Affect Foreign Direct Investment Research Articles

The Factors Affecting Foreign Direct Investment Intentions of Investors: A Case of Malaysia

Foreign direct investments (FDI) are regarded as one of the most important sources of external financing for all countries in this globalisation era. In recent years, Malaysia has only been successful in attracting a small number of foreign investors. As a result, the primary goal of this paper is to examine the factors that have attracted FDI into Malaysia from 1990 to 2020. The study investigates the relationships between FDI and the proposed explanatory variables, namely market size (GDP), trade openness (OPN), inflation rate (INF), and infrastructure (INFRA). Multiple Linear Regression (OLS) is used to examine the relationships between the variables. The Variance Inflation Factor and the Breusch Pagan Godfrey test are also analysed to discover the data collected from the World Bank Data. Findings indicate GDP and INF have a significant impact on FDI. This study has not brought any evidence of INFRA and OPN influencing FDI inflows in Malaysia. Understanding these factors is crucial for policymakers and investors to promote sustainable economic growth and attract foreign investments

Indonesia's FDI in Development of Special Economic Zones (SEZs)

In realizing equitable development and economic growth, it is necessary to develop special economic zones (SEZs) as a form of commitment of the Indonesian government; and if viewed from the budget perspective applied, it is still limited. This study aims to determine the factors affecting Foreign Direct Investment (FDI) in Indonesia from 2008 2nd quarter to 2021 2nd quarter. Based on that period, the economy in Indonesia experienced a contraction since the Asian monetary crisis in 1998. So that the development of SEZs experienced financial budget constraints and Indonesia can try to find other financing solutions. For developing countries, such initiatives should be taken in order to attract foreign investment. This study uses quantitative research with the analytical method used is the Vector Error Correction Model (VECM), which is a derivative of the vector autoregressive (VAR) method. The results of this study indicate that for the long-term VECM variable estimates only interest rates have a negative effect on FDI, and trade inhibition, inflation, and GDP variables have a positive effect. While the wage variable has no effect on FDI. In this phenomenon, it is necessary to pay attention first to the influence on FDI, companies in Indonesia, the majority of which are labor-intensive workers.
 Keywords: FDI, GDP, inflation, interest rates, trade inhibition, wage

Role of Socioeconomic Uncertainty on Foreign Direct Investment (FDI) Inflows and Economic Growth in ASEAN

The interconnectedness begins with active trade and foreign investment flowing to the host country, making the economies in the world integrated into one another. Unfortunately, the rise of interconnectedness has sky-rocketed uncertainty. Economists then build the considered socioeconomic index, namely the World Uncertainty Index (WUI). This research aims to determine whether such an index can affect Foreign Direct Investment (FDI) inwards and economic growth, especially in ASEAN. We use yearly data of FDI inflows, economic growth, and WUI as a proxy for the global level of domestic uncertainty, inflation, and real effective exchange rate from 2015 to 2019 for each ASEAN member state. We estimate a System Generalized Method of Moments (Sys-GMM) to see the dynamic relationship and the short- and long-run effect of the socioeconomic uncertainty proxies with respect to FDI inflows and economic growth. The results show that the uncertainty index with respect to FDI inflows and growth has been negative and significant. Meanwhile, only FDI inflows sensitively respond to socioeconomic uncertainty in the long run, despite the growth for ASEAN member state.

Does Corruption Affect Foreign Direct Investment? Empirical Evidence from ASEAN Plus Three Countries

Corruption poses a significant challenge in numerous countries, impacting foreign investment, including those within the ASEAN Plus Three (APT) region. This study aims to ascertain the influence of corruption and other factors—specifically, the exchange rate, political stability, and economic growth—on the appeal of foreign direct investment in APT countries. The research employs the Error Correction Model (ECM) for statistical testing to analyze both short- and long-term effects. The findings indicate that corruption and exchange rate fluctuations do not exert a significant impact on foreign investment inflows into APT countries, regardless of the time horizon. In the short term, a surge in corruption cases tends to diminish the interest of potential foreign direct investors. However, over the long term, foreign investors anticipate that APT countries will adopt more stringent measures to combat corruption, thus fostering a corruption-free environment. This expectation is bolstered by the presence of political stability and robust economic growth in APT countries, which stand as pivotal considerations for foreign direct investment. Therefore, APT countries, particularly Indonesia, ought to establish transparent investment guidelines, root out corruption, ensure political stability, maintain exchange rate stability, and prioritize policies aimed at stimulating economic growth in order to entice foreign investment.

