a debt overhang, i.e. on those aspects that reflect the most important recent changes in international capital market conditions. The empirical analysis concentrates on the 1980s. Regressions are run for an overall sample of about 35 host Des and for various subgroups. The paper is organized as follows. Section II presents the major hypotheses. The empirical results are summarized in Sections III and IV. Finally, some policy conclusions are drawn in Section V.

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The Economic Determinants of Foreign Direct Investment in Developing Countries and Transition Economies

The Pakistan Development Review ◽

10.30541/v47i3pp.285-299 ◽

2008 ◽

Vol 47 (3) ◽

pp. 285-299

Author(s):

İSmail ÇEviŞ ◽

Burak ÇAmurdan

Keyword(s):

Developing Countries ◽

Foreign Direct Investment ◽

Panel Data ◽

Transition Economies ◽

Direct Investment ◽

Inflation Rate ◽

Host Countries ◽

Fdi Inflows ◽

Economic Determinants ◽

Determinants Of Fdi

The economic growth rates have dramatically increased in developing economies, such as in Latin American, Asian, and Eastern European countries, following the financial liberalisation attempt, especially during the 1990s. Foreign direct investment (FDI) has become an increasingly important element for economic development and integration of developing countries and transition economies in this period with the world economy. The main purpose of this study is to develop an empirical framework to estimate the economic determinants of FDI inflows by employing a panel data set of 17 developing countries and transition economies for the period of 1989:01-2006:04. In our model there are seven explanatory economic variables. They are, respectively, the previous period FDI (the pull factor for new FDI), GDP growth (measures market size), Wage (unit labour costs), Trade Rate (measures the openness of countries), the real interest rates (measures macroeconomic policy), inflation rate (as country risk and macroeconomic policy), and domestic investment (Business Climate). Hence, throughout the paper, only the economic determinants (being separated and apart from the other studies in the literature) of FDI inflows to developing countries and transition economies are studied. It is found out that the previous period FDI which is directly related to the host countries’ economic resources is important as an economic determinant. Besides, it is also understood that the main determinants of FDI inflows are the inflation rate, the interest rate, the growth rate, and the trade (openness) rate and FDI inflows give power to the economies of host countries. JEL classification: F21, R19, C23 Keywords: Foreign Direct Investment, the Determinants of FDI, the Developing Countries, Transition Economies, Panel Data Analysis

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The Impact of FDI Inflows and Outflows on Economic Growth: An Empirical Study of some Developed and Developing Countries

Journal of Raparin University ◽

10.26750/vol(6).no(1).paper9 ◽

2019 ◽

Vol 6 (1) ◽

pp. 129-157

Author(s):

Younis Ali Ahmed ◽

Roshna Ramzi Ibrahim

Keyword(s):

Economic Growth ◽

Developing Countries ◽

Panel Data ◽

Fixed Effects ◽

Positive Impact ◽

Developed Countries ◽

Fdi Inflows ◽

Panel Data Estimation ◽

The Impact ◽

Data Estimation

FDI is an investment including a long-term relationship and reflecting a lasting interest and control of a resident entity in one economy. FDI is a combination of capital, technology, marketing and management. Based on the Neoclassical, Exogenous and modern theories FDI has a positive role in accelerating economic growth and development. Many countries are improving their economy in order to attract FDI. The main objective of this study is to examine the impact of FDI inflows and outflows on economic growth of developed countries such as (USA, UK and France) and developing countries such as (Malaysia, Turkey and Iran) from (1980 to 2017). To accomplish that, ARDL approach and panel data estimation were used. The empirical findings reveal that the FDI inflows and outflows for developed countries (US and UK) have a positive impact on economic growth (GDP), while the FDI inflows of France have a negative impact. Nevertheless, FDI inflows and outflows for developing countries of (Malaysia, Turkey, and Iran) have a positive impact on economic growth. The result of panel data estimation shows that Fixed effects model is appropriate for estimating the parameters. In conclusion, Developing countries should diversify their FDI inflows and outflows to cover all the sectors and they should benefit from the developed countries’ experiences with higher impact of FDI on economic growth.

