A Two‐Dimensional Framework of National Governance and Its Effects on Attracting Foreign Direct Investment

This study seeks to analyze the role of ease of doing business in attracting foreign direct investment in the SADC region. The main goal of the study is to present new findings to corroborate whether ease of doing business factors are a significant and positive stimulus for Foreign Direct Investment (FDI). The study also proves to the role of ease of doing business to boost foreign direct investment in the SADC Region to enhance economic growth amid indications that foreign direct investment (FDI) streams in the SADC Region are diminishing rather than other economic communities all through the world, regardless of SADC’s endeavours to encourage an empowering environment for FDI. The research also verifies some hindrances such as negative gamble discernments, a troublesome business environment, and pervasive corruption as key elements given for SADC’s inability to attract and keep up with FDI. The study used panel data and therefore applied a Pooled Ordinary Least Squares (OLS) regression or a fixed effects model. The results revealed that gross fixed capital formation, political stability, corruption and gross domestic product were statistically significant towards FDI inflows into the SADC region. The study recommended that the SADC region should develop responsible foreign capital regulation which offers incentives for localized investment and lower unemployment rate by producing jobs and real income that can be used to either fuel economic growth or be saved in financial institutions.

Countries compete intensely for foreign direct investment (FDI) and perform a wide range of activities to attract it. Research on FDI promotion often overlooks the effects of advertising. To fill this gap in the literature, this study analyzes the content of FDI advertising to explain its structure. To guide the analysis, the authors use Dunning's FDI location advantages framework. This framework represents an effective prism through which to view FDI advertising, and Dunning's location advantages are reflected in advertising content. In an effort to shed more light on FDI advertising, the authors first provide an assessment of how advertising content varies by country income classification. Next, using exploratory factor analysis, they identify the five factors represented in FDI advertising: knowledge resources, market attractiveness, economic governance, infrastructure, and natural resources. The findings suggest that high-income countries tend to focus on knowledge resources, while lower-middle-income countries focus on economic governance. Upper-middle-income countries tap into both knowledge resources and economic governance while also promoting the attractiveness of their market.

We contribute to the question of why some countries are more attractive for foreign direct investment (FDI) than others by constructing a composite measure that describes a host country's attractiveness for receiving FDI. This index considers all identified major, measurable and, for our scope, comparable aspects that affect FDI decisions. As a result, we can rank 127 countries with respect to their FDI attraction. The index provides the possibility of conducting detailed strength and weakness analyses for all of our sample countries and regions. These analyses provide support to policy-makers to improve their country's attractiveness for receiving inward FDI. They also enhance the discussion of why FDI flows still remain concentrated in advanced economies and, additionally, in which areas emerging and developing economies have to improve in order to narrow the existing gap. We provide correlation and sensitivity analyses to test the quality of our composite measure. Additionally, we benchmark our index with several alternative indices. Thereby, we show that no other index tracks actual FDI activity more closely.

Data privacy and security are crucial to competitiveness in the information age, especially for Foreign Direct Investment (FDI) and firm-level competitive advantage. A systematic review and content analysis were conducted based on scientific publications. This chapter explains the intricate relationship between factor conditions, supporting industries, policies, and regulatory frameworks that contribute to its competitiveness in attracting Foreign Direct Investment (FDI). The institutional stability of data protection boosts employees' trust and reduces geopolitical and cybersecurity concerns. The approach enhances competitiveness in attracting technology-driven Foreign Direct Investment (FDI) and enables enterprises to maintain long-term profitability through secure and transparent data ecosystems. According to research, compelling data governance and privacy enable organizations to capitalize on market opportunities and mitigate risks. The chapter provides a framework for corporate leaders to integrate privacy, security, and FDI competitiveness in digital globalization.

