scholarly journals Institutional Efficiency and Attraction of Foreign Direct Investment to Developing Countries

2019 ◽  
Vol 11 (7) ◽  
pp. 54
Author(s):  
Karima Sayari
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Institutional Quality ◽  
Efficiency Index ◽  
Panel Data Regression ◽  
Quality Of Institutions ◽  
Institutional Efficiency ◽  
The Impact

The paper estimates the impact of institutions’ quality on the attraction of foreign direct investment (FDI) to developing countries. Data Envelopment Analysis (DEA) was used to develop a new measure of quality of institutions: Institutional Efficiency Index (IEI). In order to appraise quantitatively the effect of institutional quality on FDI entry, we used a panel data regression analysis on a dataset covering 40 countries from different developing regions for which the necessary data were accessible during the period 2011-2015. The paper argues that the institutional efficiency, as a measure of institutional quality, enhances the attractiveness of developing countries to FDI. The results of this paper suggest that FDI is mainly determined by institutional quality. A host country endowed with a high quality of institutions will be more attractive to foreign investors. In order to improve their competitiveness in term of attraction of foreign investment, developing countries should work more on providing a stable environment as well as on the transparency of policy implementation regarding the entry of multinational companies. 

scholarly journals QUALITY OF INSTITUTIONS AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES: CAUSALITY TESTS FOR CROSS‐COUNTRY PANELS

2006 ◽  
Vol 7 (3) ◽  
pp. 103-110 ◽  
Author(s):  
Hea-Jung Hyun
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Panel Cointegration ◽  
Long Run ◽  
Panel Cointegration Test ◽  
Quality Of Institutions ◽  
Causality Tests ◽  
Short Run

This paper analyzes the short-run and long-run dynamics between quality of institutions and foreign direct investment (FDI) in the sample of 62 developing countries covering the period 1984–2003. Panel cointegration test and FM OLS (Fully Modified OLS) estimators are used to test for cointegration. For short‐run dynamics, we estimate error correction model using fixed effect OLS and system GMM estimators. Institutional quality and FDI are found to have bi‐directional cointegrating relationship in the long-run. However, there is no evidence in favor of short-run causality between two variables.

scholarly journals Impact of Intellectual Property Rights Institutional Quality and Financial Development on Foreign Direct Investment - Evidence from Developing Countries

2019 ◽  
Vol 7 (2) ◽  
pp. 11-22
Author(s):  
Palwasha Farooq Farooq ◽  
◽  
Arshad Hassan ◽  
Junaid Ahmed ◽  
◽  
...  
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Intellectual Property ◽  
Financial Development ◽  
Direct Investment ◽  
Institutional Quality ◽  
Property Right ◽  
Intellectual Property Right ◽  
The Impact ◽  
Patent Right

The current study explores the impact of intellectual property right, financial development and institutional quality on foreign direct investment. Data of patent index were used as a proxy of intellectual property right. Financial development index and institutional quality variables were taken from ICRG for the period of 1980- 2016, by applying pooled OLS, fixed test. Sample of 123 developing countries data set were used. The results are consistent with theory of OLI presented by Dunning 1979. The results explain more than 70 percent of FDI significance level is explained by these proxies. The only paper that identifies Patent right index is by Park (2008) that took patent index from 1960-2005. Furthermore, work is under taken where the patent right variables are taken as independent variables. On the contrary previous studies have empirically examined the effect of patent proxy effect on the creativity, innovations and the dissemination of the technology transfer. This study differs because patent index is included with institutional quality variables. Beside this the high level financial development is a catalyst in attracting FDI. Moreover, the FDI is higher in military regime, which is due to higher level of dis stability regime in the country. However, results shows that developing countries can improve regulatory quality by maintaining bureaucracy and accountability to enable them to take advantage from the external finance which further boosts the growth of economy

Korea’s Foreign Direct Investment in the Automotive Industry in China

China Report ◽  
2018 ◽  
Vol 54 (2) ◽  
pp. 175-193 ◽  
Author(s):  
Jungmin Lee ◽  
Jai S. Mah
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Technology Transfer ◽  
Automotive Industry ◽  
Direct Investment ◽  
Policy Implications ◽  
Foreign Firms ◽  
Job Opportunities ◽  
Korean Firm ◽  
The Impact

