Attraction Of Foreign Direct Investment Research Articles

Making aid work: institutional thresholds and FDI

Purpose The purpose of this paper is to analyse the institutional threshold effects of foreign aid on foreign direct investment (FDI). Design/methodology/approach This paper develops a theoretical model from an extended Solow model that introduces the conductive effect of institutions in an aid recipient country towards the capacity of attracting FDI. This study evidences threshold effects with the most recent panel threshold models that consider endogeneity issues. The data on economic institutions and foreign aid are decomposed into disaggregated level to reveal the detailed threshold pattern. Several sample subsets are used for a heterogeneity analysis. Findings Conducting empirical research on a sample of 62 countries during the period 2003–2016, this study finds robust evidence of the existence of an institutional threshold in the aid–FDI nexus which a country must attain to reap the full attraction of FDI by foreign aid providing financial resources. Furthermore, foreign aid tends to promote FDI in institutions characterized by a right-sized government, a strengthened legal system and an appropriate regulatory environment. On the other hand, aid may crowd out FDI. The results are robust to regional combinations and a subset of low and lower-middle-income countries. In addition, this study finds that aid targeted at social infrastructure and services has a positive effect regardless of institutional threshold. Originality/value This paper contributes to the literature by introducing a non-linear and discontinuous effect of aid on FDI, i.e. a threshold effect, highlighting the relevance of legal systems and regulations and the possibility of a crowding-out effect on FDI for specific institutional regimes. The thresholds provide a guide for donor countries to ensure aid effectiveness at the risk of being counterproductive and for recipient countries to better assess the institutional dimensions that need to be improved.

Practical Strategies for The Economic Development of Mexico: Nearshoring Trend

This research aimed to suggest practical strategies for Mexico's economic development through the trend of nearshoring. It involved identifying, analyzing, and organizing the causes of the conflict between China and the USA over international trade and exploring the opportunities that nearshoring to Mexico can offer. Qualitative research methods were applied, and documentary research techniques were used based on two study objects: a) the Sino-American dispute over international trade and b) nearshoring to Mexico. Nearshoring to Mexico is driven by various factors, including tariff benefits from Free Trade Agreements, low labor costs in manufacturing companies, and a stable exchange rate. Therefore, Mexico needs to encourage the development of industrial parks, implement an effective Public Security Policy, offer tax incentives to attract Foreign Direct Investment and improve port, road, and air infrastructure to take full advantage of this trend.

Do FDI And Trade Openness Affect Economic Growth Differently Across Income Groups? Case Studies From Asian Countries

This study examines the nexus between foreign direct investment (FDI), trade openness (TRO) and economic growth for selected 11 high-income and 22 middle- and low-income Asian countries within a model using a more recent panel dataset over the period 2000–2021. The cointegration test has been applied in this study, which shows that whether there is a long-term interrelationship between FDI and economic growth, which we focus on in particular, and then the covariance matrix estimators that are developed by Driscoll and Kraay are used. Our findings indicate that there is a positive relationship between FDI and TRO, and economic growth for high-income countries, whereas the relationship between FDI and economic growth is negative for middle- and low-income countries. This study provides insights on why governments and policy makers in developing countries should focus on prioritizing domestic investment and production strategies for sustainable economic growth rather than simply emphasizing the attractiveness of FDI and the indispensability of import-oriented trade liberalization.

Justification Strategic Priorities of Investment Development of the Republic of Armenia

The Republic of Armenia requires investments for economic growth and development, including foreign direct investment due to the small capacity of the domestic market. The investment strategy must be consistent with the national development strategy and must be the resource base of the national strategy in terms of realizing the values and interests of the country’s residents. The purpose of the study is to substantiate the strategic priorities of investment development of the Republic of Armenia and to identify priority development sectors that have competitive advantages and investment potential. The methodological basis of the research is the theory of strategy and methodology of strategizing by academician V. L. Kvint. According to the strategy methodology, an analysis of global investment and national trends was carried out, and successful international experience in attracting investments was studied. The experience of Israel is considered, which demonstrates a striking example of improving the investment attractiveness of the country thanks to an effective investment strategy. The strategic priorities of Israel’s investment strategy are highlighted, some of which need to be implemented in the practice of attracting investments in the Republic of Armenia. To substantiate strategic priorities and highlight highly competitive industries, regulations governing the attraction of foreign direct investment in Armenia, the economic state of Armenia were studied, and an OTWS analysis of investment activity was conducted. Based on the results of a comprehensive analysis, the authors propose two groups of strategic priorities: primary strategic priorities and auxiliary priorities that enhance the significance and effectiveness of the former. The study shows that strategic industries with competitive advantages and investment potential for Armenia are the chemical and metallurgical industries, textile and clothing industries, tourism, pharmaceuticals, and agro-industry. An effective investment strategy for the Republic of Armenia is the basis for the country’s further development.

