Investigating the ‘curious’ case of civil war and foreign direct investment: evidence from Sudan

This paper investigates the impact of real effective exchange rates (REER), both in terms of levels and volatility, on foreign direct investment (FDI) inflows for a panel of 35 Indian sub-national economies over the period 2000-2013. In light of the asymmetric distribution of FDI inflows within India, we focus on examining the nexus between FDI inflows at the sub-national level and India’s competitiveness captured by REER. Our empirical analysis reveals that movements in REER have a significant and negative impact on FDI inflows, while REER volatility is found to be inducing FDI. Our results are suggestive that FDI inflows into India are largely domestic market oriented in nature. Purpose: In light of the asymmetric distribution of FDI inflows within India, we focus on examining the nexus between foreign direct investment (FDI) inflows at the sub-national level and India’s competitiveness captured by real effective exchange rates (REER). This paper investigates the impact of REER, both in terms of levels and volatility, on FDI inflows to 35 Indian sub-national economies over the period 2000-2013. Research Methodology: To examine the impact of REER on FDI inflows, we compile a panel dataset for 35 sub-national economies covering the time period 2000 to 2013. We employ panel fixed effects models to explore our relationship of interest between REER and FDI, controlling for other characteristics specific to a sub-national economy.Findings: Our empirical analysis reveals that movements in REER have a significant and negative impact on FDI inflows, while REER volatility is found to be inducing FDI. Our results are suggestive that FDI inflows into India are largely domestic market-oriented in nature. Originality/Value: Considering that India’s FDI inflows exhibit significant concentration patterns among selected regions, we exploit this heterogeneity at the sub-national level to empirically understand the determinants of FDI, with a particular focus on cost competitiveness as captured by REER. The extant literature has not explicitly focused on testing the impact of REER both in terms of its levels and volatility on FDI inflows to India at the sub-national level, especially not at the sub-national level. While admittedly the exchange rate varies only at the national level, the value-addition comes from understanding its interaction with state-varying macroeconomic indicators.

factors such as level of output, rate of saving and investment, standard of living of people, per capita income as well as national income and finally on industrial development. Pakistan is the second largest economy in the south Asia in terms of market size and availability of cheap labor force, however, failed to attract the surge of FDI inflow in the economy during last two decades. More specifically, the foreign investment comes in Pakistan generally on the basis of relation i.e. Pak -US relationship whose effect can be observed clearly during interval 2000 to 2007. Later, the financial crisis dumped the world economy resultant the developed countries channelize their investment within country to cope up with the worsening effect of financial crisis rather than concentrating on foreign investment. The prime motto behind this study is to observe the challenging effect of FDI inflow on the economy of Pakistan during most impressive period in Pakistan history in terms of foreign investment. In this study the economic growth of Pakistan is being measured by developing the econometric model over various indicators such as GDP, GDPPC, GNI, TOP during clustering period 2000 to 2012.Empirical results shows that the entrance of FDI, however, uplifted the status of GDP whereas another variables are negatively influenced during first interval i,e.2000 to 2006. On the other hand, during second interval of study i.e. 2007 to 2012 the entrance of FDI inflow strongly affected the status of GDP Per Capita, whereas other variables are negatively influenced. At last, despite of favorable investment environment and key macroeconomic fundamentals, the Pakistan is still legging continuously in attacking the large FDI inflow caused to poor infrastructure, terrorist activities, energy issues, distortion in law and orders and large security issues.

Tiesioginių užsienio investicijų Lietuvoje regioninė

PurposeTo investigate the trends of world foreign direct investment (FDI) flows during the last decades and to explore the reasons behind these trends and to examine the role of multinationals and their investment activities.Design/methodology/approachThis paper is based on the statistical data of FDI flows throughout the world and on an action field research which was also based on multinationals' investment behaviour. The FDI trends and the role of multinationals are evaluated.FindingsFDI can play a key role in improving the capacity of the host country to respond to the opportunities offered by global economic integration, a goal increasingly recognized as one of the key aims of any development strategy and an increased growth rate. World FDI inflows grew rapidly and faster than world GDP and world exports during the last two decades. There was a dramatic increase in FDI over the last decade (until 2000) which was based on globalisation and economic integration, technological improvements in communications, information processing and transportation, the changing framework of international competition and the deregulation of several key sectors. There was a dramatic decrease in FDI flows after the year 2000 due to the slowdown in the world economy. M&A deals are the most important driving factors behind overall FDI flows when at least one third (up to two third) of the total FDI flows are due to the M&A cross‐border deals.Research limitations/implicationsThe research should be also be expanded in continents (for example, Asia, America) in order to examine the multinationals' investment activities and behaviour in order to conclude about the FDI trends more thoroughly.Practical implicationsMore investment interest must be given to the developing or transition countries in which (where) the flows in absolute terms are too low. Moreover, the absence of large cross‐border merger and acquisitions in these countries, can obviously be explained by the lack of the existence of significant and well‐known large companies which could have the potential to become significant world players in the sector that they belong to.Originality/valueIt is a valuable paper for scholars, entrepreneurs and multinationals who prefer to understand the reasons behind the FDI trends and/or for the governments/politicians who prefer to create a framework in order to attract FDI flows to their countries by examining the experience of other countries.

