THE INTERACTION BETWEE THE EFFECTIVENESS OF FINANCIAL INSTITUTIONS AND THE FLOW OF FOREIGN INVESTMENT: AN INTEGRATIVE ANALYSIS IN THE ALGERIAN ECONOMY 2000-2023

Evidence of the impact of foreign equity investment flows on the global linkages of the Asian emerging equity markets is provided. Findings confirm that there is a general trend towards greater integration and this process appears to be influenced by the increasing volumes of foreign equity portfolio investment flows. The results support the widely-held view that foreign investors are return chasers and their trading behaviour is based on information drawn from recent returns available in the emerging markets. The results also confirm the price-pressure hypothesis which suggests that foreign equity investors are mainly responsible for the increases in the stock market valuations in the Asian emerging markets. In view of the findings, the Asian emerging markets may become more vulnerable to the changes in foreign investment flows and turn more volatile in future.

This study estimated the relationship between governance indicators and the inward flow of foreign direct investment (FDI) in China. We examined the relationship for the period between 2002 and 2019 using various estimation regression techniques, including fixed effect model and the generalized method of moments (GMM). The study confirms a significant relationship between the flow of foreign direct investment and good governance. More specifically, this study reports a positively significant relationship between control of corruption, rule of law, and regulatory quality with the flow of foreign investment in China. However, government effectiveness, political stability, and voice & accountability reported no significant relationship, which makes sense in China’s case. China, which has a one-party government, does not need to focus on these variables. The paper holds policy implications for other countries, especially those located in Asia, to adhere to the governance indicators to attract higher foreign direct investments, as these countries possess both cheap and abundant labor.

The economy of a country is largely determined by the flow of capital or investment that enters the economic chain. Investment can accelerate the development of infrastructure that supports supply distribution and provides capital to increase production output. The increase in the flow of foreign investment in particular can replace the role of foreign debt for developing countries such as Indonesia which are trying to continue to carry out economic development. This study aims to analyze the effect of inflation, the composite stock price index, foreign exchange reserves, and government spending on the flow of foreign direct investment to Indonesia in 2000-2021 using the Ordinary Least Square (OLS) analysis tool. The results in this study state that foreign exchange reserves have a positive effect on foreign direct investment, while the composite stock price index has a negative effect on foreign direct investment. Meanwhile, inflation and government spending were found to have no effect on foreign direct investment into Indonesia. Based on these results, the government is expected to be able to maintain economic stability in Indonesia so that the targeted economic growth can be achieved and the position of national foreign exchange reserves strengthens every year. Thus, foreign investors will be more interested in investing in Indonesia.

Determinants of International Portfolio Investment Flows to a Small Market: Empirical Evidence

Foreign Direct Investment has become an important source of bridging the gap between domestic savings and domestic investments in developing countries in the past three decades. In order to increase the flow of foreign direct investment, Nigeria like many other developing countries reformed her tax system in late 1990s to create incentives for the flow of foreign direct investment into the country. She reviewed company income tax downward from 50% in 1980s to 30% in 1999. Similarly, investment allowance was reviewed upward from 25% in 1980s to 95% in 1999. This study investigated whether the incentive policy has brought any significant change in the pattern of flow of foreign direct investment to the non-oil sector. The study adopted a multiple regression model which was transformed into log-log model in the analysis. Regime switch model helped us to evaluate the effectiveness of the policy introduced in late 1999. Both company income tax and investment allowance appeared with the right sign. Result suggests that the tax incentive policy introduced changed the flow of foreign investment to the non-oil sector, showing that the country’s tax incentives can help revive the ailing non-oil sector.

This study looks at how foreign investment flows affected Nigeria’s stock market performance from 1994 to 2023. The paper utilised an ex-post facto research approach, and the Central Bank of Nigeria (CBN) bulletin, 2023, offered the data for analysis. Market capitalisation (MCAP) was the dependent variable in the study, and the independent variables used to measure foreign investment flows were foreign direct investment inflows (FDINF), outflows (FDIOUF), inflows from foreign portfolio investments (FPINF), and outflows from foreign portfolio investments (FPIOUT). The study tested the proposed hypotheses using the Ordinary Least Squares estimation approach. In order to determine the dependent variable, market capitalisation, the research examined the effects of four independent variables: FPI inflow, FDI inflows, and FPI outflows. The results show that the influx of FDI has little effect on market capitalisation. Outflows of FDI have a big effect on market capitalisation. Inflows of foreign portfolio investments have little effect on market capitalisation. Outflows from foreign portfolio investments dramatically increase the capitalisation of the stock market. As per the r2, changes in foreign investment variables in Nigeria may account for around 59% of the variations in stock market performance within the Nigerian economy. According to the study’s findings, foreign investment flows significantly affect Nigeria’s market capitalisation. Suggestions include promoting foreign direct investment inflows continuously, encouraging domestic companies to invest overseas, improving market transparency to draw in foreign portfolio investment inflows, and cautiously promoting outward investments to avoid excessive capital outflows.

