Navigating the labour landscape: does FDI influence employment in India?

One of the most important components in China’s economic reform programme has been the economy’s gradual opening to inward foreign direct investment (IFDI) and foreign invested enterprises (FIEs). While China has become more and more open to IFDI over time, it remains far more closed than most large economies. In recent years, we have seen the apparent contradictory trends toward developing what appears to be a more liberal legal environment for IFDI combined with highly publicized examples of pushback against FIEs in China. In order to understand China’s approach towards IFDI and FIEs, it is necessary to understand the historical background of IFDI and FIEs in China, the objective function that China applies to IFDI and FIEs, and the fact that the impact of IFDI and FIEs on China’s economy is often underestimated. These features will influence any investment treaties that might be reached with China and how they will be implemented. This chapter also provides a broad-brush perspective on China’s approach toward IFDI and FIEs. It then describes the results of novel method of estimating the economic benefits that IFDI and FIEs have brought to China. Finally, the chapter provides perspectives for those interested in the potential for the negotiation and implementation of investment agreements with China.

An analyst of U.S. foreign economic policy observes that each wave of antiforeign sentiment associated with the surge of foreign direct investment (FDI) coming into the United States washes ashore a flotsam of restrictive and exclusionary laws that recedes slightly or becomes buried and forgotten in the sand only to advance again with a new wave. During the late 1980s, the controversy generated by the sharp rise of Japanese acquisitions in the United States washed ashore the latest flotsam of regulatory measures and further advanced the tangle of rules and regulations targeting inward foreign direct investment (IFDI). Of the various types of FDI, the present study is concerned mainly with the policy change toward foreign investment in an already established domestic business. This type of investment often involves merger or acquisition and is distinct from a “greenfield” investment where the foreign investor establishes “from scratch” a new business in the host economy.

ABSTRACTThe United States has been one of the world's premier destinations for inward foreign direct investment (IFDI) since the 1970s, yet research remains limited on the origins of the domestic institutions that govern IFDI flows. This article focuses on the Committee on Foreign Investment in the United States (CFIUS), an executive body created in 1975 ostensibly to stand sentry on the US's ‘open’ investment door. Previous accounts have explained CFIUS's origins in terms of an inter-branch conflict between an ‘internationalist’ Executive and a ‘protectionist’ Congress, but these accounts are far from comprehensive. Based on new archival evidence as well as a broad review of congressional-hearing transcripts, government reports and trade publications, this article finds that existing analyses underestimate the influence of internationally oriented segments of capital, overlook the emergence of key conflicts within the Executive and disregard the specific economic ideas that motivated policy-makers to establish CFIUS and later reform it. These findings buttress the article's conclusion that CFIUS represents not merely a generic case of inter-branch conflict, but a concrete case of neoliberal state-building.

This paper assesses the state of inward foreign direct investment (IFDI) and outward foreign direct investment (OFDI), as well as the direct and spatial impact of China’s Belt and Road Initiatives (BRI) on FDI and the degree of coordination synergy between IFDI and OFDI at the provincial level. The paper uses a discontinuous and spatial regression analysis covering 30 Chinese provinces between 2007 and 2019. The results suggest that China’s IFDI and OFDI development has achieved moderate coordination synergy over time. At the provincial level, the BRI has a positive direct impact on IFDI, OFDI and foreign investment coordination synergy. This indicates that with the BRI, China is able to improve OFDI flows and achieve better synergy in foreign investment coordination achieving a more balanced investment development path. Interestingly, the growth of OFDI at the provincial level also had a positive spatial spillover effect, while IFDI displaces domestic investment, the growth of OFDI is able to mitigate the displacement effects. However, the positive effect of BRI was only significant in the eastern region and not in the central and western regions. This indicates the heterogeneous nature of BRI effects, which limits the effectiveness of BRI in promoting FDI growth in China and its coordination synergy as an ambitious global policy.