Tanzania has become one of the best choices for foreign direct investment (FDI) in East Africa and sub-Saharan Africa in general. The country has been pulling in an average of US$627 million a year and it is one of the continent's top foreign direct investment (FDI) performers. In 2011, the FDI value in the country reached $1,095,401,000.00 and the trend has been increasing. The booming of FDI is believed to have created jobs, increased incomes and contributed significantly to the national economy. Despite that, a large number of ordinary citizens have indicated dissatisfaction with this boom in FDI, which has caused a lot of conflict between investors and the surrounding communities where projects are taking place. In addition, environmental pollution has been observed in connection with a number of new investments. This paper assesses the contribution of environmental impact assessment (EIA) in informing the policy and decision-making process with regard to the boom in FDI in the country. The main focus of the study was to investigate the quality of the EIA undertaken and the extent to which they have influenced decision making with regard to the investments in Tanzania. This was done by reviewing EIA reports and having consultations with developers and regulatory authorities. The main findings are that, despite the existence of EIA for almost all development projects in the country, few of the mitigation measures proposed in the EIA reports are implemented by the developers. The study also revealed a number of EIA reports which were weak in terms of informing decision and policy makers to ensure that FDI would result in a win-win outcome. In addition, the enforcement and monitoring of environmental management plans by the authorities responsible was weak, partly due to inadequate resources.

The Indian economy has reached in the orbit of high rate of economic growth. It is being widely acclaimed and considered as an emerging global economic power. The rate of growth recorded during the period 1950- 51 to 2020-2021 clearly indicated a tendency of steady upward trend. However, the decade of 80's emerged as a beginning of the high rate of economic growth or at least a dramatic departure from the past growth performance. This tendency had continued in the nineties and further growth stimulus has occurred in the early 21st century. Foreign direct investment is an investment made by a foreign individual or company in productive capacity of another country. It is the movement of capital across national frontiers in a way that grants the investor control over the acquired asset. As the third-largest economy in the world in PPP terms, India is a preferred destination for foreign direct investments (FDI). India's recently liberalized FDI policy permits up to a 100% FDI stake in ventures. Industrial policy reforms have substantially reduced industrial licensing requirements, removed restrictions on expansion and facilitated easy access to foreign technology and FDI. The upward moving growth curve of the real-estate sector owes some credit to a booming economy and liberalized FDI regime. A number of changes were approved on the FDI policy to remove the cap in most of the sectors. Restrictions will be relaxed in sectors as diverse as civil aviation, construction development, industrial parks, commodity exchanges, petroleum and natural gas, credit-information services, Mining etc. The future of Indian economy is brighter because of its huge human resources, rapidly upcoming service sector, availability of large number of competent professionals, vast market for every product, increasing impact of consumerism, absence of controls and licenses, interest of foreign entrepreneurs in India and existence of four hundred million middle class people. Today, India provides highest returns on FDI than any other country in the world. (Key Words:- FDI, Liberalized,Stake,Emerging Global Economic Power)

The increasing globalization of the world economy has stimulated the appetite of multinational enterprises for investing abroad, while at the same time it has forced host countries to create a more favorable environment for foreign direct investment (FDI). Net FDI in the developing countries was almost three times as large in 1991 as it was during all of the 1980s, while it increased by about 30 per cent in 1992 and 40 per cent in 1993. 1 FDI rose from 4 per cent of total net resource flows to developing countries in 1970 to 15 per cent in 1986 and 27 per cent in 1992. 2 World gross FDI inflows reached $315 billion in 1995, an increase of 40 per cent over the previous year. Inflows of FDI in the developing countries amounted to $100 billion in 1995, an increase of 15 per cent over the 1994 total. Of global FDI inflows in 1995, the industrialized countries received 65 per cent, the developing countries 32 per cent, and Central and Eastern Europe 4 per cent. FDI flows have a high degree of country concentration. About two-thirds of the outflow in 1995 came from five countries (the US, Germany, the UK, Japan, and France). The ten largest recipients of FDI inflows in 1995 also received about two-thirds of the total. China, the developing country with the largest inflow, accounted for 38 per cent of the total inflow to developing countries in 1995, while South, East, and South-east Asia accounted for 65 per cent. Only the US received a larger inflow of FDI than China in 1995. 3

