Attraction Of Foreign Direct Investment Research Articles

Status and trends of investment activity of domestic enterprises

The prospects and problems of direct foreign investment as a very important factor in the development of the Ukrainian economy are determined in this paper. Foreign direct investment (FDI) is the most desirable form of investment, because it enables to implement large projects; in addition the country receives new technologies, new corporate governance practices, etc. Over the past years, according to the policy of the Ministry of Economic Development and Trade of Ukraine conserning capital raising in various spheres of the economy, numerous negotiations with major investors regarding their affiliates opening on the state's territory are directed. As a result, such actions result in changes only in certain spheres of the economy, but do not affect the overall investment climate in the country. For global changes in this area, it is necessary to change conditions and factors influencing the investment subjects. The highest level of investment in the economy of our country was observed in 2013 and amounted 4.5 billion US dollars. Unfortunately, after the outbreak of hostilities, the amount of investments dropped sharply to 0.4 billion US dollars in 2014 and 3.07 billion in 2019. Therefore at present the government should make great efforts to increase the level of confidence of potential investors. However, the structure of past investments did not contribute to balanced development or structural modernization of economy (exports of high-tech products in 2019 amounted to 7.2% of the country’s industrial exports). Authoritative financial institutions such as the World Bank, Rating and Investment Information, Inc., McGraw-Hill, analyzing the investment environment in Ukraine, declare that the main obstacles of this area improvement are: high level of bureaucracy of processes (such as registration of new enterprises and registration of necessary documents for its activity), high level of corruption, imperfection of legislation and complexity of property interests protection of enterprises in courts. As a result, the Cabinet of Ministers of Ukraine in 2015 adopted the plan regarding the implementation of the best practices for high-quality and efficient regulation reflected by the World Bank Group in Doing Business rating methodology. Here the priority development areas, including agricultural sector, transport infrastructure, light manufacturing and IT industry are also identified. The assumptions of the ministry are confirmed by the data of the association`s research, according to which the IT sphere in Ukraine steadily grows by 11–26% each year. Regardless of the general state of economy, and the volume of this industry exports amounted $ 4.5 billion US dollars in 2019. The result of the state investment plan is also the announcement of two major airlines about their intention to invest $ 4 billion in the Ukrainian economy, which exceeds the total volume of direct investments in the previous year. The importance and necessity of the investment climate improvement are analyzed and presented and recommendations for improving the investment quality are developed in this paper. The negative influence of both economic and non-economic characters concerning the attraction of FDI to the domestic economy is defined as well.

The Big Screen: Mapping the Diffusion of Foreign Investment Screening Mechanisms

In the decade following the 2008 financial crisis, many advanced industrialized economies engaged in a competition to attract Foreign Direct Investment (FDI), whose flows had plummeted following the global shock. At the same time, however, they also implemented or tightened Investment Screening Mechanisms (ISMs), which empower governments to restrict foreign takeovers, especially in strategic sectors. ISMs are an understudied phenomenon in the International Political Economy literature. This research note describes patterns in the evolution of foreign investment screening policies and suggests a research agenda for analyzing these patterns. After defining ISMs and establishing the puzzle of rising investment screening in conjunction with rising efforts to attract FDI, we present a newly coded dataset on ISMs in OECD countries from 2007-2021, examining the evolution of seven key features of investment screening over time. Next, we set an agenda for future research by suggesting three explanations for their recent evolution in the shadow of rising Chinese investment: the role of bottom-up backlashes to economic globalization; elite-driven foreign policy arguments about the increasingly blurred lines between national and economic security in the information economy; and geopolitical transformations that have challenged key features of the post-war liberal order.

