AFRICAN STRUCTURES FOR GOVERNING FOREIGN DIRECT INVESTMENT: A CRITIQUE

African countries have warmed up to foreign direct investment (FDI) in the past two decades. In an attempt to attract more FDI, most countries have reformed their FDI policies and institutions. However, the national structures governing FDI have not been studied in-depth. This policyscience research uses a unique conceptual framework and an institutionalist approach to expose and critique national policies and institutions for FDI in Africa. The current African structures governing FDI reflect a messy web, difficult to decipher and inadequate to form a foundation for a continental regime. Policy learning and structural convergence may be essential for better FDI governance.

FDI determinants: dynamic extreme bounds analysis

PurposeThe aim of this paper is to develop a new analysis method, named dynamic extreme bounds analysis (DEBA), and to determine decisive determinants of foreign direct investment (FDI) by using this new method.Design/methodology/approachIn econometrics, the extreme bounds analysis (EBA) method is a convincing way of examining the strength of independent variables. However, the results obtained when using the EBA method contain little information, since each variable is only either strong or fragile, and some strong variables may be omitted because their significance could be undermined by just one unreasonable regression. Therefore, in order to overcome these limitations, this paper proposes DEBA, a new analysis method.FindingsThe authors employ the DEBA method to determine the factors which impact FDI in 86 countries. The authors note that in developing countries, the level of previous FDI, a high degree of openness, large market size and development of infrastructure help to attract FDI, whereas the development of domestic industry deters it. In developed countries, FDI is lured by the level of previous FDI stock, a high degree of openness, large market size, macroeconomic instability and availability of energy.Research limitations/implicationsAlthough this study is expected to contribute a new methodological approach and define the strong determinants of FDI, the study is not without limitations, such as the unavailability of data. Further studies should improve the DEBA method by developing DEBA packages for use in popular statistical software, enhancing methods for other types of data and more accurately determining the estimation order of variables. In addition, further research should expand the study's FDI model, providing more potential variables for an in-depth overview of this model.Originality/valueThis study is to contribute a new methodological approach (DEBA method) for data analysis and defining of strong determinants of FDI. The study findings are useful for governments, policy-makers and economists in formulating more attractive FDI policies.

The Development Trajectories of Thailand and Sri Lanka: A Comparative Analysis

The raison d’être to compare the development trajectories of two Asian economies, viz. Thailand and Sri Lanka, stems from the fact that both countries are in the middle-income level. Hence, a comparative analysis of the development trajectories of the two countries during 2009–2019, both being neighbours with religious and cultural affinities, as well as members in Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), has been undertaken. The key objective is to decipher key policy lessons for Sri Lanka (which has been in the lower middle-income group) from Thailand’s development path (which has placed the latter in the upper middle-income group). This article also elucidates the key drivers of economic growth along with the challenges that the two countries must contend with, to attain higher growth levels. Economic drivers, such as tourism, foreign direct investment (FDI) policies and political stability are concomitant for their development.

Government Partisanship, Unionization and the Structure of Investment Liberalization

Governments in advanced industrial democracies generally regulate foreign direct investment (FDI) inflows with two types of policy measures: entry barriers and post-establishment restrictions. This article provides an integrated account for the two types of FDI restrictions, which is largely absent in the existing literature. We argue that the government's choice of FDI policies is shaped by a compound effect of the incumbent's ideological orientation and the political influence of unionized labour. Although inward FDI broadly benefits domestic workers, the entrance of multinational corporations (MNCs) adversely impacts the unionized interests of labour by transforming the labour market in ways detrimental to unions’ wage-bargaining leverage. Leftist governments, driven by the preferences of their labour constituency, tend to lift entry barriers to FDI in order to promote capital inflows. At the same time, leftist governments may also need to address unions’ concerns about inbound MNCs by tightening post-establishment restrictions on FDI, which impose constraints on the globalized business and operational model of MNCs. We argue that leftist incumbents generally liberalize entry barriers but tighten post-establishment restrictions when the level of labour unionization is high. We found evidence consistent with our argument from country-level and sector-level analysis of FDI restrictions, using a sample from the early 2000s to the mid-2010s of Organisation of Economic Co-operation and Development (OECD) countries.

FDI Performance and Policy of India and China: A Comparative Analysis

The competition among countries to attract foreign direct investment (FDI) has increased significantly in the last two decades. While comparing FDI flows across countries, the comparison between India and China is a significant area of interest as these two countries enjoy strong similarities with each other in terms of population and market size and are also among the top prospective host economies for FDI inflows. However, they differ significantly in terms of their FDI performance. While China remains the largest host country in the developing world in terms of FDI inflows, India has been unable to attract comparable FDI inflows despite having a huge market. This paper analyses the aggregated as well as segregated trends in FDI inflows of both the countries and also presents a comparative analysis of the two countries in terms of their FDI policies and other macroeconomic factors. The analysis reveals that India needs further liberalization of its FDI policy and norms