Benefits Of Foreign Direct Investment Research Articles

Maximising the (unequal) benefits of foreign direct investment: addressing the two-speed problem

ABSTRACT The UK is made up of broadly two types of local economies, characterised by two types of equilibria. One, ‘high-skill equilibria’, consists of richer localities throughout the country (e.g. London, South East, Cambridge, Oxford) which attract high-tech FDI, venture capitalists, high levels of innovation, skills and productivity. Another, ‘low-skill equilibria’ locations, have low levels of innovation, skills and productivity, even despite high levels of activity, in some cases. The notion of the two equilibria was recognised in an earlier volume of Contemporary Social Science and discussed in some detail in the editorial by Fai and Tomlinson (2023). The purpose of this paper is to explore the potential policy interventions for inward investment, focused not merely on growth, but on productivity growth, with the core purpose of helping lagging regions recover. We present a framework which explores how inward investment can be leveraged to ‘move the dial’ in lagging regions of the UK, rather than merely offering more of the same in terms of output, productivity and employment opportunities – which would attract activity that is subsequently rather divorced from the rest of the local economy. Our proposed framework summarises the nature of the interaction between multinational enterprises (MNEs) and the host economy, enriched with insights from supply chain analysis, economic geography and the trade-offs involved in delivering transformative growth and productivity.

You play the bad guy: how foreign direct investment affects zombie firms in China

This paper investigates the impact of foreign direct investment (FDI) on zombie firms at both the macro and micro levels, revealing a significant negative effect on their prevalence at the city level. Our results show that FDI accelerates zombie firm exits as local governments cease subsidies, recognizing that foreign firms can sustain local economic growth. This result is robust to alternative methods of identifying zombies, alternative measures for FDI, and diverse regression methodologies. This shift is predicated on the recognition that foreign firms can sustain local economic growth. Consequently, financial constraints and profitability among zombie firms deteriorate significantly, while healthy firms remain unaffected. These results support the crowding-out effect but find no evidence for technology spillover, challenging some conventional expectations about the benefits of FDI. Our findings contribute to a nuanced understanding of FDI spillover effects and its role in the targeted disposal of non-viable firms.

Foreign Investment and Governance Shaping SEZ Performance in Uzbekistan

This study examines the impact of Foreign Direct Investment (FDI) on the performance of Special Economic Zones (SEZs) in Uzbekistan, with a focus on export growth, job creation, and infrastructure development. While SEZs are globally recognized for their contribution to economic growth, limited research exists on their outcomes in Uzbekistan. To address this gap, a multiple linear regression model was applied to data from 100 stakeholders, including policymakers, investors, and businesses within Uzbekistan's SEZs. The analysis revealed that FDI has a significant positive impact on SEZ performance, with a coefficient of 0.45, followed by governance quality (0.35) and infrastructure (0.25). The findings underscore the importance of foreign investment in fostering industrial growth and economic diversification. The study suggests that improving governance structures and infrastructure within SEZs is essential to fully leverage the benefits of FDI and recommends policy measures such as better investment incentives and streamlined bureaucratic processes to attract more foreign investors.

Development and benefit of FDI in India

Foreign direct investment (FDI) is a key source of funds for India's economic development. Totake advantage of India's evolving economic climate and lower labour, foreign firms engage directly in fastgrowingprivate Indian enterprises. There are so many advantages of Foreign Direct Investments in Indialike Promotion of investment in key areas, New technologies, Increase in Capital inflow, Increase inExports, Promotion of Employment opportunities, Promotion of financial services, Exchange ratestability and development of backward areas. Foreign Direct Investment (FDI) is critical to a country'seconomic development. The entry of foreign cash has allowed India to improve its infrastructure,increase productivity, and increase employment. FDI also serves as a vehicle for acquiring sophisticatedtechnology and mobilizing foreign exchange reserves. This Article is an attempt to explore new benefitsof FDI for the economic growth of the nation.