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THE IMPACT OF INSTITUTIONAL FACTORS ON FOREIGN DIRECT INVESTMENT INFLOWS: CROSS-COUNTRY ANALYSIS

CBU International Conference Proceedings ◽

10.12955/cbup.v7.1348 ◽

2019 ◽

Vol 7 ◽

Author(s):

Rogneda Groznykh ◽

Igor Drapkin ◽

Oleg Mariev

Keyword(s):

Developing Countries ◽

Foreign Direct Investment ◽

Direct Investment ◽

Developing Economies ◽

Institutional Development ◽

Institutional Factors ◽

Fdi Inflows ◽

Positive Effects ◽

Cross Country ◽

The Impact

This research paper is devoted to analysis of various institutional factors as determinants of foreign direct investment (further – FDI) inflows to different countries. The objective of the research is to estimate the effect of institutions on FDI inflows. The analysis is provided on a database of cross-country FDI inflows on 72 countries FDI-importers and 112 countries FDI-exporters in the period from 2001 to 2016. It is supposed in the paper that the impact of institutional factors might be different for the groups of developed and developing countries; since developed economies have higher institutional indicators, they tend to attract larger amounts of foreign direct investment compared to developing economies, where institutional development is at the lower level. The estimation is based on the gravity approach, which considers the positive effects of countries’ GDP and the negative effect of the distance between them. The main method used for the econometric estimation is the Pseudo Poisson Maximum Likelihood (PPML) regression, which is considered to be one of the adequate methods for estimating such data. During the research the problems of zero-observations and correlation between institutional indicators are solved. The results have shown that higher quality of institutions tends to attract more foreign direct investment to a country. Thus, institutions in developed countries have positive and significant impact on FDI attraction. At the same time, the analysis of developing countries has shown that some institutions have less significant influence on the FDI inflows. Based on the results of the research, possible recommendations for government policy on institutional improvement can be suggested.

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Risk and FDI flows to developing countries

South African Journal of Economic and Management Sciences ◽

10.4102/sajems.v11i4.285 ◽

2011 ◽

Vol 11 (4) ◽

pp. 511-527 ◽

Cited By ~ 3

Author(s):

Jay Van Wyk ◽

Anil Lal

Keyword(s):

Developing Countries ◽

Economic Freedom ◽

Inflation Rate ◽

Explanatory Power ◽

Current Account Balance ◽

Institutional Variables ◽

Fdi Inflows ◽

Macroeconomic Variables ◽

Absolute Growth ◽

The Impact

The explanatory power of institutional and macroeconomic variables for FDI stock accumulation in developing countries is investigated. Hypotheses are tested by means of pooled least squares regressions. The impact of institutional variables on FDI flows produced mixed results: levels of economic freedom facilitate inward FDI; political risk dampens investment. Some macroeconomic variables displayed significant explanatory power: market size (as measured by per capita income in the base year) and absolute growth of GDP positively impacts FDI inflows. Other key macroeconomic variables, such as lower current account balance, appreciation of host country’s currency, and lower inflation rate stimulate FDI inflows.

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Rewards of reforms: Can economic freedom and reforms in developing countries reduce the brain drain?

International Area Studies Review ◽

10.1177/2233865919846725 ◽

2019 ◽

Vol 22 (4) ◽

pp. 327-347

Author(s):

Jarand H Aarhus ◽

Tor G Jakobsen

Keyword(s):

Developing Countries ◽

Brain Drain ◽

Fixed Effects ◽

Economic Freedom ◽

Economic Determinants ◽

Economic Freedom Index ◽

Fraser Institute ◽

Fixed Effects Regression ◽

Rich Countries ◽

The Impact

The objective of this paper is to investigate the impact of economic freedom on brain drain from developing countries to rich countries. Previous literature on brain drain has examined social, political and economic determinants. However, no study in the literature so far has studied this proposed relationship. We employ the Economic Freedom Index sourced from the Fraser Institute as a proxy for economic freedom and the rate of moderately skilled and highly skilled emigration functions as a proxy for brain drain. Our sample consists of 142 countries covering the period 1990–2010. We estimate the results using a two-way fixed effects regression estimator. The results show that an increase in economic freedom is strongly associated with lower levels of brain drain from developing countries to rich countries. In addition, we find that long-term benefits associated with more economic freedom outweigh short-term costs of economic reforms when it comes to restricting brain drain.

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