This paper attempts to answer the economic implications of combining inward foreign direct investment (IFDI) and outward foreign direct investment (OFDI) by constructing a panel fixed effects model using Chinese industrial firm-level data for the period 1998–2013. Specifically, we focus on the impact of combining IFDI and OFDI on firm productivity in China. We also introduce interactive terms into the model to explore the direct and indirect mechanisms through which IFDI and OFDI affect productivity growth. The results show that IFDI and OFDI work together to contribute to productivity growth by acting directly on the level of technology, thereby increasing productivity. IFDI intensifies market concentration, which in turn positively moderates the relationship between OFDI and productivity. Furthermore, IFDI moderates the financing constraints of firms, but has a weaker effect; the easing of financing constraints facilitates the positive impact of OFDI on productivity. Absorptive capacity favours IFDI spillover, but OFDI inhibits absorptive capacity improvements. Our in-depth analysis of the mechanism of the combined impact of IFDI and OFDI on productivity reveals the objectives of using this combination, thereby providing theoretical support and policy recommendations for the implementation of this strategy.

Export tax rebate (ETR) and inwards foreign direct investment (IFDI) are important driving forces for the steady development of China’s export-oriented economy. Based on data from 2004 to 2019, this study puts forward relevant assumptions on constructing a model for empirically analyzing the impact of the ETR on China’s IFDI from the perspective of the national and the sub-national. The result demonstrates that there exists a complementary relationship between the ETR and IFDI; the weak lag effect of ETR on IFDI in the eastern, middle, and western regions of China; an explicit impact on the performance in the western region, which lags behind only one period; and no significant lag effect of ETR on IFDI in developed, moderately developed, and underdeveloped regions. On the basis of this evaluation, the conclusion could be achieved that that ETR has a significant effect on IFDI, though there may be differences in the direction and value of the impact. The highlight of this research is to detect the impact of ETR on IFDI by taking China as a case, and achieved that there exist sub-national differences, including the geographical and development-level differences.

Manufacturing industry is the leading industry in China’s national economy. The participation of global value chain (GVC) in China’s manufacturing industry is very high, whereas its GVC status is very low. The inward foreign direct investment (IFDI) and outward foreign direct investment (OFDI) are the main ways for China’s manufacturing industry to integrate into the global value chain. Previous studies mainly focused on the upgrading of GVC in China’s manufacturing industry from the perspective of single IFDI or single OFDI. This paper takes the perspective of “Two-Way FDI” as the starting point. Using the panel data of China’s manufacturing sub-industries, this paper analyzes the mechanism of IFDI, OFDI and two-way FDI influencing GVC. The Fixed Effect Model is established to analyze the impact of IFDI, OFDI and two-way FDI on GVC upgrading of China’s manufacturing industry.

Abstract. With the initiative of the West China Development policy, the flow of Inward Foreign Direct Investment (IFDI) gradually increased in western China. This paper investigates and tests the determinants of IFDI for western China’s11 provincesduring2002 – 2008. By compiling a pool data set and employing General Least Squares (GLS) with fixed effects model in natural logarithmic form, we explorethe IFDI in western China thoroughly. The proposed model illustrates reliable estimates of determinants of IFDI for the region. The market size, laborcosts, education level, imports and highway length are found to have a significant relationship with IFDI in western China, hence, they may be considered as determinants. On the other hand, research and development (R&D), length of railways, and postal and telecommunication services have a statistically insignificant effect on IFDI. Keywords. Inward FDI determinants, Western China, Pool data.. JEL. F20, K20, L20, L20, M20.