Foreign direct investment in the Lao People's Democratic Republic: Challenges and prospects

In the article the inflow of foreign direct investment (FDI) into the economy of the Lao is examined, in particular, the evolution of the policy, methods and rules of FDI attraction and regulation, as well as the dynamics and sectoral structure of FDI inflows. In result of Lao’s targeted proactive government policy, the FDI inflow since 2005 have risen substantially, owing primarily to domestic and foreign investments in hydropower and mining. Since the 3rd five-year National Plan for 1991-1995, the promotion of FDI has become a priority for the government. Since 2005, the annual rate of economic growth has exceeded 5%, and by 2020, the poverty of the people has dropped significantly. Through continuous, inclusive and sustainable economic growth the country managed to get out of “least developed countries” status by 2020. The Lao PDR government continues to improve the legal framework and law enforcement practice in the field of FDI. China, Thailand and Vietnam lead the investment process among the 10 most active foreign investors. Lao government clearly defined the desirable industries for foreign direct investment, which meet national interests - hydropower, mining, infrastructure facilities, industrial and agricultural enterprises, tourism. In this article an overview of the most important FDI sectors in Laos is provided. Authors have come to conclusion that the scope, volume and focus of implemented and ongoing FDI projects has benefited the Laos in terms of socioeconomic growth, foreign exchange earnings, job creation, as well as modern equipment, technology and skills transfer. The attention of the Lao government to practical details of foreign investment in important national projects contributes to successful use of external resources for national goals.

Determinants of Foreign Direct Investment in Developed and Developing Countries: Impact of Political Stability

Stable political environment and prominent development of political institutions increase foreign direct investment flows by providing lower risks for investors. However, this impact can vary according to the development of the country. This study aims to investigate the impact of various indicators of political stability on foreign direct investment attraction for different economies distinguished by their development level. Our database includes 66 FDI-recipient countries and 98 FDI-investing countries for the period from 2001 to 2018. By applying the gravity approach and Poisson Pseudo Maximum Likelihood method with instrumental variables (IV PPML), we model bilateral FDI flows, incorporating variables reflecting various aspects of political stability formed by the principal components analysis. Interestingly, we found mixed results regarding the impact of political stability on FDI flows. In particular, political stability indicators were found to be insignificant, when analysing the bilateral FDI flows for the group of developed economies. We obtained similar result for the group of developing economies. However, political stability variables significantly influence FDI flows for countries with different development level, confirming the hypothesis that countries’ development affects bilateral FDI flows. Besides, we discover the significant difference between developed and developing countries referring to FDI-investors. Based on the obtained results, we highlight a few policy implications for developing and developed economies.

Evaluating the Investment Climate in Algeria from an Institutional Point of View & its Impact on Attracting Foreign Direct Investment - in Comparison with Some Arab Countries –

The study aims to demonstrate the importance of the quality of institutions in attracting foreign direct investment, by assessing the institutional investment climate in Algeria and comparing it with some Arab countries (Morocco, Saudi Arabia, the UAE), by relying on some international indicators that measure institutional investment climate. So that the study finds that the quality of institutions in Algeria It is still weak compared to the countries selected for comparison, and that countries that were characterized by better institutional quality attracted more direct foreign investment.

Husab and Ramatex as Foreign Direct Investments in Post-Independence Namibia :

In their rhetoric and agitation for freedom and independence, liberation movements envisioned a new economic order for the majority of their people that will thwart inequality and economic exclusion occasioned by colonialism and apartheid. The South West Africa People’s Organisation (SWAPO) – Namibia’s then leading liberation movement – promised economic opportunities for Namibians and was on record proposing a leftist economic order as opposed to capitalism. Most analyses of the postcolonial economic order in Namibia testify to the fact that these promises were not kept. Instead, Namibia followed a neoliberal and an outward-looking economic development path that prioritised the attraction of Foreign Direct Investment. This text analyses the content and character of neoliberalism in postcolonial Namibia by conducting a comparative analysis of two case studies of Foreign Direct Investment – Ramatex Textiles Namibia and Husab Uranium Mine. Using a qualitative research method, the text finds that in both cases, state and foreign elite convergence ensured a neoliberal environment characterised by general deregulation, exploitation of labour and relaxation of laws all in favour of foreign capital at the expense of the local population. The text argues that the continuation of a neoliberal approach to economic policy will deepen inequality in Namibia. Instead, it is proposed that Namibia must follow the path of a developmental state as is the case in Botswana, Tanzania and Mauritius.