In this study, the long termed effects of foreign direct (capital) investments inflows and outflows on the economic growth of the economies of developed G-7 countries where the capital mobility is intense and selected emerging market economies (Brazil, China, India, Mexico, Russia, South Africa and Turkey (EME-7)) are empirically analyzed for the period of 1994-2015 within the scope of the new generation panel data methodology. From this aspect, it is also aimed to economically analyze whether the foreign direct investments inflows and outflows in countries of G-7 and EME-7 have an effect on the economic growth as is seen in the theoretical framework by being considered the capital exporter/importer positions of these countries. Determined in consequence of the study that foreign direct investments inflows/outflows in the countries of G-7 have a positive and statistically significant effect on economic growth in the long term. Also determined that the foreign direct investments inflows have a positive and statistically significant effect on economic growth in countries of EME-7; while the foreign direct investments outflows have not the same effect on the economic growth. These results which are consonant with the theoretical and empirical literature show that just both foreign direct investments inflows and outflows have a significant role in economic growth on G-7 countries; just foreign direct investments inflows have an important role in economic growth on EME-7 countries at the same time.

This research extends Dunning’s investment development path theory to assess the long-run relationship among foreign direct investment (FDI) inflow, outflow and domestic investment (DI) for 32 emerging market economies (EMEs) based on 17 years data from 1996 to 2012. Breitung Panel unit root test has been used to identify the presence of unit root in the panel data. Since the FDI flows and domestic investments were found to be non-stationary at they were first differenced for converting to stationary variables. Based on Pedroni’s panel cointegration test a long-run relationship among DI, FDI inflow, and FDI outflow was observed indicating that the variables were integrated of order one. Further panel VECM was carried out to assess the causality and it was observed that a joint long-run causality was present both from FDI inflow and outflow towards DI. This essentially indicates that the FDI flows to EMEs will augment domestic capital formation. Therefore policy makers from the EMEs instead of focusing on standalone increase in FDI inflow should focus on both FDI inflow and outflow. However, in the short-run, DI was caused only by FDI inflow, and FDI outflow did not have any causal impact on DI. Further applying fully modified OLS (FMOLS) and dynamic OLS (DOLS) it was observed that FDI inflow and FDI outflow have crowding-in effects on DI. Hence, it can be concluded that for EMEs FDI outflow is also equally important in addition to FDI inflow to augment DI. The impact of 2008 crisis was also examined in the light of FDI outflows and inflows from EMEs. Results based on FMOLS and DOLS indicate that 2008 crisis negatively affected the FDI inflow but the effect on outflows was not statistically significant. These results advocate for a protection mechanism from the financial crises for the EMEs as the FDI inflow declined during the period. Further incentivizing the domestic firms investing abroad for technologies and synergies as FDI outflow also enhances growth.

Nowadays, heightened academic interest in foreign direct investment (FDI) inflows derives from a shift in host-country policymakers' perspectives on encouraging and attracting more FDI, which would generate possibilities and assist developing nations in achieving sustainable development. This study analyzes the determinants of FDI inflows in Sri Lanka using secondary data from 1978 to 2019. We used the Autoregressive Distributed Lag (ARDL) bound testing procedure to examine the long-run relationships between variables. The result revealed that the gross domestic product (GDP) growth rate positively affects FDI inflows to Sri Lanka. A higher GDP paves the way to higher market size, leading to more FDI in Sri Lanka. Openness to trade also positively impacts foreign FDI inflows into Sri Lanka, and this effect is statistically significant. It means that trade liberalization policies implemented since 1978 have increased FDI inflows into Sri Lanka. The exchange rate has a significantly positive impact on FDI inflows to Sri Lanka.

