Outward Foreign Direct Investment in Emerging Economies

Outward Foreign Direct Investment (OFDI) has been utilized by developed economies to enter developing markets for competitive advantages. However, recent boom in OFDI from emerging economies has prompted the question as to why these economies are investing abroad? A modest amount of literature exists regarding China and India, however, Turkey being an emerging economy has been largely untapped when it comes to determinants of OFDI. This study uses the Global Competitiveness Index (GCI) to find host and home country factors which have led to OFDI from Turkey to their top 10 investment destinations for the past 10 years. The host country factors found to be significantly correlated with Turkish OFDI are innovation (Netherlands and Russia), technological readiness (Russia and UK), labor market efficiency (Netherlands), infrastructure (Netherlands), domestic market size (Germany), and exports (UK). The home factors found to be significantly correlated with Turkish OFDI are infrastructure and domestic competition.

The Determinants of Foreign Direct Investment Outflows from Turkey

The aim of this study is to specify the determinants of the outward Foreign Direct Investment (FDI) flows from Turkey. For this purpose, the ARDL Bounds Test is used in order to observe the possible relation between these flows and define potential factors that might have an effect on them. The evidences of the empirical analysis reveal that the destination countries' market size, the home country's development level, trade openness and wage rate are positively related to outward FDI while the home country's interest rate shows a negative relationship. Turkey's outward FDI is significantly determined by the opportunities of the foreign markets as well as the outstanding home country factors.

On Some Aspects of State-Owned Enterprises' Foreign Direct Investments (SOEs' FDI)

This chapter seeks to enrich the existing literature by discussing the broader context of international engagement of state-owned enterprises (SOEs). It discusses the rationale for examining foreign direct investment (FDI) done by SOEs and outlines the challenges which need to be addressed in this respect. It provides a brief overview of FDI carried by Polish SOEs. The authors applied the qualitative methodology of critical literature review and descriptive analysis of internationalization of Polish state-controlled firms. This chapter can contribute to the current studies devoted mainly to Chinese or other Asian emerging state-controlled multinationals by adding the Central and Eastern European (CEE), in particular the Polish, perspective. It concludes that given the well-recognised peculiarities of such entities adequate framework needs to be adopted to explore their foreign activities. The Polish multi-case study encompassing nine entities demonstrates that the group can be pretty heterogeneous and indeed can combine the specificity of multinational enterprises (MNEs) and SOEs.

Foreign Direct Investment in Indian Market

A number of recent studies examine technology transfer from foreign direct investment (FDI) to India's domestic industrial enterprises. This study goes further by investigating the implications of institutions for the nature of technology spillovers during 2004 - 2013. We examine three institutional features that comprise aspects of India's “special characteristics”: (1) the different sources of FDI, where FDI is nearly evenly divided between mostly Organization for Economic Co-operation and Development (OECD) countries and Mauritius; (2) India's heterogeneous ownership structure, involving state- (SOEs) and non-state owned (non-SOEs) enterprises; and (3) industrial promotion via tariffs or through tax holidays to foreign direct investment. We find robust positive and significant spillovers (as measured by total factor productivity) to domestic firms via backward linkages (the contacts between foreign buyers and local suppliers). Our results suggest varied success with industrial promotion policies. Final goods tariffs as well as input tariffs are negatively associated with firm-level productivity. However, we find statistically significant evidence of stronger productivity spillovers associated with firms that received tax breaks, suggesting that tax holidays were more successful than tariffs as an instrument to promote productivity growth in India.

Political Economy of Foreign Direct Investment

The global political economy evolves around shifting theoretical and conceptual paradigms that simultaneously reflect the ongoing globalization process involving several actors and processes. Thus the complexity of linking the theory and practice of global political economy increases, and this, in return, accelerates further the in-depth inquiries in this interdisciplinary field of research such as discussions around global governance, international economic system, international trade, global value chains, and international development among several others. More specifically, in parallel with these developments, underlying trends in the global economy point to vast developments in both theory and practice of foreign direct investment (hereinafter FDI) across regions, countries and sectors as well, which form the main focus point of this chapter which will attempt to address the complexity of linking theory with actual practice through also involving global value chains with reference to FDI between EU member states and Turkey.