PurposeDrawing on the resource dependence theory (RDT), this paper investigates ownership composition, export intensity, and industry class as moderating factors to investigate the role of imported raw materials in performance of inward foreign direct investment (IFDI) in Ethiopia.Design/methodology/approachThe hypotheses were tested using secondary data obtained from the 2016 Central Statistical Agency (CSA) on Large- and Medium-Scale Manufacturing and Electricity Industries Survey. The data included basic quantitative information on the country's manufacturing industry. The data items for the 2016 manufacturing and electricity industries surveyed are the numbers of proprietors or establishments involved in various sectors. The report did not record small firms that employed fewer than 10 people and did not use power-driven machinery. Two-Stage least squares (2SLS) regression analysis was performed to test the proposed hypotheses.FindingsThe results of this study indicate that three moderators (ownership composition, export intensity, and industry classification) interact with the hypothetical relationships between imported raw materials and performance. These findings enrich the knowledge of IFDI firms' operations in Ethiopia and in other least-developed countries (LDCs). The findings could provide information for IFDI firms that are looking to invest in LDCs.Research limitations/implicationsLike all social science research, this study has some limitations. First, the research was conducted with the data found in the Report on Large- and Medium-Scale Manufacturing and Electricity Industries Survey In 2016. This was the first year of the second five-year Growth and Transformation Plan (GTP II), a national development plan for the 2016–2020 period. Continual research on IFDI in Ethiopia in the following years will be needed to get a full picture of the effects of the determinants on IFDIs.Practical implicationsTo IFDI investors, the result of this thesis demonstrates several alternatives to overcoming hurdles in manufacturing operation. The results find that J.V. firms make better use of imported raw materials than W.O. subsidiaries in order to achieve better performance. Concerning the choice between focusing on export or domestic markets, the study suggests that domestic market—oriented companies require less imported raw materials to achieve better performance. Concerning the comparative advantage on different industries, this study found the performance of firms in Industry 12 depended on imported raw materials. These findings highlight the challenges and opportunities for potential foreign investors. Ownership composition, market factors, and industry factors should be well considered in making investment decisions.Originality/valueThis is one of few studies on IFDI in Ethiopia, the most populous LDC. Ownership composition, export intensity, and industry class are used as moderating variables to investigate the difference between imported raw materials and the level of expatriate deployment to IFDI performance. For IFDI investors, the results of this study demonstrate several alternatives to overcoming hurdles in manufacturing operation.

PurposeThe purpose of this paper is to estimate foreign direct investment (FDI) premia in the former Soviet states.Design/methodology/approachThe authors follow an empirical approach. Using Orbis data for a sample of more than 3,000 companies, the authors characterize FDI involvement and FDI premia of firms from three distinctive groups of former Soviet states, designated “upper-middle”-income, “lower-middle”-income and “high”-income countries. This yields interesting within-group and between-group results on the effects of outward FDI (OFDI) and inward FDI (IFDI) on firm-level innovation.FindingsThe authors unveil new facts about innovation and FDI in the former Soviet states. FDI firms innovate more than non-FDI firms and OFDI firms innovate more than IFDI firms. The innovation effect of OFDI is the largest for firms from the “lower-middle” countries, followed by the “high” and “upper-middle” countries. The innovation effect of IFDI is the largest for firms from the “lower-middle” countries, followed by the “upper-middle” and “high” countries. FDI to and from Europe has the largest impact on innovation; this holds across country groups.Research limitations/implicationsThe estimates of this paper document robust FDI premia, i.e., a positive and significant correlation between firm-level innovation and FDI. However, the cross-sectional nature of the data does not permit a proper causality analysis.Originality/valueThe paper contributes to the literature on FDI premia by: considering IFDI and OFDI in a unified empirical framework; dissecting IFDI and OFDI by location; measuring firm-level productivity in terms of innovation; and providing cross-country comparable evidence on both emerging and advanced economies. At the same time, the paper contributes to the literature on FDI from emerging economies by: taking a firm-level quantitative approach; focusing on a relatively unexplored set of countries; and providing comparable cross-country evidence on both emerging and advanced economies.