Experience of Leading European Global Cities in Attracting Foreign Direct Investments and Labor Migrants: Opportunities for Use in Russia

This research examines how Russian cities can learn from leading European global cities in attracting foreign direct investment (FDI) and foreign labor migrants. It emphasizes the link between migration and investment flows in global cities specialized in specific services. Global cities play a crucial role in attracting transnational factors of economic growth, with migration being a significant factor. The study analyzes the potential benefits of migration to global cities, including increased trade and capital flows. This benefits both the countries of origin through remittances and the global cities themselves through FDI. European global cities, including London, Paris, Amsterdam, Stockholm, Madrid, Frankfurt, Vienna, Zurich, Dublin, and Berlin, are major centers attracting FDI and labor migrants. Each city has its own specialization and competitive advantages, contributing to the global division of labor. Building on previous research, the study analyzes the attracting factors identified by the City of London for FDI and foreign-born skilled personnel. It aims to identify applicable opportunities for Moscow and St. Petersburg, the leading Russian global cities. While Moscow and St. Petersburg are well-ranked, other Russian cities have limited recognition. The research plans to expand to other Russian global cities, contributing to a comprehensive understanding of global city development. The research explores how Russian cities can leverage the experiences of leading European global cities to attract FDI and foreign labor migrants. By doing so, Russian cities can foster economic growth and enhance their global standing.

Factors Affecting the Attraction of New Generation Foreign Direct Investment into Vietnam

The study of factors influencing the attraction of new generation FDI aligns with the trend of focusing on attracting more high-quality and environmentally friendly FDI flows seen in today's countries. The objective of the article is to investigate the impact of these factors on attracting new generation FDI into Vietnam using a sample of 10 Asian countries from 2012 to 2023, including Vietnam, and applying the OLS method to analyze data. Regression results show that economic growth rate, innovative ecosystem, and inflation are factors influencing the flow of new generation FDI into Vietnam.

The Role of Performance Political Stability and Macroeconomic Attracting Foreign Direct Investment in ASEAN

Foreign direct investment (FDI) plays a crucial role in developing nations to raise the standard of living for their citizens and strengthen their economies. This research aims to investigate the effects of macroeconomic factors like GDP, inflation, and female employment in the industry on flows of foreign direct investment as well as factor political stability with a research focus on 5 ASEAN countries (Indonesia, Malaysia, Vietnam, Laos, Cambodia) with research 20 years. The research method used panel data regression with secondary data from the World Bank. The Fixed Effect Model is found to be the best model selection. The results showed that political stability variables as well as all macroeconomic fundamental variables as measured by GDP, Inflation, and Employment Females in Industry partially had a significant and positive effect on the inflow of Foreign direct investment in 5 ASEAN countries and simultaneously had a significant positive effect.

ESTIMATING THE EFFECT OF TAXATION ON THE ECONOMIC GROWTH OF SIERRA LEONE USING A TIME SERIES ANALYSIS

<p>This study delves into the impact of taxation on the economic growth of Sierra Leone, aiming to establish a comprehensive understanding of the intricate relationship between taxation and the country's economic trajectory. Employing time series data spanning from 1995 to 2022, the study utilizes the Auto Regressive Distributed Lag (ARDL) framework for analysis. Unit root analysis reveals that certain variables remain stable at levels, while others achieve stability at their first difference. The bound test cointegration results affirm the presence of cointegration, indicating a long-term relationship between taxation and economic growth in Sierra Leone. The study highlights the overall significance of explanatory variables in explaining Gross Domestic Product (GDP). The coefficient of determination indicates that 77.37 percent of GDP variation is explained by indirect taxes, other taxes, interest rates, and foreign direct investment. Notably, the coefficient of indirect taxes demonstrates a negative and statistically significant influence on short-term economic growth in Sierra Leone. In contrast, interest rates exhibit positive and individually significant effects on short-term economic growth. The findings suggest that indirect taxes in Sierra Leone stimulate consumption but reduce savings. Consequently, policymakers are urged to prioritize enhancing international relations to attract Foreign Direct Investment (FDI) and promote export activities, thereby bolstering export revenue and fostering economic growth.</p><p> </p><p><strong>JEL: </strong>O11, O23, H20, H22, C22, F21, E62</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/edu/0758/a.php" alt="Hit counter" /></p>

Dynamic impact of demographic features, FDI, and technological innovations on ecological footprint: evidence from European emerging economies.