Dampak Industri Halal pada Perekonomian di Indonesia: Pengaruh Pendapatan, Ekspor, dan FDI terhadap PDB Melalui Pendekatan GMM

This research explores the influence of income, exports and foreign direct investment (FDI) on Gross Domestic Product (GDP) in the halal industry in Indonesia, using the Generalized Method of Moments (GMM) approach. This study is based on panel data from companies operating in the halal sector between 2010 and 2022. The results show that income and exports positively and significantly influence GDP growth, confirming the importance of company activities and export performance in driving national economic growth. In contrast, FDI was found to have no significant effect on GDP, indicating that foreign investment's contribution in this sector is not yet optimal or is influenced by other factors such as the quality of institutions and infrastructure. This research provides important implications for policymakers and stakeholders, considering the urgency of improving export strategies, diversifying markets, and improving the quality of institutions and infrastructure to maximize the economic benefits of FDI. In addition, the results of this research also emphasize the important role of the halal industry as a major contributor to Indonesia's economic growth, as well as the need for policies that support further development and diversification of the halal industrial sector.

Country-level dynamic capabilities and inward FDI: a framework on future policy adaptations applied to post-Brexit UK

The purpose of this paper is to establish a policy framework for those responsible for maximising the opportunities of inward foreign direct investment (FDI). Our proposed framework intellectualises the need for dynamic capabilities at the country level (national and local) to sense and seize new opportunities from inward FDI, use this knowledge to mobilise resources and, over time, make changes to reconfigure the UK’s location-specific advantages in a post-Brexit marketplace. Using the backdrop of the UK’s decision to exit the European Union in May 2016 (Brexit) alongside other global challenges (the COVID-19-induced supply chain crisis, political unrest, wars, new trade deals), we explore the changing nature of FDI entering the UK. We explain why an adaptive investment promotion strategy means greater and more widespread benefits of inward FDI for the economy. Then, we propose a policy-oriented dynamic framework for how the benefits of FDI can be maximised during political upheaval. In our analysis and discussion, we highlight how changes in foreign firms’ FDI motives can alter the UK’s value proposition, and over time, the nature of a country’s specific advantages.

Foreign Direct Investment and Economic Growth in the Pacific Alliance countries

This article empirically analyzed the relationship between foreign direct investment (FDI) and economic growth (EG) in the Pacific Alliance countries. Quarterly data was used for each variable, and unit root tests, cointegration, and causality tests were applied. Additionally, a multivariate error correction model and impulse response functions were estimated. The main hypotheses were that FDI promotes the economic growth of the recipient countries and that economic growth contributes to attracting higher FDI flows. The results showed that in some countries, foreign investment promoted economic growth and, in turn, that EG contributed to attracting higher investment flows. However, in other cases, this relationship did not hold. These results suggest that factors such as infrastructure, financial market development, macroeconomic stability, institutional quality, and human capital are determinants of maximizing the benefits of FDI.

Exploring the pathways accounting: Foreign direct investment as a catalyst for idiosyncratic risk, sectoral GDP, economic activity, and economic growth

This study examines the interaction between foreign direct investment (FDI), idiosyncratic risk, sectoral GDP, economic activity, and economic growth in ASEAN countries using structural equation modeling (SEM) performed using AMOS software. The analysis uses data from the ASEAN Statistics Database 2023 to distinguish the significant direct and indirect impacts of FDI on idiosyncratic risks, sectoral GDP, economic activity and aggregate economic growth can. ASEAN, which includes ten Southeast Asian countries, has experienced rapid economic growth and increasing integration in recent decades, making it an interesting area to study these relationships. The study covers a comprehensive period to capture trends and differences among ASEAN member states. Applying SEM with AMOS allows a detailed examination of complex relationships between important economic variables. The results show a clear link between FDI inflows, idiosyncratic risks, industry GDP performance, economic activity, and overall economic growth. More specifically, FDI inflows have a notable direct influence on idiosyncratic risks, which then impact GDP growth by sector, and the level of economic activity and ultimately contribute to economic growth trends. economy more broadly in ASEAN countries. These findings highlight the importance of understanding and effectively managing the dynamics between FDI and various economic indicators to promote sustainable economic development across ASEAN. This information can inform policymakers, investors, and stakeholders in developing targeted strategies and policies that maximize the benefits of FDI while minimizing related risks to promote strong and inclusive economic growth in the region. This study highlights the multifaceted relationships in the ASEAN economic context, emphasizing the need for strategic interventions and policy frameworks to exploit the potential of foreign investment directed at ASEAN, to the Sustainable Development Goals and long-term economic prosperity in the region.