Political stability and foreign direct investment inflows in 25 Asia-Pacific countries: the moderating role of trade openness

This article analyzes how trade openness and political stability affect foreign direct investment (FDI) in 25 Asia-Pacific countries from 1990 to 2020. This study employs the dynamic system Generalized Method of Moments to mitigate the heteroskedasticity and autocorrelation issues. We also perform the Johnson–Neyman test to examine whether trade openness moderates the relationship between political stability and FDI. Our findings show that trade openness positively affects FDI, while political stability has a negative effect. Noticeably, the Johnson–Neyman test indicates that Trade Openness moderates the relationship between political stability and FDI in Asia-Pacific nations. Trade openness and its moderating role remained robust before the 2008 financial crisis. The impacts of trade openness and political stability on FDI persist in non-tax-heaven countries. Our findings align with market-seeking, efficiency, resource-seeking, and regulatory risk theories. Finally, these findings are helpful for policymakers to attract FDI projects sustainably across the Asia-Pacific region.

Infrastructure Quality and FDI Inflows: Evidence from the Arrival of High-Speed Internet in Africa

Abstract Does ambient infrastructural quality affect foreign direct investment (FDI) in developing countries? This paper investigates how the arrival of high-speed internet in Africa triggered FDI into the region. It also explores the role of complementary infrastructure, such as access to electricity and road connectivity, in amplifying the impact of internet connectivity on investment. To causally estimate impacts, the paper exploits plausibly exogenous variations in access to high-speed internet induced by the staggered arrival of submarine fiber-optic internet cables and spatial variations in terrestrial fiber cable networks across locations on the continent. Findings from the paper indicate that access to high-speed internet induces FDI, particularly in the service sector, with the finance, technology, retail, and health services subsectors as the main beneficiaries. Access to (hard) infrastructure, such as electricity and roads, amplifies the impact of internet connectivity on FDI, thus highlighting the role of complementarities in the impact of infrastructure. Further, the results suggest that improvement in quality of governance and increased performance of incumbent firms are plausible mechanisms.

Does Sudan’s Removal from State Sponsors of Terrorism Designation Affect Foreign Direct Investment (FDI)? “A Multivariate Analysis Combining VECM and ARDL Analysis” (1974–2019)

Thanks to the great political and economic global openness that Sudan witnessed in late 2020, the USA decided to remove Sudan from the terrorism sponsors designation. The paper seeks to investigate whether Sudan’s removal from the state sponsors of terrorism designation affects foreign direct investment (FDI). Data covered the 1974–2019 period, using a multivariate analysis combining VECM and ARDL models. Evidence reveals that the political and economic global openness headed by the removal of Sudan from state sponsors of terrorism designation, agricultural and oil investment as well as minerals investment opportunities are key variables that attract foreign direct investment in Sudan and affect FDI inflows positively and significantly in the long run. Policymakers should benefit from the global openness opportunities that offer a respectable environment for FDI inflows. Meanwhile, lifting the political and economic restrictions that were imposed, such as the state of a sponsor of terrorism and further economic restrictions, can boost investment in the agriculture, oil, and mineral sectors in the long run by creating some effective policies that are likely to lure foreign direct investment inflows and enhance sustainable economic development. Policymakers should emphasize implementing agriculture, oil, and mineral investment policies that must be accompanied with fundamental infrastructure restructuring policies by reforming the government system through the adoption of effective financial policies to combat corruption. Also, policymakers should develop towards geographic diversification of foreign investment flows to Sudan by focusing on European countries as essential partners given their crucial role in supporting Sudan and the strength of efficient companies in all areas that Sudan needs.

Does Global Economic Uncertainty Affect Foreign Direct Investment? Evidence From Asian Emerging Markets

In this paper, we examine the impact of global economic uncertainty on foreign direct investment (FDI) in Asian emerging markets using the new world uncertainty index (WWUI). The results show an insignificant and indirect impact of global uncertainty on FDI inflows in Asian emerging markets.