Climate change effect mitigation is a critical priority for top leaders and communities around the globe. Human-induced environmental issues are affecting humankind's standard of living and development potential and the planetary boundaries. Sustainability objectives aim to enhance environmental quality and ensure sustainable development for all by eliminating social inequalities. This study examines the complex relationships between demographic features, foreign direct investment, technological innovation, and ecological footprint, emphasizing the relevance of population aging, population density, and urbanization in this context. The research uses a selection of emerging European economies during 1995-2018. The reasons for countries' selection are related to the increasing rate of population aging in European countries, the attractiveness for foreign direct investment, the economic growth, and the technological advancement potential these emerging countries possess. In order to investigate the long-run relationship between the selected variables, the study tests the cross-section dependence, homogeneity, and cointegration and uses Konya tests to determine panel causality. Based on Konya methodology, differences between countries in the panel are evidenced and discussed accordingly. Our findings confirm the long-run relationship between environment, technological innovation, population aging, and FDI. The results of this research are highly relevant for policymakers in selected countries for identifying the set of correlations and the relevance of various variables in such national economies. Demographic features such as population aging and population density are critical for Europe, and the results show the impact on the ecological footprint.

Innovation and foreign direct investment attraction in developing countries

Innovation and foreign direct investment attraction in developing countries

Green finance, social inclusion, and sustainable economic growth in OECD member countries

The importance of fostering a thriving green economy is emphasized as a key strategy for mitigating the threats posed by climate change. This study aims to assess the influence of social inclusion and green finance on the sustainable growth of 31 Organization for Economic Co-operation and Development (OECD) nations between 2010 and 2021. The results obtained using the fully modified OLS (FMOLS) methodology indicate that social factors such as poverty reduction and social inclusion do not impact the green economic prosperity of OECD countries with an industry-focused economic structure. Furthermore, the expansion of green finance markets and the attraction of foreign direct investment with an environmental focus can contribute to the advancement of green development in OECD countries. As a recommendation, it is advisable for OECD nations to place greater emphasis on developing the green digital finance market, exploring blockchain-based green finance solutions, fostering green foreign direct investment, and promoting early warning economic systems.

Determinants of foreign direct investment in the agricultural sector: Empirical evidence based on economic regional data in Vietnam

Agriculture is an industry that plays an essential role in economic development towards eliminating poverty issues, but foreign direct investment (FDI) inflows to this sector remain modest in Vietnam. This study analyzed the determinants of foreign direct investment in the agricultural sector into the Southern Key Economic Zone (KEZ) of Vietnam, which is considered the foreign direct investment magnet of Vietnam, but its FDI inflows into the agricultural sector have been consistently low, and has shown a downward trend in recent years. The study was based on a sample of 129 foreign investors of a total of 164 multinational enterprises (MNEs) in the agricultural sector, including representatives of the Board of Directors and representatives at the department level. The Partial Least Squares Structural Equation modeling (PLS-SEM) approach was used to test the hypotheses. Findings indicated that FDI attraction policies have the strongest impact on FDI inflows. This was followed by infrastructure, regional agriculture policies, public service quality, natural conditions, and human resources. This study suggests policy recommendations to improve foreign direct investment inflows into the agricultural sector of the Southern Key Economic Zone (KEZ) of Vietnam.

Conceptualisation of Nation Brands to Attract Foreign Direct Investment: An Integrated Model

A nation brand is defined as a brand of a country. Nations are not only political and sovereign entities, but also business entities that conduct foreign trade, promote talent and innovation, create knowledge, levy taxes and enact laws. As a whole, nations accumulate wealth, power and status and leverage their brand identities to further their strategic interests. This article looks at the theories of nation branding and its implications on attracting foreign direct investment (FDI). FDI inflow has been studied by various researchers. The impact of nation branding on FDI has not been studied from an integrated perspective. This article analyses all the papers published in the field from 1969 when the genre of research was first mentioned in management literature and the factors presented by various researchers and place brand practitioners up to 2022 and combines them all into one integrated statistically testable model. The article analyses the factors from three perspectives—that of the governments and investment promotion agencies, external brand analysts and ranking consultancies as well as that of the investors.

