Can the Post-COVID FDI Boost the Indian Economy?

Ever since the liberation of trade policies in India, Foreign Direct Investments (FDI) has been crucial in the growth of the economy, both at the macro as well as sector level. The association between FDI and economic growth is an area of interest globally. The investment decisions are affected by several national and international events that add to the volatility of the number of inflows. COVID-19 pandemic severely impacted the intensity of FDI inflows. But the strong resilience by our government manifested in crucial policy reforms and proactive decision-making minimized the impact. This article examines the potential impact of FDI on crucial macroeconomic variables using the Computable General Equilibrium (CGE) Model. Introducing the policy shock of $90 billion into the model, an increase of 5.68% per annum in GDP is estimated. Findings indicate that the impact of FDI shall be favourable to a large number of sectors mainly metals, construction, motor vehicle, computers, and electronics in terms of increased output, exports, and employment opportunities. The study offers logical implications for the policymakers to continue strengthening their moves to attract FDI.

The Impacts of FDI Inflows on Carbon Emissions: Economic Development and Regulatory Quality as Moderators

With the accelerated development of the global economy, environmental issues have gradually become prominent, which in turn hinders further high-quality economic development. As one of the important driving factors, cross-border flowing foreign direct investment (FDI) has played a vital role in promoting economic development, but has also caused environmental degradation in most host countries. Utilizing panel data for the G20 economies from 1996 to 2018, the purpose of this study is to investigate the impacts of FDI inflows on carbon emissions, and further explore the influence channels through the moderating effects of economic development and regulatory quality. To produce more robust and accurate results in this study, the approach of the feasible generalized least squares (FGLS) is utilized. Meanwhile, this study also specifies the heteroscedasticity and correlated errors due to the large differences and serial correlations among the G20 economies. The results indicate that FDI inflows are positively associated with carbon emissions, as well as both economic development and regulatory quality negatively contribute to the impacts of FDI inflows on carbon emissions. It implies that although FDI inflows tend to increase the emissions of carbon dioxide, they are more likely to mitigate carbon emissions in countries with higher levels of economic development and regulatory quality. Therefore, the findings are informative for policymakers to formulate effective policies to help mitigate carbon emissions and eliminate environmental degradation.

Trends and Determinants of FDI with Implications of COVID-19 in BRICS

Foreign direct investment (FDI) movement to any country is recognized as an important criterion for economic strength and potentiality. Hence, the present study analyzes the motives of FDI inflows through the determinants and channels, namely horizontal or vertical FDIs and the impact of COVID-19 on FDI Inflows in BRICS countries during the period 1990–2020. The Kinked Exponential (deterministic) trend, and Zivot and Andrew’s trend equations are applied for the growth analysis of FDI inflows. Regarding the estimation of channels of FDI inflows in terms of horizontal, vertical, and hybrid motivations, dynamic panel data analysis using GMM for BRICS economies together and ARDL-PMG for individual countries is made. The findings show significantly positive growth in FDI inflows in all BRICS countries except India during the first decade of the present century. After that, these countries have experienced either significantly or insignificantly declining trends, except India, where the trend has significantly increased during this later period. From the overall analysis, we see that both horizontal and vertical motivations play a dominant role in determining FDI inflows for the BRICS countries. However, from country-wise estimations, it is observed that both horizontal and vertical motives are dominant factors for FDI inflows to India and Russia. In contrast, the horizontal motive of it is significant for China. For Brazil and South Africa, no motive behind FDI inflows appears significant. The pandemic situation significantly impacts attracting FDI in Brazil, while it remains insensitive in the rest of the BRICS countries. The findings reveal that FDI determinants are country-specific. So, the BRICS countries can design proper FDI policy and adopt more reforms in attracting FDI that may help improve their economic situation.

Investigating the determining factors of sustainable FDI in Vietnam

PurposeThe main purpose of this paper is to analyze the sustainable inward FDI pattern of Vietnam.Design/methodology/approachThis paper intends to analyze the sustainable FDI pattern of Vietnam using the gravity theory and panel data approach for the annual data over the period of 2007–2020.FindingsVietnamese FDI volume is positively affected by political and social factors, globalization and green energy consumption, while geographical distance is a major obstacle to the increase of FDI inflows of the country.Practical implicationsAs the main practical policy implications, issuing policies for sustainable economic growth, launching the novel strategy of green FDI neighborhood policy and regionalism through free trade agreements are recommended.Originality/valueTo the best of author's knowledge, there has not been any in-depth academic study focusing on the Vietnam's sustainable FDI. In addition, three robustness checks have been conducted to ensure the validation of empirical findings.

Economic Growth at the Expense of Environmental Degradation: Evidence from the Philippines

This study presents an empirical analysis of the impacts of three macroeconomic variables namely, Gross Domestic Product, Foreign Direct Investment, and Urban Population on the emissions of CO2 in the Philippines from the period of 1970 to 2018. The results reveal that Gross Domestic Product and Foreign Direct Investments exhibit a statistically significant relationship with CO2 emissions. The findings of this study suggest that the Philippines’ reliance on high-polluting industries as drivers of economic growth will only worsen its environmental quality. Moreover, its weak environmental laws provide foreign investors the opportunity to exploit the environment in exchange for FDI inflows to the country. Furthermore, the results of this study support the scale effect in the Environmental Kuznets Curve hypothesis, as well as the Pollution Haven Hypothesis.

The Role of Foreign Direct Investment Inflows in Economic Growth in Malaysia

The purpose of this study is to investigate the relationship between the inflows of Foreign Direct Investment (FDI) and economic growth in Malaysia. The sample collected for this empirical study covered 30 years of data from 1991 to 2020. The secondary data was collected annually and a total of 30 observations were taken for each variable. Ordinary Least Square (OLS) regression, unit root test, several diagnostic tests and Granger causality test were used in this research to investigate the relationship between FDI inflows and economic growth. Eviews 11 was used to analyze the time series data throughout all the tests. The result showed that the inflows of FDI has a significant negative relationship with economic growth and there is no causal relationship between FDI and Gross Domestic Product (GDP). Keywords: Economic growth, FDI inflows, Granger Causality Test, Ordinary Least Square regression, Unit Root Test

The Nexus of Selected Macroeconomic Variables toward Foreign Direct Investment: Evidence from Indonesia

Foreign direct investment (FDI) inflows are a major instrument of economic growth in developing countries. Indonesia is one of the developing countries that has received more FDI with macroeconomic stability. The macroeconomic stability indicator is seen as an important factor in driving economic growth and attracting FDI inflows in Indonesia. Therefore, this study examines the relationship of selected macroeconomic variables toward the FDI in Indonesia over the period 1980-2019. Using Autoregressive Distributed Lag (ARDL), the empirical results showed that market size, domestic investment, government spending and foreign exchange rate are key factors influencing long-run FDI inflows. However, financial development revealed no relationship with FDI inflows in Indonesia. Overall findings indicated that macroeconomic variables influence FDI inflows. These findings guided policymakers in formulating new policies to ensure macroeconomic indicators' stability in driving economic growth.