Most developing countries rely heavily on foreign direct investment (FDI) inflows for economic growth and stability. However, political risk and the foreign exchange rate could direly affect FDI inflows as investors seek stable markets. The most recent example of political risk interactions, the exchange rate and FDI has been the trade war between the United States (US) and China, where the US increased tariffs on Chinese goods worth over $16 billion. A crucial debate is needed regarding the importance of FDI inflows in developing countries, such as South Africa. FDI is observed as a crucial component in providing resources, and it is critical in facilitating globalisation and providing financial assistance to countries in need, especially developing countries such as South Africa. This study aimed to examine the long- and short-run effects of political risk ratings and foreign exchange rate fluctuations on FDI inflows in South Africa. The literature review provided evidence of long- and short-term relationships between political risk ratings, the real effective exchange rate, and the GDP's balancing variable on the dependent FDI inflows. The study utilised both the autoregressive distributed lag (ARDL) and non-linear autoregressive distributed lag (NARDL) models to analyse quarterly data from 1995 to 2020. The Variables included in the study were political risk, the real effective exchange rate, FDI inflows and GDP. The study revealed that political risk ratings and the real effective exchange rate have long-run effects on FDI inflows. The real effective exchange rate has an asymmetric long-run effect. It was also found that FDI inflows respond more to real effective exchange depreciations than real effective exchange rate appreciations, implying that the exchange rate is an important economic factor in explaining the investment inflows. Consequently, the study recommends that policymakers deploy responsive policy measures to deal with currency fluctuations and political instability. In South Africa, the negative effect of political risk affects FDI and impacts the overall country risk ratings and the country's ability to borrow. The study also recommends that further research be employed to understand other impacts on FDI inflows and the interaction of political risk and the real effective exchange rate on other critical economic factors.

This research investigates the effect of Financial Sector Development on the Foreign Direct Investment (FDI) inflows in Zambia. This study adopts a quantitative approach utilizing econometric modelling to analyze the relationship between financial development indicators and FDI inflows over a 32-year period from 1990 to 2022. Financial Sector development in this study refers to four key indicators and these are Credit to the private sector, Broad Money Supply, Stock Market Capitalization, and Gross Domestic Savings. The research employs various statistical techniques to ensure the reliability and validity of the results. Using the Vector Autoregression (VAR) model, the study evaluates the long-term and short-term effects of financial sector development indicators on FDI inflows. The results suggest that while domestic credit to the private sector is positively correlated with FDI inflows, the effect is statistically insignificant, indicating that credit accessibility alone does not substantially drive FDI in Zambia. In contrast, the broad money supply exhibits a significant negative correlation with FDI inflows, likely due to its association with inflationary pressures and volatile interest rates, which deter foreign investors. Such instability creates an unfavorable investment climate, causing potential investors to reconsider their commitment to entering or expanding in the Zambian market. Furthermore, stock market capitalization, which reflects the overall performance and robustness of the capital markets, demonstrates negligible influence on FDI inflows. The limited impact of stock market capitalization suggests that Zambia’s capital markets remain underdeveloped, characterized by low liquidity and limited investor participation. Similarly, the negative relationship between gross domestic savings and FDI may reflect a crowding-out effect, where local investors prioritize domestic investment opportunities over attracting foreign capital. This research underscores the necessity for targeted policy reforms aimed at enhancing financial development in Zambia. To enhance financial development and attract FDI, policymakers should focus on strengthening financial regulations to improve credit access, implementing monetary policies that ensure price stability, and fostering capital market growth through investment incentives and enhanced market transparency.

Vietnam's phenomenal economic development has coincided with a substantial increase in FDI inflows and hence led researchers, including the author, to believe that increased inflows of FDI into Vietnam have had important implications for the country's trade and economic expansion over the past decades. This dissertation investigates factors determining foreign direct investment (FDI) inflows and the effects of FDI inflows on economic growth and trade in Vietnam and its different regions over the 1993-2006 period. The study reveals that wages, income per capita, GDP growth and accumulated FDI stock as well as openness to trade and special economic zones are important factors attracting FDI inflows into Vietnam. Human capital has not yet been a significant factor determining FDI inflows because FDI activities in Vietnam are mainly in labor-intensive industries in which a large number of skilled labor is not yet required. The existing physical infrastructure in Vietnam does not help attract FDI inflows either and this implies that an improvement in its quality is needed. Economic growth and FDI in Vietnam have a positively significant relationship. The beneficial effect on growth of FDI comes from stock of foreign capital that has been accumulated over the years. At the regional level, higher capital flow of foreign direct investmentis a major factor stimulating economic growth in the Northern region. The flow of superior technologies transferring from FDI firms can also help to increase the growth rate of the Central region by interacting with the region's open trade regime. The contribution of FDI to economic growth in the Southeastern region is explained by both foreign capital accumulation and new technologies and knowledge transferred from FDI enterprises through human capital. In all regions, inward FDI has a complementary relationship with Vietnam's exports, imports and total trade, implying that the FDIs are mostly of the vertical type. However, the patterns of the FDI-trade relationships between Vietnam and different partner countries show variations. To attract more FDI inflow into Vietnam and sustain the economic development, Vietnam has to improve the country's income per capita, GDP growth rate and trade openness. The Vietnamese government needs to pay more attention to improved quality of human capital, physical infrastructure as well as putting effect to enhance the investment environment in order to attract FDI inflows into a more tecnology-intensive line of production in the future.