The Role of Governance on Outward Foreign Direct Investment in Emerging Market Economies

Emerging market economies have clear deficit in governance infrastructure and also have an increasing trend in the amount of foreign direct investment (FDI) outflows compared with advanced countries. Hence the main issue of the study is to identify the determinants leading to the increase in FDI outflows with special emphasize given to the role of governance infrastructure. Thus, the aim of the study is to analyze the effect of governance infrastructure together with other control variables on FDI outflows in emerging market economies. It is found that improvement in all measured aspects of governance infrastructure leads to increase in FDI outflows from emerging market economies and governance infrastructure, human capital and physical infrastructure are base factors for MNCs taking outward FDI decision from emerging market economies. It is also found that FDI outflows from emerging market economies are not market or efficiency seeking; instead they are resource, labor or finance seeking.

Dilemmas on OFDI Measuring and Interpreting

Foreign direct investments (FDI) seem to have been thoroughly studied in specialised literature. However the scope of available statistical data often significantly hampers or even prevents any in-depth analysis of the phenomenon. The dynamic economic processes lead to the formation of new linkages, new organisational solutions in international enterprises that co-exist with well described and recognised forms of FDI but escape proper monitoring of statistical institutions. The chapter discusses the different concepts of measuring and interpreting FDI to provide researchers helpful guidelines how to deal with the problems of different methodological dilemmas. A main conclusion is that data provided by official statistics are insufficient and incoherent, and analysis of the scale of OFDI engagement of enterprises (especially from emerging countries) carries some risk and its results should be approached with caution. The case study of Poland's statistics has been used to portray the most significant discrepancies and problems.

Trade and FDI Between the Czech Republic and Portugal

With the collapse of communism, some former communist States of Eastern Europe managed to muddle through their way to a market economy and entered the European Union. This brought about the acceleration of Foreign Direct Investment (FDI) among the European economies and accelerated the globalization process. Although there is plenty of research on FDI and trade among countries, the aim of this chapter is to analyze how trade between Portugal and the Czech Republic have evolved over form 2000 until 2015. The chapter seeks to complement previous studies on FDI and trade as Portugal and the Czech Republic are part of the European Union, but have had different historical, cultural, and economic paths. The main conclusion of the chapter is that trade between both countries has grown significantly. The main reason affecting trade between both countries is the economic unrest Portugal has been through since 2008.

Outward Foreign Direct Investment in Post-Transition Economy

Recent two decades witnessed unprecedented changes in the economies of Central and Eastern Europe. Accelerated economic growth following systemic transformations, globalisation and liberalisation and EU integration visibly intensified international capital flows, including foreign direct investment (FDI). Intense internationalisation of an economy is usually perceived as a positive process, which – in general – gives an opportunity to accelerate growth and strengthen competitiveness. Therefore the authorities of an economy try to support FDI flows by implementing different incentives. The main goal of the chapter is to show the scale and scope of outward foreign direct investments (OFDI) of Polish companies in the light of economic transformation experience and authorities support. The chapter is organized as follows: first it presents Poland's path from centrally planned state to developed, competitive economy. Secondly, the focus is laid on support offered to companies undertaking OFDI ventures and finally on the scale and scope of Poland's outward investments.

Sourcing Strategies of Firms

The purpose of the chapter is to present recent theoretical developments in FDI theories with an emphasis on sourcing strategies of firms. It is stated that economic theory explains the existence of the so called vertical FDI as the result of market failures or transaction costs and incomplete contracts. Firms engage in foreign sourcing due to lower costs or an access to unique resources but that sourcing takes place within firms' boundaries in order to benefit from internalization advantages. Although recent theories have been developed in the context of FDI from developed countries, those new insights can be easily applied to the case of outward FDI from emerging economies as well.