Is There a Trade-off Between Economic Growth, Foreign Direct Investment, International Trade and Environmental Degradation? A Comparison Between Asian Developed and Developing Countries

Against the backdrop of impressive economic growth, the attractive foreign direct investment (FDI) and international trade of Asian countries, this study attempts to examine whether trade-offs between three aspects of economic growth, FDI, international trade and environmental degradation. Panel Autoregressive Distributed Lag (P-ARDL) model with pooled mean group estimates has been applied on panel data from 1996 to 2019. Panel Vector Error Correction model (VECM) Granger causality test is also used to identify multidimensional causal relationships between variables. The research results confirm the existence of a long-term equilibrium relationship between environmental degradation (CO2 emission) and the combination of economic growth, FDI and trade openness. In the short run, income positively affects CO2 emission while negative impacts and lower income elasticity have been found in the long run, implying that CO2 emission decreases and reverses its direction when income rises. Contrasting results collected from two groups of developed versus developing countries, the author reveals a linear relationship with a positive direction between economic growth and environmental degradation in developing countries while opposite results have been shown in developed nations, which supports the environmental Kuznets curve hypothesis in Asian countries. This study also provides sound proof for the ‘pollution haven hypothesis’ and the scale effects on FDI attraction and international trade. By applying relatively new estimators in the field of econometrics to compare the differences between Asian developed and developing countries, the research highlights the appropriate policies contributing to sustainable economic growth, attractive FDI and growing green trade with minimum adverse effects on the environment. JEL Codes: C33, F18, F21, F43, O44, Q40, Q51, Q53

The Experience of Bulgaria in Attracting Foreign Direct Investment — Lessons for Emerging Economies

Foreign direct investment (FDI) has been crucial in transitioning Central and Eastern European countries from planned to market economies, facilitating technological modernisation, job creation, export performance, and regional competitiveness. However, FDI alone cannot solve economic development challenges; effective policies are essential for leveraging FDI as a catalyst for economic catch-up. This paper aims to derive economic policy lessons for emerging economies through a critical assessment of the Bulgarian experience in attracting FDI. It employs a methodological approach that combines quantitative analysis of key FDI indicators with qualitative evaluation of the policy landscape. Since the end of the 1990s, Bulgaria has secured macroeconomic and political stability as an important precondition for FDI, applying an open-door policy for foreign investors without strategic targeting. The country's accession to the European Union in 2007 further enhanced its investment appeal. Nevertheless, the passive policy of reliance on a low tax regime and low labour costs without a strategic focus has led to unbalanced regional and unfavourable sectoral distribution with foreign investors crowding into the metropolitan area and sectors like non-tradable services and low-end manufacturing. Thereby, the Bulgarian experience, where the quantity of incoming FDI overshadowed the quality, demonstrates the insufficiency of a laissez-faire FDI strategy for maximising the benefits of FDI. The study underscores the necessity for proactive state policies in emerging economies that not only attract FDI but also ensure it fosters technological transfer and stimulates the economic potential of underdeveloped regions.

Empirical Relationship between Foreign Direct Investment and Economic Growth: Evidence from Nepal

Background: Foreign direct investment (FDI) is vital for developing countries like Nepal to access foreign capital, drive economic growth through technology transfer, open new investment and research opportunities, and harness their abundant natural resources. With Nepal experiencing a capital shortage, FDI plays a crucial role in bridging the resource gap and stimulating economic activities in the country.
 Objective: The study examines the relationship between FDI and economic growth, gross domestic savings (GDS), trade openness, as well as the impact of policy (liberalisation) and security variables in Nepal.
 Methods: The study employs data from secondary sources, such as the Nepal Rastra Bank, the Ministry of Finance, and the Central Bureau of Statistics, along with a database on the Nepalese economy from 1996 to 2019. The study utilises the Autoregressive Distributed Lag (ARDL) model for the evaluation and interpretation of the results.
 Results: The findings of this study demonstrate a positive and statistically significant relationship between Real Gross Domestic Product (RGDP), Real Gross Domestic Saving (RGDS), and Trade Openness (Xm) with Foreign Direct Investment (FDI) inflow in Nepal in the long run. Likewise, the Liberalization Policy positively affects FDI, although it lacks statistical significance. However, the presence of poor security conditions during the civil war exerts an adverse impact on FDI inflow.
 Conclusion: The empirical analysis provides compelling statistical evidence supporting the claim that Trade openness and RGDP positively impact FDI in the long run. It signifies the potential of FDI as a significant resource capable of contributing to economic growth, with trade openness facilitating the inflow of FDI in the economy. Furthermore, Gross Domestic Saving appears to be a significant determinant of FDI, as it fosters capital formation within the economy, ultimately promoting increased FDI inflows. Likewise, the success of FDI attraction in Nepal is contingent upon effective Liberalisation and Privatisation policies alongside a stable political environment, which collectively play pivotal roles in facilitating and sustaining FDI inflows.
 Implications: The study suggests that policymakers should focus on the timely reformation of economic policies and should pay close attention to providing security and ensuring an investment-friendly environment. The government should encourage increased savings through the better facilities of financial institutions and promote international trade and infrastructure development.
 Keywords: FDI, Gross Domestic Savings, Economic Growth, Trade Openness, ARDL
 Paper Type: Research Paper