This paper examines the impact of international investment on national innovation, focusing on the role of inward foreign direct investment (IFDI), outward foreign direct investment (OFDI), and two‐way foreign direct investment (DFDI). Analysis of cross‐country panel data from 2011 to 2023 using the double machine learning method reveals that IFDI significantly promotes national innovation through technology transfer and competitive pressure. In contrast, OFDI and DFDI demonstrate a more limited direct impact on innovation. The results of propensity score matching–difference‐in‐differences show that ASEAN's Regional Comprehensive Economic Partnership policies boost national innovation. Additionally, mechanism tests show that economic freedom moderates the relationship between international investment and national innovation. Greater economic freedom alleviates market access barriers and promotes the integration of foreign investment into the local innovation ecosystem, thereby amplifying the positive impact of IFDI. The analysis also points out that the relationship between international investment and innovation varies across regions and levels of development, with the impact of IFDI being stronger in developing countries and Asian countries. The study therefore emphasises the importance of tailoring international investment strategies to specific economic and regional circumstances to maximise their contribution to national innovation. Policymakers should focus on improving the quality of inward investments, supporting outward investment for technology acquisition, and promoting a balanced two‐way investment system to ensure innovation‐driven growth.

Inward FDI in China and its policy context in 2012

Inward foreign direct investment (FDI) is important in building a sustainable and diversified economy as envisaged by the United Arab Emirates (UAE). The UAE’s stock of inward FDI (IFDI) grew at an average annual growth rate of 49%, from US$ 1.1 billion (1.5% of GDP) in 2000 to US$ 85.4 billion (23.7% of GDP) in 2011. Many foreign multinational enterprises (MNEs), including several Fortune 500 companies -- have established affiliates in the country. The rapid growth of IFDI reflects confidence in the UAE economy and efforts to enhance its competitiveness. The recent global crisis has, however, significantly reduced IFDI flows. Efforts are under way to speed up the ratification of a new foreign investment law, which removes several of the current legal barriers to FDI and offers foreign investors similar rights to those of UAE nationals.

Both industrial agglomeration and inward foreign direct investment (IFDI) are drivers of China’s economic development. However, their distributions are unbalanced. Both are large in eastern regions, similar to the distribution of the GDP in China. It indicates there may be a relationship between them. Based on it, the paper selects fixed effects model to analyse the relationships among GDP, IFDI and the industrial agglomeration in China regarding different regions and time horizons, and finds that on the whole, the industrial agglomeration and IFDI do promote the regional economic growth stably during different periods, while both are much stronger in the western regions and central regions. The paper also finds the coefficient of their interaction item is significantly negative, which implies the transmission mechanism between IFDI and industry agglomeration is inefficient. To promote the balanced economy development of different regions, the paper suggests that China should improve the quantity and quality of industrial agglomeration and the IFDI to increase the coordinated development of both in different regions.

Nearly all developing countries actively seek capital and technology from the advanced countries. Although private direct foreign investment (mainly in the form of multinational enterprise) is viewed with ambivalence by many developing countries, it is nonetheless true that direct investment remains a substantial source of capital and is sometimes the only source of specific technologies. Indeed, given the slow growth in official external assistance, developing countries are becoming more, not less, dependent on direct foreign investment. While disbursements of official development assistance by the OECD countries rose 43% from 1961 through 1970, direct investment flows rose almost 90% over the same period. In the later year, the flow of direct investment was more than two-fifths of all official assistance, $3.2 billion compared to $7.8 billion.1 Furthermore, the United States and other major capital exporting countries would prefer, for economic as well as ideological reasons, to channel more of their capital outflows to developing countries through private investment. It is highly probable, therefore, that developing countries will continue to rely on direct foreign investment in the foreseeable future to carry out their development programs. It is against this background that the present study seeks to identify the empirical determinants of direct foreign-investment flows in the manufacturing sectors of developing countries. Our purpose is to select from the many economic, social, and political features of a developing country those features that are critical to making that country attractive or unattractive to private foreign investors. Available empirical studies are limited