This study is unique in several respects. First, it reviews the characteristics of the top 10 industries targeted for foreign direct investment (FDI) activity in the United States between 1979 and 1987. It analyzes both overall FDI activity and new plant and expansion FDI activity. The study summarizes and tests alternative hypotheses regarding the determinants of FDI in the United States by all countries, by the United Kingdom, by the European Community, by Japan, and by Canada. Large and growing product markets in an expanding economy have attracted FDI in the United States. Exchange rate movements have prompted opportunistic decisions to invest in U.S. production facilities. Investors' superior management skills appear to have prompted takeovers, while efforts to realize technological advantages of new physical capital and of relatively large operating plants have fostered plant and expansion investments. Evidence exists that a desire to circumvent current—but not potential—trade restrictions has motivated foreign direct investment. FDI activities are not associated with concentrated or heavily unionized industries. Highly protected industries have attracted heavier equity FDI by Japan and heavier new plant FDI by all sources and Canada. No evidence exists that FDI in the United States by Japan or anyone else is targeted to undercut union-dominated firms or to arrest the spread of protectionist trade policies.

Africa has emerged as an attractive destination for foreign direct investment (FDI) due to its rich natural resources, growing economies, and increasing political stability. The doors of Tanzania, one of the largest countries in Africa, have been opened to international companies in search of growing markets. Nevertheless, Tanzania has seen a low level of foreign direct investment (FDI) inflows, primarily because of its stringent policies restricting the ownership of businesses by foreign nationals. The aim of this study is to identify and explain the factors that influence FDI inflows in Tanzania, which is the country that will be the focus of the study. This study will concentrate on the independent factors of political stability, availability of natural resources, size of the economy, and transport infrastructure, as well as the dependent variable of foreign direct investment (FDI). To collect the appropriate information, five survey questions were developed for each variable. A total of 125 respondents were collected using purposive sampling. The findings of this study will inform policymakers, investors, and other stakeholders in the region about the factors that influence foreign direct investment inflows into Tanzania. The study examined the impact of transport and infrastructure, political stability, the scale of the economy, and the availability of natural resources on foreign direct investment (FDI) in Tanzania.

This study is unique in several respects. First, it reviews the characteristics of the top 10 industries targeted for foreign direct investment (FDI) activity in the United States between 1979 and 1987. It analyzes both overall FDI activity and new plant and expansion FDI activity. The study summarizes and tests alternative hypotheses regarding the determinants of FDI in the United States by all countries, by the United Kingdom, by the European Community, by Japan, and by Canada.Large and growing product markets in an expanding economy have attracted FDI in the United States. Exchange rate movements have prompted opportunistic decisions to invest in U.S. production facilities. Investors' superior management skills appear to have prompted takeovers, while efforts to realize technological advantages of new physical capital and of relatively large operating plants have fostered plant and expansion investments.Evidence exists that a desire to circumvent current—but not potential—trade restrictions has motivated foreign direct investment. FDI activities are not associated with concentrated or heavily unionized industries. Highly protected industries have attracted heavier equity FDI by Japan and heavier new plant FDI by all sources and Canada. No evidence exists that FDI in the United States by Japan or anyone else is targeted to undercut union‐dominated firms or to arrest the spread of protectionist trade policies.

Purpose– The purpose of this paper is to draw from organizational ecology and institutional theory, the authors suggest that there will be a curvilinear relationship between legal system uncertainty and foreign direct investment (FDI) attraction in Southeast Asia. The authors extend theory by arguing that this is because uncertainty will provide opportunities for FDI that seek this form of operating environment, leveraging legal system uncertainty as a basis for competitive advantage.Design/methodology/approach– The authors test and find support for the hypotheses using FDI data from nine Southeast Asian countries for the years 1995-2005.Findings– In this paper, the authors hypothesize and find that the relationship between legal system uncertainty and FDI attraction is curvilinear in nature, such that FDI attraction decreases with legal system uncertainty down to an inflection point, but then increases beyond this point; and that the relationship between legal system uncertainty and FDI attraction is moderated by government intervention in the host country economy, such that the strength of this relationship is greater when government intervention is high rather than when it is low. Implications of the findings and suggestions for future inquiry are presented.Originality/value– Conventional wisdom suggests that legal system uncertainty will negatively affect FDI attraction. However, to date, research on the effects of legal system uncertainty on FDI attraction in emerging markets has received very little attention. The aim of this research study is to shed new light on how, under certain conditions, legal system uncertainty will attract FDI in Southeast Asia.