Factors Affecting Foreign Direct Investment in India: A Survey Based Study of Economic Experts

The study can help identify the key factors that impact foreign direct investment (FDI) inflows into India. Political stability and a favourable regulatory environment are the most significant determinants of FDI inflows into India. Experts highlighted the importance of a stable political environment that fosters investor confidence and predictability. The liberalization of FDI policy has increased the sectors eligible for FDI and raised the FDI limit in various sectors. Similarly, ease of doing business measures such as digitization of procedures and streamlining of regulatory processes have improved the investment climate in the country. Overall, the study provides important insights into the factors that impact FDI inflows into India and offers suggestions for policymakers to further improve the investment climate in the country. The findings suggest that political stability, a favorable regulatory environment, better infrastructure, and flexible labor laws are crucial for attracting FDI into the country. Policymakers should continue to focus on these areas to attract greater FDI inflows into India and foster sustained economic growth. Sample of 130 respondents that includes economic experts were surveyed to know the factors that affects Foreign Direct Investment in India and it is found that Political stability, Favourable regulatory environment and better infrastructure the factors that affects Foreign Direct Investment in India.

An Error Correction Model Analysis of the Determinants of Foreign Direct Investment: Evidence from SAUIDI ARABIA

The aim of this study was to gain insights into the factors affecting Foreign Direct Investment (FDI) inflow in Saudi Arabia by applying the cointegration and error-correction model on annual data over the period 2000-2020. The results of the ARDL bound test of co-integration displayed the existence of the long-run equilibrium in the model. The long-run regression results report that openness, government spending and economic stability are statistically significant. The coefficient of exports and market size is positive and both of them are not significant. However, in the short-run, our evidence shows that exports, openness and economic stability are statistically significant at 1%. The findings of the study are important for Saudi economic policy makers to undertake effective policies that can promote and attract foreign direct investments to diversify sources of income and boost economic growth.

Organized Crime and Foreign Direct Investment: Evidence From Criminal Groups in Mexico

How does organized crime affect foreign direct investment (FDI) in developing countries? Some research examines the effects of crime, such as homicide rates, on FDI. However, we know little about how organized crime in particular might affect such investment. This paper examines organized crime and FDI in Mexican states between 2000 and 2018. This case is important because Mexico is one of the top global recipients of FDI. At the same time, criminal violence has killed hundreds of thousands of people in Mexico in recent years, and scholars seek to understand the violence’s wider effects. We explain how organized crime competition, as opposed to crime generally, should shape investors’ decisions. Analyses using original data on criminal organization territory find that higher numbers of criminal groups are associated with lower levels of new FDI. Other measures of crime, such as homicide rates or crime rates, are not associated with foreign investment.

ANALISIS FAKTOR YANG MEMPENGARUHI FOREIGN DIRECT INVESTMENT (FDI) ASING TERHADAP PERTUMBUHAN EKONOMI DI IDONESIA TAHUN 2000-2019

. This study aims to analyze the variables that affect Foreign Direct Investment (FDI), inflation, interest rates and exports to economic growth either partially or simultaneously. Indonesia is the fourth most populous country in the world with a large workforce and abundant natural resources. This makes Indonesia one of the most promising countries to invest in. This foreign investment opens up many new jobs so that the unemployment rate can be reduced. The most obvious benefit from the entry of foreign investment is to increase state revenues through taxes. In addition, it creates a more stable relationship in the economic sphere of the two countries. The data used in the form of secondary data, which is data obtained from the official website or website. Based on these objectives, the data analysis technique uses time series data analysis with the ECM (Error Correcton Model) model. A method for estimating the movement between long-term and short-term variables.

Factors Affecting Foreign Direct Investment: The Case of the Netherlands

This study analyzes the effect of gross domestic product, inflation, and natural resource rent on foreign direct investment in the Netherland. Our analysis employs the Autoregressive distributed lag model from 1980 to 2018. The empirical results show that gross domestic product and natural resource rent positively affected foreign direct investment while inflation negatively affected both the short and long run. This study recommends that government officials and policymakers formulate policies to promote foreign direct investment for the development of the economy of the Netherland.
 