This article examines the impact of foreign-invested enterprises in the development of China’s automotive industry. It particularly focuses on the case of foreign direct investment (FDI) by a Korean firm, namely, the Hyundai Motor Company, in China. The Chinese government’s policy regarding the automotive industry allowed China’s domestic manufacturers to benefit from technology transfer, as foreign firms were not allowed to invest exclusively in China without a partnership. The contribution of Korea’s investment in China’s automotive industry would comprise the creation of job opportunities, technology transfer and the development of the automobile parts industry. Korea’s investment in the automotive industry of China has policy implications for China and other developing countries trying to expand their technology-intensive industries.

scholarly journals Impact of Foreign Direct Investment on Domestic Investment in Developing Countries

2020 ◽  
Vol 6 (9) ◽  
pp. 256-266
Author(s):  
A. Mamatkulov
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Negative Impact ◽  
Domestic Investment ◽  
Short Term ◽  
Total Investment ◽  
The Impact

Author analyzes the impact of foreign direct investment on domestic investment in host developing countries and checks whether a foreign direct investment has a “positive” or “negative” impact on domestic investment, as well as evaluating the impact of selected variables on this relationship. Using a full sample, the main conclusion of this study is that FDI does have a positive (crowding out) effect on domestic investment in this sample of developing economies. In the short term, an increase in FDI by one percentage point as a percentage of GDP leads to an increase in total investment as a percentage of the host country’s GDP of about 10.7%, while in the long term this effect is about 31% dollar terms, one US dollar represents us 1.7$ of total investment in the short term and us 3.1$ in the long term. Based on the results of this study, it was once again proved that inflation hinders domestic investment in host countries by 0.04% and 0.12% in the short and long term, respectively.

scholarly journals FOREIGN INFRASTRUCTURE INVESTMENT IN DEVELOPING COUNTRIES: A DYNAMIC PANEL DATA MODEL OF POLITICAL RISK IMPACTS

2019 ◽  
Vol 25 (2) ◽  
pp. 134-167 ◽  
Author(s):  
Weiling Jiang ◽  
Igor Martek ◽  
M. Reza Hosseini ◽  
Jolanta Tamošaitienė ◽  
Chuan Chen
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Capital Investment ◽  
Risk Mitigation ◽  
Political Risk ◽  
Dynamic Panel Data ◽  
Mitigation Strategies ◽  
Risk Indicators ◽  
The Impact

Foreign direct investment (FDI) is inhibited by political risk. Developing countries tend to experience higher levels of such risk, yet need foreign capital to generate growth. Moreover, foreign direct investment in infrastructure (FDII) – fundamental to economic growth – is particularly sensitive to political risk; characterized by high capital investment, longer investment periods, while especially exposed to mercurial shifts in government policy. Yet, no comprehensive study has been undertaken that measures the impact of political risk on FDII in developing countries. This paper addresses this lack. Twelve political risk indicators, drawn from the International Country Risk Guide Index, are used to quantify the political risk inherent to 90 developing countries, over the period 2006 to 2015. An Arellano-Bond GMM estimator is developed which measures the dollar value impact of risk on both FDI and FDII. A comparison of results confirms that FDII is generally more sensitive to risk than is FDI, however the influence of risk categories is found to vary significantly. The findings can be expected to inform infrastructure policy-makers and foreign investors alike on the dollar-impact of determinable risk levels on foreign-funded projects, and in so doing better facilitate corrective risk mitigation strategies.

Institutional quality and foreign direct investment in Ghana

2020 ◽  
Vol 30 (1) ◽  
pp. 109-122 ◽  
Author(s):  
Ibrahim Nandom Yakubu
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Institutional Quality ◽  
Principal Component ◽  
Political Stability ◽  
Single Measure ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
The Impact

Purpose This paper aims to investigate the impact of institutional quality on foreign direct investment (FDI) in Ghana for the period 1985-2016. Design/methodology/approach The study uses the autoregressive distributed lag (ARDL) approach to examine the relationship between institutional quality along with other controlled variables and FDI. Findings Evidence from the ARDL framework establishes a positive significant effect of institutional quality on FDI irrespective of the time horizon. The results also reveal a significant impact of inflation on FDI in both short and long run, while GDP per capita growth and trade are significant determinants only in the short run. Practical implications The study recommends the instigation of effective policies and strategies that seek to strengthen the quality of institutions, as this provides a conducive investment climate to attract FDI. Specifically, policies that are focused on promoting transparent legal regimes, regulatory reforms, non-corrupt institutions and political stability should be the precedence of policymakers. Originality/value In addition to being a pioneering work on the impact of institutional quality on FDI in Ghana, the main contribution of the study lies in its application of the principal component analysis to generate a single measure of institutional quality based on a number of institutional factors.

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