Attracting Foreign Direct Investment into the country using marketing technologies

The purpose of the study is to prove ways to determine an effective marketing technologies for the country in attracting foreign direct investment and to determine an effective form of organization for promotion agency. The authors developed and used marketing methods and effective methods of digital marketing to attract foreign direct investment to the country. The article emphasizes the attraction of investment in order to form scientific interest in this topic, as well as contributes to the development of scientific literature. As attracting foreign investment is a matter of policy and the situation in the country, the developed proposals are useful for promotion agencies. As a result of the study, it was proved that the use of digital marketing is effective for attracting foreign direct investment and forming an image, it was also proved to choose the right form of organization for promotion agency.

An Economic Blueprint for Assessing the Attractiveness and Suitability of Foreign Direct Investment in the Host Country

Attracting Foreign Direct Investment or FDI is both an “art” and a “science.” In deciding upon a potential investment opportunity in a particular nation or region of the world, it is important to understand the strength of a domestic market and the factors that would make for a good investing opportunity. Some of these factors include national income, debt, currency issues, country classification, and the operational economic system—analyzed through both traditional and non-traditional measures. This article provides foundation information relating to these factors in the context of measuring and classifying economies and economic systems in relation to foreign direct investment.

Examining foreign direct investment determinants of tourism industry in Oman and Egypt: The moderating role of investment environment

AbstractLimited research has examined foreign direct investment (FDI) determinants within the tourism industry, particularly in the MENA region. Thus, based on the internationalization framework of Dunning (Multinational enterprises and the global economy, Addison‐Wesley, 1993), this article aims to empirically investigate and compare the FDI determinants of the tourism industry in Oman and Egypt not only through the investors perceptive but more importantly through other stakeholders perspective such as experts in economy and tourism sector due to their vital role in decision making. It also examines the moderating role of investment environment on the relationship between the determinants and attractiveness of FDI. Further, PLS‐SEM was employed for data analysis purposes. The results revealed that resource‐seeking and efficiency‐seeking have a significant role in both countries. However, though market‐seeking was positive and significant in Egypt, it was found insignificant in Oman. Interestingly, the investment environment has a significant moderating role in both countries. The current study contributes to the literature by providing an obvious understanding of tourism FDI determinants with a special emphasis on the essential view of the related experts. It also presents a clear sight to tourism authorities on the essential factors that attract FDI in tourism.

PRZESTRZENNE ROZMIESZCZENIE SEKTORA ŚREDNICH PRZEDSIĘBIORSTW W WĘGIERSKIEJ HIERARCHII MIEJSKIEJ

The present study investigates the spatial distribution of the medium-sized enterprise sector inthe Hungarian urban network. This tier of the enterprise network has been relatively neglected in comparison with large foreign-owned firms, but deserves a look due to its promising role in the regional development and development policy. Our previous research on medium-sized enterprises becomes particularly relevant when we consider that the dominant development model of post-socialist industry, based on the attraction of Foreign Direct Investment, is showing limits under the new economic crisis; and that the further increase in regional competitiveness necessitates stronger support for the development of domestic enterprises in both developed and underdeveloped regions. However, the development dilemmas of mid-sized enterprises have not been sufficiently considered in the previous decades, even though their position between larger (mostly foreign-owned) companies and small, capital-poor enterprises gives them significant development potential. Their contribution to domestic capital accumulation, ability to formulate independent competitive strategies, and the role in shaping the local or regional business environment deserves scrutiny. According to our preliminary assumption, the status of medium-sized enterprises in the urban hierarchy is shaped first and foremost by the population number of cities, since the proximity of human resources and markets is a significant locational factor for medium-sized manufacturing firms. The study gives an overview of the evolution of the number of medium-sized enterprises and the average number of their employees in Hungarian cities since 2000, based on data published by the Hungarian Academy of Sciences CERS Databank and the Central Statistical Office. Structured interviews were conducted to detect the disparities at the level of urban regions, with a particular emphasis on Baranya County and the City of Pécs. The results demonstrate that entrepreneurial traditions and entrepreneurial visions are evaluated as important locational advantages by domestically owned medium-sized enterprises.

