Understanding FDI in Socialist Nations

2021 ◽  
pp. 246-272
Author(s):  
Jayanth Narendra Deshmukh
Keyword(s):  
Economic Growth ◽  
Direct Investment ◽  
Developing Nations ◽  
Economic Policies ◽  
Strategic Decisions ◽  
Foreign Investors ◽  
Institutional Conditions ◽  
Entry Requirements ◽  
Set Up ◽  
Over Time

The link between foreign direct investment and economic growth has been widely studied. The studies have provided insights into how developing nations enable growth by adjusting policies to entice investors. Foreign investors entering emerging markets have to make strategic decisions on how to set up their operations. Investors look for markets and countries that would maximize their returns and position themselves as leaders in the industry. Hence, understanding entry requirements and economic policies are vital to understanding FDI. Keeping this in mind, this chapter analyses FDI in socialist nations and how their policies have evolved over time. The chapter will analyze the motivations and trends in FDI and how institutional conditions have enabled or impeded growth. The chapter studies China and Vietnam and compares their approach to FDI. The chapter uses Eclectic Theory posited by Dunning to understand changes in policies and how socialist nations are evolving to accept FDIs. The chapter concludes with a comparison section and presents scope for further research.

scholarly journals What worth is a BIT? Impact of BITs on FDI Inflows into India

2018 ◽  
Vol 4 (02) ◽  
Author(s):  
Anshuman Kamila ◽  
Mitali Chinara
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Best Practice ◽  
Foreign Investors ◽  
Fdi Inflows ◽  
New Model ◽  
Indian Model Bit ◽  
The Government

Developing countries often consider foreign direct investment (FDI) as an engine to boost economic growth. Therefore they try to promote investment inflow by various means. One approach is to offer investment guarantees to foreign investors using Bilateral Investment Treaties (BITs). Following international best practice, India has signed a number of BITs to stimulate inflow of FDI. Till date, the Government of India has signed BITs with 83 countries. These BITs were largely negotiated on the basis of the Indian Model BIT of 1993. There have been recent moves that point in the direction of India fundamentally altering the text of its BITs with countries, including calling off existing BITs and approving a new model BIT. However, concerns have been raised as to the possible pernicious impact of these changes on the inflow of FDI into India. This paper investigates whether the concern is warranted at all – by asking if BITs significantly impact the inflow of FDI. It is established that BIT is indeed a veritable boost to FDI inflow, and the estimated coefficient remains significant and robust across econometric specifications. Therefore, a note of caution is sounded for the rejigging exercise involving BITs that has been initiated by India.

scholarly journals Examining the impact of Exports and Exchange rate on Economic Growth of Turkey

2020 ◽  
Author(s):  
Iftikhar Muhammad ◽  
Malik Shahzad Shabbir
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Granger Causality ◽  
Direct Investment ◽  
Economic Policies ◽  
Long Run ◽  
Short Run ◽  
Auto Regressive ◽  
The Impact

Abstract Purpose This study intends to analyze the long-run and short-run relationships along with the identification of causal links between exports, economic growth, and exchange rate in Turkey. Data/Design: This study uses auto-regressive distributed lags (ARDL) and Granger causality over time series monthly data from the year 2010–2018. The results indicate that exports are significantly positively related to economic growth while the exchange rate is found to be negatively related to economic growth. Findings: Moreover, findings from the test of Granger causality indicate that a unidirectional causal association is found from exports to foreign direct investment and economic growth and from economic growth to foreign direct investment. The Granger causality results indicate that an increase in exports accelerates the economic growth of Turkey and a change in growth rate and exchange rate leads to a change in foreign direct investment. Originality of work: The overall findings suggest that exports should be promoted along with the liberal-investment economic policies to boost the overall economic growth in Turkey.

scholarly journals A közvetlen külföldi befektetések és a korrupció közötti kapcsolat (The connection of Foreign Direct Investment and corruption)

2011 ◽  
pp. 4-14
Author(s):  
Viktória Erdődi-Kovács ◽  
Krisztina Hegedűs
Keyword(s):  
Foreign Direct Investment ◽  
Risk Factor ◽  
Negative Correlation ◽  
Direct Investment ◽  
Quantitative Methods ◽  
Additional Risk Factor ◽  
Foreign Investors ◽  
Additional Risk ◽  
Set Up ◽  
The Cost

