Effects of Economic and Political Risks on Foreign Direct Investment

The chapter identifies the main determinants of FDI and the factors that constitute the main obstacles to foreign investment attractiveness in a region affected by economic and political instability and even conflict and where investors may face a multitude of political, economic, and security risks. The sample includes 14 Arab countries over the period of 2003-2017. To determine the factors that explain the probability of attracting investment inflows in MENA countries, the study uses a multiple regression model to estimate data in a time series. The authors also use the World Bank's governance indicators to assess the quality of the Arab institutional framework. The results of the panel data estimates through three different regressions reveal that macroeconomic instability combined with political instability constitutes an obstacle to investment. On practical implications, the study suggests that, in general, economic managers should take some economic policy measures to reduce or mitigate risks to encourage foreign investors to invest in MENA countries.

Factors Influencing International Institutional Investments

At the turn of the 21st century, globalization of developed and developing countries in the world witnessed institutional inflows from international investors which became the main characteristic of global capital markets. The current research has assessed time-series data from 2000 to 2017 to understand how the different elements that have influenced the foreign institutional investments and helped India become a global market for such investors. The results revealed that political risk, financial market development, trade openness of the country, size of the economy, and rate of return on investment are the important determinants in attracting foreign institutional investments in India. The chapter also found economic risk and financial market risk played an insignificant role in determining foreign institutional investment in India. The findings of the research help the present government and market regulators to introduce policies aimed at increasing the flow of funds from international institutional investors.

India-BIMSTEC Bilateral Trade Activities

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is one of the solutions to converge the economic interests of India's Look East Policy and Thailand's Look West Policy. Its objective is to integrate the regions on both sides of the Bay of Bengal. The development of BIMSTEC countries is indispensable for the forward march of Asia as a whole. This chapter analyzes the India-BIMSTEC trade activities after the establishment of BIMSTEC bloc. Gravity model and Auto-Regressive Integrated Moving Average (ARIMA) are used. The model estimates the sets of regression equations to measure the effects of regional trade agreements using ordinary least squares with nation dummies to capture country-specific fixed effects. The study reveals that all coefficients of regional dummy variables are mostly positive and significant, indicating the agreements that tend to enhance more trade than bilateral trade agreements. The authors state that based on India's trade with the BIMSTEC region, there exists a scope for intraregional trade in the future.

Economic Integration of African Economies With China and India

In recent decades, the global economy has been witnessing the emergence of the Global South, which accounted for about 40% of global trade in 2017, up from 24% in 2001. The traditional pattern of trade, generally skewed towards developed economies, has shifted to a growing South-South trade relationship. The rapidly expanding trade and investment relationship within the China-India-Africa triangle attests to this dynamic change. This study reviews China-Africa and India-Africa relations along the lines of trade flows (dynamics, structure, and destinations of exports and imports) and foreign direct investment (stocks accumulated in African countries). The authors emphasize existing problems and challenges in China-Africa and India-Africa trade and investment integration and reveal opportunities for the three sides to collaborate with an aim to spur economic growth.

Indian Ocean Rim Association

The Indian Ocean Rim Association (IORA) is a regional forum that focuses on bringing together representatives of government, business, and academia, for promotion purposes. It depends on the principles of open regionalism for strengthening trade facilitation and investment, promotion, and social development of the region. Social, cultural, political, geographical, and economic linkages exist between 22 member nations. The main objective of this chapter is analyzing India's trade potential with IORA member nations. The main outcome of this chapter is that India should concentrate on ammonium dihydrogen orthophosphate for Australia, gold and semi-manufactured for Singapore, mineral or chemical fertilizers for Thailand, tankers for Malaysia, warp knit fabrics of synthetic fibers for Indonesia, ammonium dihydrogen orthophosphate for South Africa, palm oil and fractions for Sri Lanka, Bangladesh, Mozambique, Tanzania, the United Republic of Yemen, crude palm oil for Kenya, bigeye tunas, frozen for Mauritius, and carded yarn of fine animal hair for Madagascar.

India's Export Competitiveness With BIMSTEC Countries

This chapter analyzes the export competitiveness of India against BIMSTEC countries. To identify the comparative advantage/disadvantage of India's exports with BIMSTEC countries, revealed comparative advantage (RCA) approach is used at HS 6-digit. It provides an understanding of challenges and opportunities that India's export sector faces as it becomes rapidly integrated into global markets. The study identifies those export categories in which India loses, gains, or maintains its comparative advantage with following the stages of comparative advantages. The study concludes that India's export sectors witnessed competitive positioning of some of its product, and these trends have not been uniform across all Industries. Rapid export growth of some sector does not imply that the sector is displaying high demand growth in BIMSTEC markets. In an ideal situation, there would be the emergence of an export structure that has a heavy concentration in those industries that exhibit high growth in the BIMSTEC market.

China in Africa

China's role in Africa: is it really unilateral domination or is it awakened because of the equation of the situation and interests? Then, how are the character, developments, and forms of cooperation? To answer those questions, this chapter uses a concept of inter-regionalism, in which inter-regional cooperation has several objectives namely balancing, bandwagoning, institution building, rationalizing, agenda-setting, and stabilizing. The emerging collaboration gives China an opportunity to introduce a model of interregional cooperation based on its foreign relations. China introduces a mechanism of cooperation based on “Chinese characteristic” which seems different from the Western perspective. China and Africa's interregional cooperation has been developing not only from economic reasons but has also been influenced by international politics. It is an economic cooperation alternative for Africa and international model alternative from the Chinese perspective. The last is influenced by China's international relations behavior which is based on its character.

Globalization

The chapter focuses on contemporary globalization and emerging regional cooperation initiatives in the context of economic development. The authors analyze the trends of the current globalization (new protectionism) and conflicts/contradictions between various forces involved in global economic integration. The chapter also investigates the trends, status, issues, and impacts of the de-linking project of the South initiatives (which can be seen in the forms of various regional blocks). It also provides a comprehensive treatment of the subject and recommends new perspectives on the potential developmental effects of regional cooperation and the implications of regional integration for global economic development.

Latin America

Latin America has been often termed as the lost continent but over the last two decades, both Europe and America have adjusted their policies as per the requirements and opportunities offered by these countries which shows that everything has not been lost. The geopolitical importance of these countries is also immense because of the huge oil reserves that they have apart from other important minerals and materials. These countries have also regrouped since the 1980s and developed the Atlantic Triangle and the Pacific Triangle to take advantage of their strengths. The chapter traces the development of globalization and regionalization in this continent and what it means to the current politico-economic world of today.

Empirical Analysis of Economic Cooperation

One of the crucial parts of globalization is the upsurge in the volume of Foreign Direct Investment (FDI) inflows across economies. Thus, it becomes inevitable for the mutual benefit of the countries among themselves as it promotes economic cooperation between them. Due to the favorable demography and increasing population size, MINT economies (Mexico, Indonesia, Nigeria, and Turkey) gain particular attention to FDI for GDP growth. Hence, this chapter analyzes the paramount determinants of GDP growth of MINT economies in the period of 2000-2019. To fulfill the purpose of the study, a linear regression model and pooled data analysis statistical technique are employed. GDP is taken as a dependent variable, while some key factors like inflation, unemployment, FDI, and trade openness are taken as independent variables.