Revisiting the Nexus between FDI, financial development and economic growth: Empirical evidence from Nigeria

The need for economic development has preoccupied policymakers over the years. Especially the global south such as Nigeria, which is plagued with infrastructural deficit and less foreign direct investment and financial development attraction. This has drawn the attention of stakeholders and government officials for exploration of alternative routes for sustainable development, which is in line with the United Nations Sustainable Development Goals‐8 (UNSDG's). Thus, the current study focuses on the FDI‐led economic growth hypothesis if it holds or not for the case of Nigeria. The present study is distinct from previous studies in terms of scope by incorporation of more covariates, which has seemed to have been overlooked in the FDI argument. To this end, the current study re‐investigates the connection between FDI, financial development, total labour force, gross capital formation, and economic growth using Nigeria as a representation for Africa and Sub‐Saharan states specifically. Annual time‐series data from 1970 to 2018 is adopted for the econometrics analysis. Our study interest variables are foreign direct investment, economic expansion (GDP). The present study inculcates two additional financial development indicators; from the banking, and financial sectors. Using a battery of unit root and stationarity tests the study explores the stationarity properties of the outlined variables. Subsequently, the novel and recent robust Bayer and Hanck (2013) combined cointegration test in conjunction with Pesaran's ARDL bounds test was used to investigate the equilibrium relationship and regression analysis. While the Toda‐Yamamoto Granger causality was used to detect the direction of causality analysis among the variables. Empirical investigation traces a long‐run equilibrium relationship among the variables over the sampled period. Furthermore, empirical results show that FDI influences GDP, which suggests that FDI influences economic growth which is indicative of policymakers. Similarly, empirical outcomes establish a significant relationship between GDP and Financial Development from banking‐sector which is also corroborated in the causality results as an indirect causality is seen running from GCF to the financial sector. These outcomes suggest that FDI and Financial development are good predictors for sustainable economic growth in Nigeria. All aforementioned results have its inherent policy implications which are elucidated in the concluding remark of this study.

Telecommunications sector of Armenia and Baltic countries: the impact of foreign direct investment attraction

We examine the institutional and investment developments in the telecommunications sector of Armenia in the last two decades and compare them with those of the Baltic countries, namely, Latvia and Lithuania. In particular, directions of foreign investments made in the sector and the impacts on economic and technological systems of Armenia and the chosen Baltic countries have been thoroughly analyzed. During the analysis, an economic model has been used to assess the impact of foreign direct investments on the income (revenues) of the telecommunications sector of the countries under investigation. Econometric analysis made it possible to consider the above-mentioned links in more depth and in detail. First, a correlation analysis has been carried out which has proved the validity of the hypotheses that there is a strong connection between FDI and the revenue of the telecommunications sector in Armenia and Latvia in the considered time period of 2009-2019. The causal roots of the relationships between the two variables have been studied. After processing the statistical data and refining the model specifications, an econometric model for Armenia has been proposed with the help of which the key relationships have been clarified. The evaluated model, which satisfies the basic quality of econometric models, helped to draw important conclusions on the depth and nature of the impact of foreign direct investment volume on the income of the telecommunications sector in Armenia. The model clearly shows the unstable influence of foreign direct investments on income, which confirms the riskiness of the Armenian economy as a whole, since the country has been in an economic blockade and in a state of war with a neighbouring state for more than 20 years.