The Relationship between Foreign Direct Investment Inflows of World, Foreign Direct Investment Inflows of Turkey and Types of the Special Economic Zone: Evidence from 1980-2019

There are many factors affecting Foreign Direct Investment inflows into the countries. One of them is Special Economic Zones that encourage Foreign Direct Investment inflows and achieve remarkable results in the world. Special Economic Zones are defined in the United Nations Conference on Trade and Development as the regions where production, trade and storage are not limited to time and are exempt from customs and taxes. This study analyzed the relationship between the Foreign Direct Investment inflows of Turkey, the Foreign Direct Investment inflows of the World and the number of the Special Economic Zone types analyzed using the Autoregressive Distributed Lag Method from 1980 to 2019. The results show that Foreign Direct Investment inflows of the World have a positive and significant effect on Foreign Direct Investment inflows Turkey in the long term and the short term. Also, the number of total Special Economic Zone has a positive and significant on the Foreign Direct Investment inflows of Turkey. Foreign Direct Investment inflows of Turkey increase 1.01% and 2.58% in long term and short term, respectively when the increase is 1% in the number of total Special Economic Zone. Moreover in this study, a number of the Special Economic Zone types such as OIZ, TDZ, FZ have been analyzed.

Dynamic spatial effects of determinants of foreign direct investment: A case of the southern key economic region of Vietnam

ABSTRACTThe determinants of foreign direct investment (FDI) always attract the attention of researchers and policymakers. However, the spatial spillovers of FDI have not been given due attention. This study analyses the dynamic spatial effects of determinants of FDI in emerging markets: a case of the southern key economic region of Vietnam. The model employed in the research is the Dynamic Spatial Durbin Model for testing hypotheses of data collected from the General Statistics Office of Vietnam in the period of 2005–2016. The results show that there is a spatial interaction in FDI attraction to the above‐mentioned region. At the same time, factors such as market size, trade openness, population growth, agglomeration and institutional quality affect FDI inflows in the short and long term. In particular, the population growth of a locality reduces FDI inflows of that locality and neighbouring localities. Enterprise agglomeration of a province increases the FDI inflows of that province and reduces FDI inflows in adjacent provinces. This paper's findings highlight the determinants of FDI and spatial spillovers of FDI in emerging markets. In addition, previous models have not fully identified the spatial effects of FDI in the short and long term, which may skew policy decisions. Therefore, the article contributes to redefining the key factors to attract FDI inflows into emerging markets like Vietnam.

Factors Affecting Foreign Direct Investment and Economic Performance in Developing Economies: Evidence from Vietnam

ABSTRACT Since the economic and political reforms in 1986, Vietnam government has introduced a high extent of decentralization in fiscal and administrative aspects. This paper examines the impact of foreign direct investment (FDI) as a channel of fiscal and administrative decentralization on economic performance in Vietnam as the embodiment of emerging economies. The results point out that fiscal decentralization in terms of better tax revenue and spending on development investment have a positive and significant impact on the attraction of foreign investment. Strikingly, the level of “unofficial expenditure” has a negative influence on FDI, and controlling of corruption at local levels is critical to attract foreign investment. The results from instrumental-variable estimations show that FDI and total spending of local governments positively and significantly affect the performance of local economies.

Pengaruh Stabilitas Politik, Kriminalitas dan Daya Saing Global Terhadap Investasi Asing Langsung di 6 Negara Asean

Study aims to determine the effect of political stability, crime and global competitiveness on foreign direct investment in 6 ASEAN countries by using secondary data from 2013 to 2019 and using panel data regresi analysis techniques. The results show that political stability has a positive and significant impact on foreign direct investment in 6 ASEAN countries. crime has a negative and significant effect on foreign direct investment in 6 ASEAN countries. Global competitiveness has a positive and insignificant effect on foreign direct investment in 6 ASEAN countries. And economic growth as a control variable has a positive and insignificant effect on foreign direct investment, foreign direct investment in 6 ASEAN countries. Together, political stability, crime, global competitiveness and economic growth affect foreign direct investment in foreign direct investment in 6 ASEAN countries.