Introduction Chapter 2 used the standard AR model for the inference on unit roots. However, one may contemplate testing for a unit root using different model specifications, and doing so might result in different inferential results. This chapter introduces inferential procedures for a unit root that use model specifications that depart from the standard AR model. The first section of this chapter addresses unit root tests under structural changes in the non stochastic regressors added to the AR model. This research area, initiated by Perron (1989), received much attention because the presence of structural changes in the parameters of non stochastic regressors sometimes yields different inferential results. It also provided further challenges for econometric theorists and resulted in various new inferential procedures. The second section examines unit root tests with conditional heteroskedasticity. Because conditional heteroskedasticity is known to be prevalent in high-frequency financial time series, it is natural to consider unit root testing in its presence. As is discussed, the presence of conditional heteroskedasticity brings some complications in devising unit root tests. This chapter then addresses unit root tests in the presence of additive and innovational outliers. It is well-known that outliers can affect inferential results in a significant manner. This section discusses the effects of outliers on unit root testing and the methods of unit root testing in the presence of outliers. The fourth topic of this chapter encompasses unit root distributions and tests under fat-tailed distributions. This discussion show that fat-tailed distributions introduce nuisance parameters in the limiting distributions of Dickey and Fuller's (1979) and Phillips and Perron's (1988) test statistics. The last topic of this chapter is unit root tests against nonlinear alternatives. This discussion considers threshold AR and smooth-transition AR models, which are representative nonlinear models in time series analysis. In addition, it introduces inference methods using random-coefficient AR models. A summary and further remarks conclude the chapter.

Determinants of international portfolio investment flows to a small market: Empirical evidence

Purpose: The purpose of this study is to show that turning Jordan into an economic free zone will lead to a significant increase in foreign investments. This increase, in turn, will lead to an economic growth and to a reduction in the unemployment rate. Jordan is a developing country and any successful investments in the economy sector will have a positive impact on the quality of the social life of its people. This is particularly important now in view of the economic pressure that Jordan is going through as a result of the presence of a huge number of immigrants who have fled the civil wars in neighboring countries.  
 
 Methodology: This study has utilized the relevant literature by way of evaluating the benefits of establishing economic free zones in Jordan. Many of the findings are based on analyzing statistical information published by governmental institutions in Jordan.
 
 Findings: Jordan offers an attractive investment environment due to the security and stability it enjoys compared with other countries in the Arab region. As such, it has succeeded in establishing new economic free zones through partnership with foreign investors. This has led to a significant increase in the flow of more foreign investments in Jordan. The present study shows that turning the whole of Jordan into an economic free zone will lead to yet a further increase of foreign investments, and hence to more empowerment of the economic sector. 
 
 Limitations:  The quantitative data available is limited to the years 1999-2007.
 
 Value: The findings of this study can be a point of departure for researchers and economic decision-makers in Jordan to prepare economic plans with the purpose of attracting foreign investments and hence promoting economic growth in the country.

The study is aimed at determining the relative potency of internal and external sources of financing economic growth in Nigeria using time series data from 1983 to 2012. Ordinary least square regression method, unit root test, Johansen cointegration test and error correction model were used for the purpose of analyses. Gross national saving, internal debt, grants and foreign investment are stationary at level, gross domestic investment at first difference and gross domestic product at second difference. From the over parameterized ECM, none of the internal and external financing options is significant in explaining economic growth. In the group of internal options, gross national saving, gross domestic investment and internal debt contribute positively to growth in the short and long run, the only exception being gross national saving in the short run. In the group of external options however, only grant contribute positively to growth in the long and short run. Foreign direct investment appears like a wolf in sheep's clothing given its long run negative impact. Finally, growth is a decreasing and an increasing function of external debt in the short and long run respectively. It is noteworthy that a very high constant coefficient implies that there are many factors that actually determine Nigerian gross domestic product outside the model. While the variables of interest are theoretically expected to play significant roles, they fail empirically. A comparison of the two modes shows that internal factors prove to be more reliable in accelerating Nigerian economic growth.

This study examines the impacts of oil shocks on real stock returns in Turkey by using the vector autoregressive model (VAR). It analyzes over the 2008:10-2018:04 period. The logic lying behind this periodization is to analyze the impacts of oil prices on real stock returns for the 2008 post-crisis period. According to the results obtained, real stock returns have a positive and a statistically insignificant response to oil price shocks at the beginning. This is inconsistent with the expectations of economic theory. This inconsistency has several reasons, but the flow of foreign portfolio investment to developing countries may be a decisive factor after the financial crisis of 2008. This flow of foreign investment may have had an impact on stock returns in developing countries such as Turkey, especially when the interest rates were lowered to almost zero in developed countries following the financial crisis of 2008.