The Impact of Foreign Direct Investment on Economic Growth in Zambia: A Comprehensive Analysis

This study examines the relationship between economic growth, government consumption expenditure, gross national income (GNI) per capita, exports and foreign direct investment (FDI) in Zambia from 1994 to 2023. Using secondary data from the World Bank and regression analysis using Jamovi software, the study finds significant positive impacts of GNI per capita, exports and FDI on Zambia's GDP. The findings underscore the critical role of FDI in driving economic growth through technology transfer, managerial expertise and capital formation, while emphasising the importance of macroeconomic stability and diversified economic policies to maximise the benefits of FDI. The findings provide valuable insights for policymakers in formulating strategies to leverage FDI for sustainable economic growth in Zambia.

The Impact of Monetary Policy, Inflation Rates, and Foreign Direct Investment on Economic Growth in Developing Countries

This study explores the intricate relationships between monetary policy, inflation rates, and foreign direct investment (FDI) and their collective impact on economic growth in developing countries. Utilizing a comprehensive review of existing literature, this research aims to provide a nuanced understanding of how these macroeconomic factors interact to influence economic development. Monetary policy, often implemented through adjustments in interest rates and money supply, is critical in shaping economic stability and growth. The study reveals that effective monetary policy in developing countries can stimulate economic activity by fostering an environment conducive to investment and consumption. However, the impact of such policies is contingent upon the stability and credibility of the governing institutions, which are often variable in developing regions. Inflation rates, which reflect the general rise in price levels, were found to have a complex relationship with economic growth. Moderate inflation can stimulate spending and investment by reducing the real burden of debt and encouraging consumption. In contrast, high inflation can erode purchasing power and deter both domestic and foreign investment, thereby stifling growth. This study underscores the importance of maintaining inflation within a manageable range to support sustainable economic growth. Foreign direct investment is identified as a key driver of economic development, providing capital, technology transfer, and employment opportunities. The research highlights that FDI can significantly enhance economic growth by supplementing domestic capital, improving infrastructure, and fostering industrial diversification. However, the benefits of FDI are maximized when complemented by stable economic policies and a favorable investment climate. In conclusion, the interplay between monetary policy, inflation, and FDI is crucial in shaping the economic trajectories of developing countries. The study suggests that balanced and coherent policy frameworks are essential to harnessing these factors for sustained economic growth. Future research should explore country-specific dynamics to better understand the differential impacts across various developing economies.

Financing sustainable development goals in Sub‐Saharan Africa: Does international capital flows matter?

AbstractThis study investigates the role of international capital flows in financing the Sustainable Development Goals (SDGs) in Sub‐Saharan Africa (SSA). Using data from 41 SSA countries from 2000 to 2018 and employing the System Generalized Method of Moments (System GMM), the research examines the impact of Foreign Direct Investment (FDI) and remittances on the SDGs across disaggregated levels (economic, social, and environmental sustainability) and the aggregated level (SDGI). The findings underscore the crucial significance of international capital flows as essential financing sources for SSA countries. FDI emerges as a contributor to economic and social sustainability at the disaggregated level, yet it exhibits negative effects on environmental sustainability. Conversely, remittances are shown to positively contribute to economic and social sustainability at the disaggregated level. However, the impact of international capital flows on the aggregate SDGI is found to be insignificantly positive. These results highlight the necessity for policymakers in SSA to devise strategies that maximize the benefits of FDI while addressing its adverse effects on environmental sustainability. Furthermore, they emphasize the importance of strengthening policies aimed at directing remittances towards sustainable investments, thereby advancing the achievement of the SDGs. Governments are urged to prioritize enhancing regulatory capacities in environmental matters through investments in modern technologies and appropriate standards, aiming to strike a balance between environmental protection and economic needs. Additionally, they should prioritize transparency, public participation, and robust enforcement mechanisms. Encouraging environmentally friendly foreign investments and promoting regional and international cooperation are also crucial steps towards effectively managing local environmental challenges.