A szerzők tanulmányának középpontjában a közvetlen külföldi befektetések és a korrupció kapcsolata áll. Feltételezésük az, hogy a közvetlen külföldi befektetők a kevésbé korrupt országokat kedvelik, mivel a korrupció egy további kockázati tényezőt jelent a befektetők számára, amely növelheti a befektetések költségeit. Megítélésük szerint ezt kvantitatív módszerekkel érdemes vizsgálni, így elemzésük során 79 országot vizsgálnak meg tíz évre vonatkozó átlagokkal a Gretl-program és az OLS becslőfüggvény segítségével. Több modell lefuttatása után azt az eredményt kapták, hogy a közvetlen külföldi befektetők döntéseiben a korrupció szignifikáns tényező, a két változó között negatív korrelációt figyeltek meg. / === / The study focuses on the connection of Foreign Direct Investment and corruption. The authors assume that investors prefer countries where corruption level is lower, as corruption an additional risk factor that might increase the cost of investment. They believe that the best way to prove the previous statement if they use quantitative methods, so they set up a model where 79 countries are tested for 10 years averages, with the help of the Gretl and OLS estimator. After running several models their finding was that corruption is a significant factor in the decisions of foreign investors, and there is a negative correlation between corruption and FDI.

scholarly journals Penanaman Modal Dan Pertumbuhan Ekonomi Tingkat Provinsi Di Indonesia

2016 ◽  
Vol 19 (2) ◽  
pp. 211
Author(s):  
Rahma Dian Hapsari ◽  
Imam Prakoso
Keyword(s):  
Economic Growth ◽  
Human Development Index ◽  
Direct Investment ◽  
Strategic Investment ◽  
Foreign Investors ◽  
Transfer Of Technology ◽  
Research Objects ◽  
Regional Product ◽  
Methods Of Moments ◽  
The Impact

<p><em>This research examines the impact whether foreign direct investment (PMA) can significantly influence the gross domestic regional product ( PDRB ) and how moderation variable of Unemployment Rate (TPT) and Human Development Index (IPM) also influence to Indonesian provinces as the research objects of this study. The data was taken from 2004-2013 (10 years). By using General Methods of Moments (GMM), this research shows PMA does not have any impact on economic growth. On the other hand, domestic direct investment (PMDN) is able to increase economic growth. This implies that PMA only funded the needs to less strategic investment sector. To boost up evenly the provincial economic growth, government should increase the incentive on investment to attract foreign investors to invest on less strategic sectors, and create incentive for domestic investors to maintain the business. Another conclusion is Indonesian workers are not developed due to the presence of PMA, and it indicates that there is no transfer of technology. Government needs to maintain PMDN and attract investors to invest in other sectors that are still not efficiently managed by PMDN.</em></p>

Exploration of Relationship between FDI and GDP: A Comparison between India and Its Neighbouring Countries

2018 ◽  
Vol 21 (2) ◽  
pp. 473-489 ◽  
Author(s):  
Pooja Sengupta ◽  
Roma Puri
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Sri Lanka ◽  
Gross Domestic Product ◽  
Direct Investment ◽  
Indian Subcontinent ◽  
Domestic Product ◽  
Economic Policies ◽  
Fdi Inflows ◽  
The Difference

Foreign direct investment (FDI) inflows have been a trigger for accelerating economic growth in a number of countries. The pattern of FDI flows into India and its neighbourhood has been varied and so has been its impact on the economic growth in each of the countries. Although a lot of research has been carried out to establish causality between FDI and economic growth, the results are sometimes varied and conflicting. This study attempted to study the pattern of FDI into the Indian subcontinent and India’s neighbours, such as Pakistan, Nepal, Bangladesh and Sri Lanka, and explore the causality between FDI and gross domestic product (GDP). The results showed that the different economic policies of the respective countries had a role to play in explaining the difference in the quantum of the flow and there is an association between FDI and GDP, and in all the cases, FDI is instrumental in enhancing the economic growth of the countries included in the study.

scholarly journals Pemasaran Kebijakan Politik Luar Negeri Sebagai Diplomasi Presiden Jokowi Untuk Menarik Investor Asing di Indonesia

2019 ◽  
Vol 4 (1) ◽  
pp. 50-73
Author(s):  
Baidawi Ahmad ◽  
Azarkasi Azarkasi
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Foreign Investment ◽  
Direct Investment ◽  
Legal Certainty ◽  
Large Area ◽  
Foreign Investors ◽  
Political Policy ◽  
Economic Diplomacy ◽  
Qualitative Descriptive