Dynamics and structure of foreign direct investment in CIS countries

Object: The purpose of the study is to assess the impact of investments on the development of economic cooperation between the CIS countries and, based on this, to develop recommendations aimed at attracting foreign investment for the development of mutual cooperation between the economies of the participating countries.Methods: The following methods were also used in the course of the work: scientific abstraction, system and structural analysis, logical generalization, as well as economic and statistical analysis. The study also used grouping and classification, expert assessment and detailed methods.Findings: Thus, to date, the institution determining trade and economic relations between the CIS countries is the EAEU, which, according to Bella Balassa's theory, is at the fourth stage (economic union), which is characterized by the fact that member states must agree to coordinate macroeconomic policy across the entire zone, which is not always easy to implement, as experience has shown The European Union.Conclusions: Thus, the investment market has two levels, both within the EAEU and with foreign countries, especially with China and other countries of the Middle East at the present stage. To increase the attractiveness of foreign direct investment, the authors recommend that the EAEU countries take the following measures. Develop an investment policy for non-resource sectors of the economy; take measures aimed at training qualified labor; increase public investment, in particular in socio-economic infrastructure, etc.

Resilience of Foreign Direct Investment

Facing a world of continuous, overlapping disruptions, countries are recognizing resilience as the imperative condition for securing a sustainable and inclusive future. For developing countries, such as Costa Rica, Foreign Direct Investment (FDI) has had a positive impact specifically on economic growth, total exports, and the number of people employed. Costa Rica has undergone an important structural transformation in the last three decades, having gone from an import substitution model to a development model oriented to the promotion of exports and attraction of foreign direct investment (FDI). The efforts made to achieve greater international insertion of its economy have allowed the country to diversify its exportable offer, position itself as an attractive destination for investment in search of efficiency, and integrate its exports into global value chains.; ultimately becoming more resilient to external shocks. During the pandemic of COVID-19 Costa Rica’s Investment Promotion Agency (CINDE) reached record numbers in investment projects and job creation, the paper focuses on the years 2020-2021 and the attraction of FDI to the Costa Rica.

Solutions to Enhance Foreign Direct Investment Attraction to Vietnam in the Digital Transformation Phase

The reality shows that developing countries often face capital and technology shortages, outdated industrial production techniques, small-scale production, low labor productivity, low per capita GDP, low GDP growth rates, low savings rates, underdeveloped foreign trade with a trade deficit, exporting raw materials and semi-processed goods, a development gap compared to advanced countries, and dependence on developed countries in terms of trade, technology, foreign aid, and expertise. This is referred to as the "vicious circle" of poverty by Paul A. Samuelson, which requires an external boost. According to him, this boost includes capital, technology, expertise, etc. Therefore, attracting foreign direct investment (FDI) is considered an effective solution for the socio-economic development of developing countries. Consequently, these countries pay special attention to studying the factors that influence FDI attraction policies to timely adjust their policies to optimize FDI attraction and serve the process of economic and social development. Evaluate the attraction of foreign direct investment and examine the factors influencing foreign direct investment attraction. Based on that, propose solutions to enhance the attraction of foreign direct investment in the current phase.

Copper economic dynamics: Navigating resource scarcity, price volatility, and green growth

This research delves into the intricate discourse surrounding nations' pursuit of sustainable development between 2000 and 2020, focusing on ten major global copper-producing countries and leveraging international databases. It reveals a positive correlation between historical and current green growth efforts, an inverse relationship between copper prices and sustainable development, and explores the impact of Foreign Direct Investment (FDI) in the energy sector on energy inefficiency. Emphasizing the financial dynamics within the copper industry, the study highlights the potential negative impact of increased tax revenues on green growth. Furthermore, it underscores the pivotal role of financial conditions and economic context in shaping sustainable development, advocating for a balanced policy approach. To advance green growth in the copper industry, strategic interventions are proposed, encompassing effective copper price management, the promotion of green technological advancements, attraction of green FDI, implementation of emission taxation systems, advocacy for sustainable corporate management, and leveraging AI and big data analytics to optimize green solutions and minimize ecological footprints.