The potential for a departure from the EU to undermine the UK's attractiveness as a location for Foreign Direct Investment (FDI) is often cited as one of the key risks were the UK to leave the EU. In weighing up the threat to FDI posed by ‘Brexit’ we assess the net gain from inward investment and the role played by EU membership in attracting FDI. In theory, FDI benefits the economy via lower interest rates, higher wages for workers and ‘spillover’ benefits boosting economy‐wide productivity. But the evidence for these benefits is ambiguous. And FDI has potential drawbacks. These include an adverse effect on the tradeable sector, reflected in a wider current account deficit, the potential to ‘crowd out’ investment by domestic firms and the fiscal cost of subsidies paid to inward investors. That almost half of FDI in the UK comes from other EU countries suggests that EU membership is not the only driver of foreign investment in the UK. Other factors include the UK's business friendly environment, as reflected in global competitiveness surveys, and a relatively deregulated labour market. Of perhaps most importance is the lure provided by the UK's large domestic economy. 80% of FDI in the UK is in sectors where sales to the EU account for less than 10% of total demand. However, FDI in manufacturing does look vulnerable to Brexit, given the importance of the EU market. Granted, manufacturing accounts for a modest share of UK FDI. But to the extent that FDI boosts productivity, a loss of inward investment in this sector is likely to come at a disproportionate cost. Our modelling suggests that in a worst case Brexit scenario, the stock of FDI could ultimately be 7% lower relative to the UK remaining in the EU, potentially knocking around ½% off the level of GDP.

With a population of more than 46 million people, Ukraine is a sizable potential market for foreign direct investment (FDI). Domestic firms are not very competitive. Together with a favorable geographic location and low costs of labor and other inputs, Ukraine offers attractive opportunities for foreign investors. This potential, however, is not yet exploited, as indicated by relatively low cumulative inflows of FDI, due to the slow progress of transition toward a market economy, a high level of corruption, absence of effective guarantees protecting foreign investors, and political instability. In the wake of the global financial crisis and recession, the Ukrainian Government introduced policy measures that can potentially make inward foreign direct investment (IFDI) to Ukraine more complicated. Overcoming the crisis, improving the investment framework, accelerating economic reforms (including transparent privatizations) and association with the European Union (EU) would all be key factors permitting Ukraine to exploit its considerable FDI potential.

The so called resource curse, the fact that countries rich in natural resources often show lower rates of economic growth compared to resource-poor countries, is commonly attributed to the low quality of governance in resource-rich countries. The Extractive Industries Transparency Initiative (EITI) was founded in 2003 to address this problem through increasing the quality of the public financial management of resource flows. By joining this initiative, governments show their willingness to reform and to improve their governance. As the quality of governance is an important factor for investors in deciding where to invest, this signal has the potential to improve a country’s appeal for foreign direct investment (FDI). This study shows in a panel of 81 countries that joining the EITI increases the ratio of FDI inflows to GDP on average by around two percentage points. This is a remarkable increase given that the average ratio of FDI inflows to GDP in the sample is five percent. The results are robust when controlling for selection bias due to the voluntary decision to join the initiative and possible endogeneity of the candidate variable.

A plethora of studies has investigated the reasons for foreign direct investment (FDI) location, yet findings are still inconclusive and sometimes even contradictory. This study offers a new perspective to better understand FDI location. As communication is at the core of any transaction, including FDI transactions, this study introduced Berlo’s communication model into the context of FDI location. Indeed, the postulated model explained a large portion of FDI location in 56 countries. To be more specific, English language proficiency, knowledge, less in-group collectivism, less uncertainty avoidance, and less assertiveness of the FDI host country population were associated with higher levels of inward FDI. Key words: Foreign direct investment, location choice, communication, language, knowledge, culture.