E-commerce and foreign direct investment: pioneering a new era of trade strategies

This study explores the dynamic interplay between foreign direct investment, e-commerce, and China’s export growth from 2005 to 2022 against the backdrop of the rapidly evolving global economy. Utilizing advanced analytical models that combine province- and year-fixed effects with fully modified ordinary least squares and dynamic ordinary least-squares methodologies, we delve into how foreign direct investment and e-commerce collectively boost China’s export capabilities. Our findings highlight a significant alignment between China’s export expansion and the global sustainable development agenda. We observe that China’s export growth transcends mere international investment and digital market engagement, incorporating sustainable practices such as effective utilization of local labor resources and an emphasis on technological advancements. This study also uncovers how knowledge capital and educational attainment positively impact export figures. A notable regional disparity is observed, with the eastern regions of China being more responsive to foreign direct investment and e-commerce influences on export trade compared to their western counterparts. This disparity underscores the need for region-specific policy approaches and sustainable strategies to evenly distribute the benefits of foreign direct investment and e-commerce. The study concludes that while foreign direct investment and e-commerce are crucial for China’s export growth, the underlying theme is sustainable development, with technological innovation and human capital being key to ongoing export success. The findings advocate for policies that balance economic drivers with sustainable development goals, ensuring both economic prosperity and environmental sustainability.

Foreign direct investment, information and communication technology, and economic growth: The case of North African Countries

This paper examines the role of information and communication technology (ICT) in modulating the effects of foreign direct investment (FDI) on economic growth in North Africa (Morocco, Algeria, Tunisia, and Egypt) over the period 1995 to 2021. Using advanced quantitative methods, including quantile regression, and comparing with Two-Stage Least Squares (2SLS) regression and Generalized Method of Moments (GMM), the study assesses the impact of FDI and ICT on growth, controlling for country fixed effects. The results indicate that FDI has a significant positive impact on growth, particularly when interacting with transmission channels, notably the telephone (mobile and fixed). However, the interaction with the internet varies according to quantile levels, showing positive effects at low quantiles and negative effects at high quantiles. The study highlights the importance of investment policies, digital inclusion, and research to optimize the benefits of FDI in the region.

Does Political Stability Matter for Foreign Direct Investment in Eurasian countries? Examining the Role of the Business Environment and Macroeconomic Variables

This In recent years, developing countries have placed a strong emphasis on attracting foreign direct investment (FDI), which is ostensibly regarded as the most important external resource for increasing industrial activity and real income growth. Indeed, the subsequent benefits of FDI, one of which is increased economic growth in developing countries, have been widely acknowledged. As a result, the goal of this study was to look into the impact of foreign macroeconomic factors, political instability, and the business environment on foreign direct investment in Eurasia countries. Many developing countries have softened their stances on foreign direct investment (FDI) in the hopes of luring more of this kind of investment and thereby bolstering their economies. This is due to the fact that there are many benefits to utilizing foreign capital during the expansion process. The panel data method was used to analyse information gathered from ten different Eurasia countries over a twenty-six-year period, from 1996 to 2021. The study's findings support the predicted outcomes of the hypothesized research. This study is one of the few in Eurasia countries that can be considered a pioneering study on the subject. This study will help policymakers and researchers understand the relationship between macroeconomic risk, political instability, the business environment, and foreign direct investment.

Impact of Foreign Direct Investment (FDI) on Economic Growth: A Study of Brazil

Purpose: The aim of the study was to investigate the impact of foreign direct investment (FDI) on economic growth: a study of Brazil
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings: The study on Foreign Direct Investment (FDI) and economic growth in Brazil found a positive relationship between FDI inflows and GDP growth. FDI contributes to capital accumulation, technology transfer, and sectoral diversification, enhancing competitiveness. However, the impact varies across regions and industries, with disparities in spillover effects. Targeted policies are needed to maximize FDI benefits and promote inclusive growth, addressing regional disparities and socio-economic inequalities.
 Unique Contribution to Theory, Practice and Policy: Dependency theory, modernization theory & institutional theory may be used to anchor future studies on the impact of foreign direct investment (FDI) on economic growth: a study of Brazil. The study should provide practical recommendations for firms and corporate boards to enhance their corporate governance practices based on empirical findings. The study should inform policymakers and regulatory authorities about the implications of corporate governance regulations on firm performance and market competitiveness.