This paper wants to explain about Foreign Policy Marketing as President Jokowi's diplomacy to attract foreign investors. As we know, the Indonesian state from a geographical aspect has a very large area consisting of hundreds or even thousands of islands and straits. But the extent of the Indonesian territory has not been balanced with economic development such as infrastructure in all regions of Indonesia. This study aims to analyze the policies of President Jokowi in inviting foreign investors to invest directly in Indonesia and see the effect of foreign direct investment on foreign direct investment (FDI) on economic growth in Indonesia. The method used in this research is Qualitative Descriptive. The results or findings of this study indicate that the Marketing of Foreign Political Policy conducted by President Jokowi to attract foreign investors in Indonesia is through the economic Diplomacy Way and providing legal certainty for Foreign Investors investing in Indonesia and Foreign Investment can improve Infrastructure in Indonesia.

scholarly journals Study of Population Growth Impact on Economic Growth during (2003-2017) in Afghanistan

2021 ◽  
Vol 8 (1) ◽  
pp. 49-56
Author(s):  
Ahmad Farid Morwat
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Foreign Direct Investment ◽  
Population Growth ◽  
Direct Investment ◽  
National Income ◽  
Estimation Method ◽  
Special Importance ◽  
Demographic Changes ◽  
Over Time

Achieving high economic growth is one of the significant purposes, which all countries seek to achieve, and achieving it requires a realistic analysis of country’s economy and a better understanding of the principles and rules of economic growth. Meanwhile, demographic changes over time, as one of the most important issues impacting different parts of societies gaining special importance so that demographic changes can be tangible in investment, saving, and overly in economic growth. The relationship between population growth and economic development has been analyzed theoretically and empirically over time by different economists. Some economists believe which fast population growth prevents economic growth; while others believe, that population growth leads to economic growth due to increased demand, level of production and national income. The aim of this study was to investigate impact of population growth on economic growth during (2003-2017) in Afghanistan. In this study, it has been used the data which provided by World Development Index (WDI) Central statistics, books, journals, scientific and research journals and other related articles. For measuring the GDP growth and simple model squares estimation method from programs such as Excel, Eviews and Pass have been used indeed. Economic growth as a dependent variable, population growth, unemployment average, and foreign direct investment as an explanatory (independent) have been implemented. The outcomes showcase that population growth has a positive effect on economic growth (1%) increase in population growth which causes economic development in order to increase 2.4%. On the other hand, according to obtained results from model summary; gained determination is 0.921. It means the dependent variable of economic growth is elaborated almost 92% by independent variables of population growth, unemployment, and foreign direct investment. This demonstrates strong population growth impact on economic growth and its correlation intensity is almost 1.

scholarly journals Foreign Direct Investment in Pakistan: Policies and Trends

1997 ◽  
Vol 36 (4II) ◽  
pp. 959-985 ◽  
Author(s):  
Ashfaque H. Khan
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Labour Force ◽  
Political Stability ◽  
Business Environment ◽  
Sharp Change ◽  
Economic Policies ◽  
Foreign Investors ◽  
Macroeconomic Imbalances

Recent years have seen a sharp change in the attitude of developing countries regarding Foreign Direct Investment (FDI).. The growing balance-of-payments difficulties as well as the decline in concessional ajd. have forced many developing countries to reassess their stances on FOI and to take substantial unilateral steps to Iiberalise their inward POI regimes. In spite of liberalising the inward FOI regime, tempering or removal of obstacles to foreign investors, and according liberal incentives, Pakistan's has been a lacklustre performance in attracting FDI. This paper attempts to find out the reasons why Pakistan has not been able to attract sufficiently large FOI despite liberalisation measures. The analysis identifies a number of factors responsible for low FDI in Pakistan. These include the lack of political stability particularly during the last eight years, and unsatisfactory law and order situation particularly in the. city of Karachi, the largest industrial and commercial centre and the only port of the country. The macroeconomiC imbalances and the slowing down of economic activity tog~ther with inconsistent economic policies have also discouraged foreign investors to increase their participation in Pakistan. The slow bureaucratic process, inappropriate business environment, and inadequate infrastructure facilities have played their role in discouraging foreign . investors to undertake investment initiative in Pakistan. The lack of trained, educated, and disciplined labour force, along with complicated and overprotective labour laws, have inhibited business expansion and frightened away productive investment. The cultural and social taboos as well as the quality of life are not conducive to attracting foreign investors to Pakistan. The lack of welcome to foreign investors by government agencies and officials has also been a problem.