A Research on the Enhancement of the Hosting of Foreign Direct Investment in Korea’s Free Trade Zones

Purpose : The aim of this study is to suggest some ways to enhance the hosting of foreign direct investment(FDI) in Korea’s seven Free Trade Zones(FTZ). Research methodology : Comparative studies are applied to Korea’s three Special Economic Zones(SEZ) of FTZ, Free Economic Zones(FEZ) and Foreign Investment Zones(FIZ) to examine the performances of the Korea’s FTZ and efficacies of the present policies for the attraction of FDI in the Zones.. Results : No differentials are found between the three SEZ regarding the performances of FDI. The Zones in the Capital metropolitan areas show much greater scores for FDI than the Zones situated in the rural areas. Conclusions : Market forces play dominant roles in the flow of the FDI in the Zones. The Korea’s FTZ and FEZ are public funded SEZ for FDI. To address the intended FDI targets, more aggressive policy tools such as Advanced Enterprise Policies, Regional Strategic Industrial Policies and Trade Promotion Policies including trade credit and insurance schemes. Invest Korea’s more active role are desired to host FDI in FTZ.

Impacts of Foreign Direct Investment on Economic Growth in the East African Community (EAC): Empirical Evidence from Burundi

This study analyzes how Foreign Direct Investment affects the rate of economic development among nations in the EAC with the empirical evidence of Burundi. The paper indicates that there is a link between foreign direct investment(FDI), gross domestic product(GDP), human capital, and openness with support of yearly time-series data from 1989 to 2017. The results from the Vector Error Correction Model (VECM) analysis technics discover that all the variables in long-term they move together. The findings also discovered that there is short-term causality running from GDP and human capital to FDI and no short-run causality found from openness to FDI as a result of Burundi’s policies that do not implement market seeker FDI. For VECM validation, the paper went through some post estimation diagnostic tests such as Lagrange multiplier tests and Jarque-Bera test, the results did not indicate any autocorrelation among the variables as the residuals were normally distributed. Openness being an important factor to attracting foreign investors, it is very crucial for Burundi to revise its trade policies and encourage a conducive environment that promotes foreign investment penetration by promoting and encouraging both domestic and foreign investors and keep improving human capital for more FDI attraction as a goal for Burundi economic growth.

Environmental regulation and FDI attraction: a bibliometric analysis of the literature.

Although concerns about the environment have been raised by some governments and the public in general, literature has explored the possibility that Foreign Direct Investment (FDI) may flow from countries with strict environmental regulations to countries where the regulations are less stringent-the pollution haven hypothesis (PHH). In response to that tendency, some countries may implement less stringent regulations, in order to attract FDI, resulting in the race to the bottom effect (RTB). As the number of studies on this topic has expanded dramatically in the last two decades, the present work intends to provide an updated literature review on the relationship between FDI and environmental regulations. Through a bibliometric analysis, we evaluate the relevance of existing studies and identify possible trends. Results show that there is considerable empirical evidence for the PHH, but fewer studies confirm the RTB, and that topic has been increasingly analysed.

THE IMPACT OF THE INSTITUTIONAL FRAMEWORK QUALITY ON THE OWNERSHIP STRATEGY. EVIDENCE FROM EU FOREIGN DIRECT INVESTMENTS IN SOUTH AND CENTRAL EASTERN EUROPE

Foreign Direct Investment (FDI) is considered by scholars as a critical factor for economic growth and development. The recent economic crisis in the European Union (EU) has brought up again the discussion of the key drivers specific to the attraction of FDI. In addition to strict economic factor, the literature emphasises the role of institutions in a country as determinants in attracting FDI inflows. This study is one of the first to address the ownership strategy of multinational enterprises from the EU region undertaking FDI in former transitional economies in South (SEE) and Central Eastern Europe (CEE) using the concept of the quality of institutions. An analysis of the impact that the quality of market supporting institutions in determining ownership structure has of foreign affiliates in former transitional economies is attempted using an econometric model on institutional, regulatory, country specific and company level data based on a sample of 285 EU companies undertook FDI in 4 South and Central Eastern European countries during 1995-2015. We apply and advance the institution-based view of strategy by integrating it with resource-based and transaction cost considerations, incorporating three of the most important theoretical paradigms of international business studies.