Impact of liberalization and globalization on economic growth: Empirical evidence from Türkiye

Globalization, as the process of integration of the world economy, increases international trade, capital movements, and technology transfer. This study examines the relationship between globalization and economic growth in the 1974-2022 period in Türkiye. In this study, the ARDL Bound method was used for cointegration analysis and the DCC-EGARCH model was used to capture time-varying relationships. The results of the ARDL-Bound model show a positive and long-term correlation between globalization and economic growth in Türkiye. According to the results of the DCC model, there has been a generally positive relationship between economic growth and the globalization index since 1984. Türkiye's economy has generally been positively influenced by economic liberalization processes and globalization. However, the export-oriented growth strategy seems to have lost its effect after 2005. Moreover, the globalization benefits of foreign direct investment were only evident between 2000 and 2009, after which the positive relationship decreased. In the interest of attracting FDI and promoting sustainable economic growth, Türkiye should review its investment-friendly policies and develop strategies aimed at long-term benefits.

The Impact of China’s FDI in Renewable Energy on Pakistan’s Economy

Foreign direct investment (FDI), as a primary form of contemporary capital globalization, contributes substantially to a nation’s economic growth. Specifically, in China’s FDI initiative in Pakistan, channeling FDI towards renewable energy projects can alleviate Pakistan’s energy deficit and generate extensive economic advantages for the country. This paper examines the effects of FDI in renewable energy on Pakistan, analyzing the country’s location advantage and renewable energy potential, evaluating changes in GDP resulting from China’s investment in renewable energy projects in Pakistan, and identifying economic benefits of FDI. Additionally, this paper summarizes notable renewable energy projects and their development after inflow of FDI from China. The research provides in-depth information on the fundamental components of the projects. Additionally, the paper examines the effects of FDI in renewable energy on Pakistan’s immediate and long-term economic development. The results provide insights on suitable countries for receiving FDI and the impacts both inflow and outflow nations.

Implications of Foreign Direct Investment on SME Growth in Zimbabwe: A Case Study of Bulawayo Province

SMEs in Zimbabwe have withstood the test of time amidst economic decay experienced by the Zimbabwean economy for the past two decades. Since the adoption of progrowth policies in Zimbabwe FDI inflows have significantly increased overtime towards SMEs due because of their nurture to drive growth and economic competitiveness as well as navigating difficult economic landscapes. Therefore the paper investigates the implications of foreign direct investment on SME growth in Bulawayo. A qualitative research approach aligned with interpretivism research philosophy was adopted in this paper. The research subjects were selected using a convenient sampling technique. A total of 20 interviews were conducted with the managers and business owners of SMEs. The related challenges faced by SMEs in the Bulawayo metropolitan are increased competition, access to capital difficulties, skill and technology gaps, and regulatory and bureaucratic hurdles. The findings revealed that FDI plays a multifaceted role in shaping the SME landscape in Bulawayo metropolitan. The positive effects included opportunities for technology transfer, market expansion, improved infrastructure, capacity building, and training opportunities, and inclusion of the small and medium enterprises in supply chain integration. The study recommends a broader discussion with policymakers, business leaders, and other stakeholders to maximise the benefits of foreign direct investment on small to medium enerprises while mitigating its adverse effects.

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.

FDI, Technology Transfer and Economic Growth, What’s the connection? The case of Morocco

Foreign direct investment (FDI) has grown significantly in developing countries over recent decades, and governments in these countries now regard FDI as a key component of their development strategy. The potential benefits of FDI include the provision of financial resources, job creation, increased economic growth and spillover effects on local businesses. In addition, the development effectiveness of FDI depends on the ability of host countries to absorb technology and innovation from foreign companies. Technology transfer (TT) is therefore a major issue in the context of FDI. Political institutions and economic players need to work together to encourage effective and sustainable technology transfer. Technology transfer is therefore an essential process in enabling companies to remain competitive and innovate in a constantly changing economic environment. Technology transfer centers play a crucial role in this process, facilitating the exchange of knowledge and technology between the various players in the innovation ecosystem. After examining the two variables, Foreign Direct Investment (FDI) and TT on economic growth, the results indicate that both variables have a positive impact on economic growth