Determinants Of Foreign Direct Investment In The Manufacturing Industry: A VectorAutoregression Model Approach

This paper aimed to identify the factors that affect Foreign Direct Investment (FDI) in the manufacturing industry using a Vector Autoregression (VAR) model. The researcher selected possible economic indicators (Agriculture, Consumer Price Index, Government Expenditure and Unit Labour Cost) through theories and empirical evidences from various researches, covering quarterly period of 2004-2018. The result showed that there is a significant relationship between FDI and the selected economic indicators. It also revealed that shocks agriculture produces a positive impact, as well as government expenditure. However, consumer price index when introduced to shocks showed an immediate negative impact. On the other hand, unit labor cost did not have a significant impact on the foreign investments. The future variability of FDI primarily depends on itself, while the selected indicators affect roughly one-tenth of the future values of FDI

THE ANALYSIS OF FOREIGN DIRECT INVESTMENT AND ITS AFFECTING FACTORS IN INDONESIA

Foreign Direct Investment gave benefits in improving Indonesia's economics matters in Indonesia. Conseptually, Foreign Direct Investment (FDI) more benefecial because no return to the investor such as debt in foreign country, beside Foreign Direct Investment (FDI) in a country will be followed by transfer of technology, know-how, management skills, the risks of business was smaller and more profitable. However, the problem of global economic that occured affecting the development of Foreign Direct Investment (FDI) in Indonesia decreased and the growth became slowly. Then domestic and global factors weren’t stable influencing the decrease Foreign Direct Investment (FDI) in Indonesia. Therefore, it’s needed to examine the factors influencing Foreign Direct Investment (FDI). This study aimed to know and analyze some factors affecting Foreign Direct Investment (FDI) in Indonesia consisting gross domestic product, the level of real interest, exchange rates, labour produtivity, and exports. The affecting analysis be done in short-time by using Error Correction Mechanism = ECM technique. It was used time series data from 2000 to 2013 using Eviews 6.0. The type of data used was secondary data obtained from Indonesia Bank (BI), Central Bureau of Statistics (BPS), Federal Reserve Bank of St. Louis and United Nations Economic Social Commision for Asia and the Pacific (UNESCAP). The results of this study showed that gross domestic product, the level of real interest, exchange rates, and labour productivity had positive affection significantly on Foreign Direct Investment (FDI) in Indonesia. While the exports had negative affection significantly on Foreign Direct Investment (FDI) in Indonesia. From determination coefficient (R2) showed that the variables explained 97.13 percent on Foreign Direct Investment (FDI) in Indonesia while the rest 2.87 percent was explained by variables out of models (not studied).

THE ANALYSIS OF FOREIGN DIRECT INVESTMENT AND ITS AFFECTING FACTORS IN INDONESIA

Foreign Direct Investment gave benefits in improving Indonesia's economics matters in Indonesia. Conseptually, Foreign Direct Investment (FDI) more benefecial because no return to the investor such as debt in foreign country, beside Foreign Direct Investment (FDI) in a country will be followed by transfer of technology, know-how, management skills, the risks of business was smaller and more profitable. However, the problem of global economic that occured affecting the development of Foreign Direct Investment (FDI) in Indonesia decreased and the growth became slowly. Then domestic and global factors weren’t stable influencing the decrease Foreign Direct Investment (FDI) in Indonesia. Therefore, it’s needed to examine the factors influencing Foreign Direct Investment (FDI). This study aimed to know and analyze some factors affecting Foreign Direct Investment (FDI) in Indonesia consisting gross domestic product, the level of real interest, exchange rates, labour produtivity, and exports. The affecting analysis be done in short-time by using Error Correction Mechanism = ECM technique. It was used time series data from 2000 to 2013 using Eviews 6.0. The type of data used was secondary data obtained from Indonesia Bank (BI), Central Bureau of Statistics (BPS), Federal Reserve Bank of St. Louis and United Nations Economic Social Commision for Asia and the Pacific (UNESCAP). The results of this study showed that gross domestic product, the level of real interest, exchange rates, and labour productivity had positive affection significantly on Foreign Direct Investment (FDI) in Indonesia. While the exports had negative affection significantly on Foreign Direct Investment (FDI) in Indonesia. From determination coefficient (R2) showed that the variables explained 97.13 percent on Foreign Direct Investment (FDI) in Indonesia while the rest 2.87 percent was explained by variables out of models (not studied).