Purpose This paper aims to examine the dynamics of foreign direct investment (FDI) inflows into Indonesia. It is interested specifically in analysing and deliberating on two important policy questions: First, are all kinds of FDI useful from a policy perspective and what does the existing data on FDI reveal about the type of FDI inflows into Indonesia? Second, does the existing data help understand the extent of de facto bilateral linkages between Indonesia and other countries? Design/methodology/approach The paper offers an in-depth case study of Indonesia using extensive exploratory data analysis on FDI inflows into Indonesia. As discussed in the paper, the data investigation uses and reconciles available FDI data both from national and international sources to understand the usefulness of such data for policy analysis. Findings A data investigation of the trends in different types of FDI flows reveals a discernible downward trend in the ratio of mergers and acquisitions (M&A)–FDI ratio over the years. The paper argues that from a sequencing perspective, while a medium-to-long-term framework encouraging both domestic and foreign Greenfield investments could help Indonesia regain its growth luster, in the near term much more attention needs to be paid to FDI inflows in the form of M&As. Further, reconciling FDI and M&A data might help identify the original sources of FDI flows because existing data are based on flow of funds rather than ultimate ownership. Practical implications Since the Asian financial crisis, Indonesia has successfully embarked on a phase of economic and political transition post-Suharto, with the cornerstones of such a strategy being a process of greater democratisation and decentralisation. However, there have been growing concerns of economic growth stagnation in recent years. One of the policies to revive the economy’s lustre adopted by the government has been to attract greater FDI inflows. In this light, this paper examines the dynamics of FDI into Indonesia and deliberates on what kinds of FDI policymakers should focus on attracting to restore the country’s growth lustre. Originality/value The question of whether a policy to attract FDI should be careful in distinguishing the kind of FDI it wants to attract has not been sufficiently addressed in the related literature. This paper provides a framework to understand the different macroeconomic policy implications of types of FDI and provides extensive data analysis to not only understand the types of FDI but also sources of bilateral FDI inflows to Indonesia by reconciling FDI and M&A data.