AN ANALYSIS OF THE ECONOMIC DETERMINANTS AND THE QUALITY OF THE INSTITUTIONAL FRAMEWORK AS FACTORS TO ATTRACT FOREIGN DIRECT INVESTMENT IN SOUTHEASTERN EUROPE: THE CASE OF GREECE

Foreign Direct Investment (FDI) is considered by researchers as a critical factor for economic growth and development since they have shown a positive relationship between FDI and economic growth. The recent economic crisis in the European Union (EU) has brought up again the discussion of the key drivers specific to the attraction of FDI. In addition to strict economic factors the literature emphasizes the role of institutions in a country as determinants in attracting FDI inflows. An analysis of the role that the quality of institutions in attracting FDI has in Greece is attempted using an econometric model on institutional, regulatory, country specific and firm level data. For the purpose of giving a regional dimension in the analysis, and for attempting a comparison of the findings, the analysis focuses besides Greece, in two other Southeastern European countries (SEE), Bulgaria and Romania, being two new member states of the EU.

China's "Demographic Dividend" and the Transformation of Foreign Direct Investment

Since the reform and opening up, China has made full use of the advantages of the demographic dividend in the process of demographic transition, and achieved rapid economic development. However, since 2012, China's demographic dividend has gradually disappeared, and the attraction of foreign direct investment in labor-intensive industries has greatly decreased. In addition, the industrial structure is unreasonable, and the gap of regional development is widening. A series of problems have followed in the process of changing the age structure of the population.

Discussion: Challenges and Recent Developments of Foreign Direct Investments in Albania and Western Balkan Countries

Foreign direct investment (FDI) plays a crucial role in the growth and development of transitional economies and especially in countries where domestic capital is insufficient to meet the investment needs of the economy. Albania is a country applying for E.U. integration, so the country's central policies in recent years have brought about a liberalized economic framework and improved conditions for business development, attracting highly sought after FDI. This paper will provide an analysis of FDI in Albania and make a comparative analysis with the Western Balkan (W.B.) countries. The focus of the paper will also be on analyzing some of the critical elements that make these countries attractive to FDI, such as: analyzing the sectoral distribution of FDI stocks, the impact that inflows have had on the development of domestic economies, in creating jobs. FDI flows even though they have been in an upward trend, have not yet reached the desired expectations levels. W.B. countries have some very potential sectors to increase in the future and to be more attractive for FDI, such as tourism, service, transport, agriculture, industry. FDI had a positive impact on Albania's economy and in other Balkan countries. However, the region still needs to make many improvements in implementing institutional reforms, building and operating democratic institutions, improving the infrastructure. All countries need to collaborate to enhance political instability, resolve conflicts, and to focus on improvements and policies to attract potential investors.Implications for a Central European audience: This paper aims to contribute to increasing the knowledge about the opportunities and potential sectors to invest in the W.B. area. The article may make a positive contribution to the Central European businesses generally and especially to firms that are interested in investing their capital in W.B countries or scholars who currently study the effects of FDI in developing countries. There is an analysis of how public policies can further increase the attraction of FDIs, which is beneficial for public officials aspiring to absorb foreign investments in their area of oversight. The optimal geographical position of Albania and W.B. countries has played an essential role in attracting foreign investments for neighbouring countries and especially European Union countries. Central European countries such as Hungary, Austria, and Switzerland are leaders or significant investors in the region. The distance between host and recipient countries have been a dominant factor of FDI, as well as cultural and linguistic resemblances.

Economic complexity, human capital, and FDI attraction: A cross country analysis

Foreign direct investment (FDI) inflows dynamics indicate that its new wave is efficiency-seeking and, thus, the recent literature emphasizes the host countries knowledge role and productive capabilities. This paper holds forth the new factor of economic complexity, which is an indicator of national productive capabilities and knowledge. Two proxies are used to measure the countries economic complexity, including economic complexity index (ECI) and economic sophistication (EXPY). The results indicate that economic complexity is one of the main determinants of FDI inflows with statistically and economically robust positive effects on FDI inflows to host countries. Furthermore, our findings explain why countries with equal human capital endowment have different performances in FDI attraction.