scholarly journals THE IMPACTS OF CORRUPTION ON ATTRACTING FOREIGN DIRECT INVESTMENT

2020 ◽  
Vol 4 ◽  
pp. 10-14
Author(s):  
Najibullah Zaki
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Financial Resources ◽  
Foreign Investors ◽  
Fdi Inflows ◽  
Long Period ◽  
Different Types ◽  
Sustainable Economic Growth ◽  
Growth Economic

Investment is a macroeconomic variable and its well-known as the engine of economy that boosts economic growth, economic development and sustainable development. Investment plays an important role in the livelihood welfare of citizens. All economies require different types of investments particularly Foreign Direct Investment/ FDI in different sectors. Based on empirical researches, mostly FDI has positive impacts on the sustainable economic growth of the host economies. On one hand, FDI transfers technologies, skills, innovations, experiences, techniques and knowledge to the host economies. On the other hand, it provides host economies with stable financial resources for long period of time. Thus, it is the responsibility of governments to open their borders toward FDI inflows in order to attract this valuable financial resource. Despite the fact that countries require FDI but corruption is one of the main obstacles against it. Theoretically, there is a negative correlation between corruption and FDI inflows. In other words, corruption negatively impacts the FDI inflows and decreases FDI volume. Because, corruption increases costs and decreases benefits of FDI, corruption deteriorates the competitive trade environment; corruption discourages foreign investors through protecting domestic investors and corruption negatively effects the productivity of foreign investors. In practice, although most of the empirical researches showed that corruption negatively impacts the FDI flows. But some empirical researches also confirmed that there is a positive correlation between corruption and FDI flows. Hence, countries are responsible in fighting against corruption to attract more FDI and in return benefits their sustainable economic growth.

scholarly journals Foreign direct investment as a factor of growth: The experience of European Union countries

2004 ◽  
Vol 56 (4) ◽  
pp. 409-446 ◽  
Author(s):  
Radovan Kovacevic
Keyword(s):  
Economic Growth ◽  
European Union ◽  
Human Capital ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Empirical Literature ◽  
Domestic Saving ◽  
Foreign Investors ◽  
Fdi Inflows ◽  
New Eu Members

The empirical literature on the growth impact of foreign direct investment (FDI) suggests a strong positive relationship between the two. Yet, the lack of evidence of a clear causality from FDI to growth impedes our ability to firmly conclude that FDI inflows are a driver and not just a consequence of higher economic growth. Just as a higher return on investment typically attracts more fixed investment, it should be no surprise that it also attracts more foreign investors. Having said that, we need to acknowledge that the difficulty of finding unambiguous evidence of causality from FDI to growth does not refute the notion that such a relationship nevertheless exists. As the growth literature suggests, many different factors combine to create an environment conducive to higher economic growth. Proper policies and institutions have been found to be particularly important over longer periods of time. In this context, we need to view FDI from a broader perspective than its direct and immediate impact on growth itself. Could it not be the case, for example, that foreign investors are more demanding than indigenous firms as regards a stable and favourable policy environment, good infrastructure and an appropriate human capital stock? If governments introduce policies and create institutions with the purpose of attracting FDI, they may create an environment more generally favourable to growth even though some of this growth is not the result of FDI per se. The evidence is stronger that FDI has been boosting growth directly in Central and Eastern European countries (CEE) than in the 15 countries of the European Union (EU-15). The reason, as we have argued, is that while these countries needed to bridge the technology gap to the more advanced countries, they nevertheless met some key conditions - especially in terms of human capital - which helped them bridge this gap more quickly with the help of FDI. In addition, the sheer magnitude of net FDI inflows helped sustain a higher level of domestic investment than would have been possible on the basis of domestic saving and debt-creating capital inflows alone. While FDI is expected to continue to contribute to economic growth in the CEE countries that have joined the EU, it is less clear whether the economic gains from FDI will be as high as during the transition from plan to market. The more the new EU members come to resemble EU-15 countries in terms of inward FDI stocks as a share of GDP, productivity, efficiency and level of technology, the less likely it is that FDI will have a positive influence on economic growth beyond what is observed in more advanced market economies. That said, FDI and the associated activities of transnational corporations will undoubtedly remain an important welfare-enhancing force - both inside and outside an enlarged European Union.

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