Foreign Direct Investments in India and China: A Comparative Study

Contributors Foreword: Andreas F. Lowenfeld Preface: John H. Dunning BITs, DTTs and FDI flows: an Overview: Lisa E. Sachs and Karl P. Sauvant PART I: Introduction A Brief History of International Investment Agreements Kenneth J. Vandevelde The Framework of Investment Protection: The Content of BITs Peter Muchlinski Explaining the Popularity of Bilateral Investment Treaties, Andrew T. Guzman Double Tax Treaties: An Introduction Reuven S. Avi-Yonah PART II: Exploring the Impact of Bilateral Investment Treaties on Foreign Direct Investment Flows Do BITs Really Work: An Evaluation of Bilateral Investment Treaties and Their Grand Bargain Jeswald W. Salacuse and Nicholas P. Sullivan Bilateral Investment Treaties and Foreign Direct Investment: A Political Analysis Tim Buthe and Helen V. Milner Do Bilateral Investment Treaties Increase Foreign Direct Investment to Developing Countries? Eric Neumayer and Laura Spess The Impact of Bilateral Investment Treaties on Foreign Direct Investment Peter Egger and Michael Pfaffermayr New Institutional Economics and FDI Location in Central and Eastern Europe Robert Grosse and Len J. Trevino Do Investment Agreements Attract Investment? Evidence from Latin America Kevin P. Gallagher and Melissa B.L. Birch The Global BITs Regime and the Domestic Environment for Investment Susan Rose-Ackerman The Impact on Foreign Direct Investment of BITs UNCTAD Do Bilateral Investment Treaties Attract FDI? Only a Bit And They Could Bite Mary Hallward-Driemeier Do BITs Really Work? Revisiting the Empirical Link between Investment Treaties and Foreign Direct Investment Jason Yackee Bilateral Investment Treaties and Foreign Direct Investment: Correlation Versus Causation Emma Aisbett Why Do Developing Countries Sign BITs? Deborah L. Swenson PART III: Exploring the Impact of Double Taxation Treaties on Foreign Direct Investment Flows Do Bilateral Tax Treaties Promote Foreign Direct Investment? Bruce A. Blonigen and Ronald B. Davies The Effects of Bilateral Tax Treaties on U.S. FDI Activity Bruce A. Blonigen and Ronald B. Davies The Impact of Endogenous Tax Treaties on Foreign Direct Investment: Theory and Empirical Evidence Peter Egger, Mario Larch, Michael Pfaffermayr and Hannes Winner Host-Country Governance, Tax Treaties and U.S. Direct Investment Abroad Henry J. Louie and Donald J. Rousslang Tax Treaties for Investment and Aid to Sub-Saharan Africa: A Case Study Allison D. Christians It's All in the Timing: Assessing the Impact of Bilateral Tax Treaties on U.S. FDI Activity Daniel L. Millimet and Abdullah Kumas Do Double Taxation Treaties Increase Foreign Direct Investment to Developing Countries? Eric Neumayer PART IV: Exploring the Impact of Tax and Investment Treaties on Foreign Direct Investment Flows The Effect of Tax and Investment Treaties on Bilateral FDI Flows to Transition Economies Tom Coupe, Irina Orlova and Alexandre Skiba Selected Bibliography on Bilateral Investment Treaties and Double Taxation Treaties Lisa E. Sachs

Financial sustainability in emerging market economies crucially depends on stable foreign capital inflows as these countries lack adequate domestic capital and sophisticated technology. This study attempts to examine the impact of major political risk factors in the emerging market economies along with basic economic fundamentals such as institutional variables like per capita electric consumption, trade openness, and real rate of interest. We have followed a static panel data approach in studying the impact of these crucial variables in Foreign Direct Investment (FDI) inflows in 15 major emerging economies for the period 2000–2014. Risk perceptions, i.e., political risk data, have been collected from the International Country Risk Guide (ICRG) provided by the Political Risk Services (PRS) Group. In our research purpose, we have considered dependent variable as FDI inflows for 15 emerging countries during the period 2000–2014, which are drawn from the United Nations Conference on Trade and Development (UNCTAD, 2014, 2015) FDI database. Our results demonstrate that there are six subcomponents of risk perception (political risk) which are statistically significant in explaining variation in FDI inflows of the major emerging countries. The results show that government stability, socioeconomic conditions, religious tension, and bureaucracy quality have a positive impact on FDI inflows of emerging countries, whereas internal conflict and law and order have a negative impact on FDI inflows of these countries. Stable government is more attractive to foreign investors. Again, an improvement in the socioeconomic conditions is positively related with FDI inflows in emerging countries. Decreasing bureaucracy leads to a reduction in corruption, and assists expanding FDI flows in the emerging country.

The majority of developing countries have heavily relied on foreign direct investment (FDI) inflows over the past years due to the gap between domestic savings and investment. Studies on the interactive effect of monetary policy and institutional quality (IQ) on FDI inflows are still scanty in East African countries. This study examined the effect of monetary policy (monetary policy rate (MPR), exchange rate (ER), reserve requirements (RR)) on FDI inflows in East African Countries with a special focus on the moderating impact of institutional quality. A fixed effect model was applied to analyse panel data spanning from 2003 to 2022. The results showed that incorporating institutional quality into the relationship between monetary policy and FDI inflows marginally improves the model's explanatory power from 56 percent to 57 percent with the interaction of IQ and monetary policy variables suggesting that institutional factors contribute to understanding FDI dynamics. The findings revealed a positive relationship between, IQ and MPR-IQ interaction and FDI inflows, though it was not strong. The results further showed a negative but weak relationship between ER-IQ interaction and FDI inflows. Thus, it is concluded that IQ slightly mitigates the negative impact of MPR on FDI, suggesting that strong institutions create a stable environment that offsets the deterrent effect of higher interest rates. Additionally, though IQ enhances stability, exchange rate fluctuations continue to undermine investor confidence. It is therefore recommended that Policymakers consider a holistic approach, focusing on structural reforms and stable macroeconomic policies to boost investor confidence and attract FDI.