International Economic Integration plays an integrative role in Economic Development of any country. Foreign Direct Investment (FDI) is one and only major instrument of attracting International Economic Integration in an economy. It serves as a liaison between investment and saving. Many developing countries like India are facing the deficit of savings. This problem can be solved with the help of Foreign Direct Investment. Foreign investment helps in reducing the defect of BOP. The flow of foreign investment is a profit making industry like insurance, real estate and business services and serving as a catalyst for the growth of economy in India. With the journey of borderless economy and open competition on 24th July, 1991, the Indian production economy witnessed an unprecedented threats and challenges in the form of inward and outward capital infusion. Capital infusion have been realised with the influx of inward foreign direct investment. The FDI can affect directly the growth process and economic output of a nation. The most popular measure of economic output is GDP (Gross Domestic Product). The objective of this paper is to investigate and made an in-depth study the interactions and economic agglomeration between the economic growth, Capital infusion and economic stability of Indian economy in the period following the first generation financial sector reforms. Furthermore, the research study tries to estimates the relative roles of FDI, Exports and social well-being in the economic growth intermediation process. The study tries to tests for characteristics of movement of FDI and whether they have any assignable cause or bears any random shocks. The investigation also observes a relative responsibility and interactive long run relationship between a GDP, FDI, Economic stability and cultural agglomeration. The results indicate the importance of FDI on general, social, and economic growth and the relative roles of the internal economic environment in augmenting the growth process during this study period of 1980--2013. After analyzing all the facts it may be concluded that maximum global foreign investment's flows were went to developed countries rather than developing and under developing countries. Foreign investment flows are supplementing the scare domestic investments in developing countries particularly in India. Further this paper recommends that we should welcome the inflow of foreign investment because it enable us to achieve our cherished goal like making favourable the balance of payment, rapid economic development, removal of poverty, and internal personal disparity in developmental process and also it is very much convenient and favourable for Indian economy. During pre liberalization period of 1980–91 Inward FDI increased at CAGR of 10.39% while during first generation post liberalization period 1991–2000 it has grown 53.57% and second phase of post-liberalization period 2001–13 recorded a CAGR of 18.01%. This indicates that liberalization has had a positive impact on FDI inflows in India. Since 1991 FDI inflows in India has increased approximately by more than 191.85 times.

The article defines the modern determinants of foreign investments’ activation in the international financial space. Foreign investments became a decisive driver for the formation of additional competitive advantages in the global capital market, ensuring the transfer of capital, knowledge, and technologies across borders. Foreign investment flows become the basis for forming a single system of relations and a new configuration of the world economy. The dynamics of foreign direct investment (FDI) by groups of countries and regions were analyzed. Over the past two decades, global FDI flows have grown rapidly, largely due to the intensification of investment activity in developing countries due to accelerating economic growth, increasing market potential, and using effective government policy tools to stimulate foreign investment. The specifics of the distribution of foreign direct investment between host countries have been determined in view of the consequences of the COVID-19 pandemic. The pandemic didn’t affect the countries’ ranking among the leaders in attracting and exporting FDI. Due to the export of FDI from Hong Kong (China) and Thailand, Asia became the only region where growth in FDI flows was recorded during the pandemic, and China became the largest investor in the world in 2020. As a result of quarantine restrictions and measures to counter the consequences of the pandemic, the lowest fall in FDI indicators over the last decade. The fact that the number of restrictive measures against foreign capital in 2022 increased sharply, mainly due to the war in Ukraine has been determined. Such procedures included sanctions against financial institutions; trade and transportation restriction measures; travel bans and asset freezes for hundreds of individuals and legal entities. The peculiarities of the recovery of FDI indicators in the post-Covid period are highlighted, and it is determined that in the near future, new risks may arise for the stable development of international investment activities in view of the war in Ukraine and a number of new shocks in the world economy.

The study analyzes issues related to foreign direct investment flows into Vietnam, Vietnam’s CO2 emissions and their positive and negative impacts on the growth rate of the Vietnamese economy in the period from 1986 to 2023. This study not only provides empirical evidence on the relationship between environmental pollution, foreign direct investment and economic growth, but also uses the NARDL model to test the asymmetric impact of foreign investment flows on environmental pollution and economic growth in Vietnam. Specifically, the research results show that there is an asymmetric impact of foreign direct investment flows into Vietnam, CO2 emissions into the environment and the level of economic development. This capital flow includes both positive and negative impacts on long-term economic performance, reflecting changes in two different directions. When foreign direct investment flows increase by 1%, the economy tends to improve with an increase of 0.18%. On the contrary, when capital flows decrease by 1%, the economy is negatively affected with a decrease of 0.46% after a lag period. The results of this study are the basis for making recommendations for planning policies related to the environment, economic growth and attracting investment capital effectively.

Empirical analysis of the effects of monetary policy on house prices��Based on the VECM model