Benefits Of Foreign Direct Investment Research Articles

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.

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

The Mediating Role of Governance in Foreign Direct Investment Inflows and Economic Performance Nexus: New Evidence from Nigeria

The recent FDI-growth literature suggests that the varying effects of foreign direct investment on economic growth in host countries might be due to certain domestic factors that determine the benefits of FDI. Among these factors is the quality of governance; thus, this study examined how the interaction between foreign direct investment (FDI) and governance affects the performance of the Nigerian economy by relying on annual time series data spanning 1986 to 2021. The results from the autoregressive distributed lag (ARDL) model revealed that the interaction between governance and foreign direct investment exerts a positive and highly significant impact on economic performance. Apparently, the interaction between governance and foreign direct investment appears to be elastic. The foregoing suggests that governance is a significant moderating factor between foreign direct investment and economic performance in Nigeria.

Determinants of Foreign Direct Investment in Oman

Foreign Direct Investment (FDI) has changed worldwide due to the acute financial and economic crises that the world has witnessed in the last decades. The world economy changed rapidly, where many states became hostile towards FDI, particularly in conflict zones. Such an attitude has changed since many countries realized the benefits of FDI and its contribution to their economies. The research uses a qualitative method to provide more substantial evidence for the findings through convergences and rationale of finding. It will also increase the generalization of the results and adds to a better understanding of FDI and encourage researchers to identify the barriers and obstacles in attracting more FDI projects to Oman, such as legislative, bureaucracies, market size, and the investment climates. The outcome of this research reveals the challenges that foreign direct investment in Oman. These are bureaucracy, the investment climate, which is related to the rules and regulation, the market size of Oman, which is considered very small in international scales, and the Omanization project, which aims to replace the expatriate's workforce with nationals. This research paper conducted a SWOT analysis for Oman's investment environment, which showed many strong points as Oman enjoyed many opportunities that the government might take as the opportunities to use those as drivers to enhance the foreign direct investment inflow to Oman. Much of the analysis showed some weak points where the government should tackle it and improve it. This study took Singapore and the United Arab Emirates as secondary case studies, where both states had a successful experience in attracting foreign direct investment due to different policies where the Oman government can learn from such practices.
 Keywords: Determinants, Motivators, Foreign, Investment, Oman

The impact of FDI on economic growth in developing countries: the role of FDI inflow and trade openness

This study examines the relationship between foreign direct investment (FDI) inflow, trade openness, and the influence of FDI on economic growth. The threshold methodology and GMM estimation are employed to analyze panel data from 60 developing countries in the period between 1995 and 2019. This study demonstrates the positive impact of FDI on economic growth in developing countries. However, the study also finds a significant threshold of FDI inflow relative to GDP that changes the impact of inward FDI on GDP growth. Regarding the role of trade openness, a significant threshold is found, which also indicates the absorptive capacity of the host countries. Moving from below to above this threshold, an increase in FDI inflow leads to a lower increase in economic growth. An increase in FDI relative to GDP stimulates growth only when the host country has sufficient absorptive capacity with regard to trade openness above the threshold. We suggest developing countries tighten the coherence of trade liberalization and FDI attraction policies to obtain the benefits of FDI and make changes to attract new investors when they succeed in attracting massive FDI inflows.

Impact of Foreign Investment on Indonesia: Analysis of Socio-Legal Problems

Foreign Direct Investment (FDI) has become a pivotal element in Indonesia's development over the past few decades. The presence of foreign capital in Indonesia has made a significant contribution to economic growth, yet it has also been accompanied by a range of issues and challenges that need to be addressed. This article aims to conduct an in-depth analysis of the impact of FDI on Indonesia's economic growth and elaborate on the issues that arise within the context of socio-legal. This study combines qualitative and quantitative approaches to analyze the impact of FDI across various socio-legal context, mainly economics, sociological, and legal aspects. The research findings indicate that FDI has played a pivotal role in accelerating Indonesia's economic growth, generating employment opportunities, and transferring technology. However, these positive impacts are counterbalanced by issues such as income inequality, shifts in social dynamics, and legal and regulatory concerns. The article also outlines several prospects that can guide future policy development. These include enhancing cooperation between the government and foreign investors, improving workers' rights protection, and increasing transparency and efficiency in FDI licensing. Environmental sustainability and social inclusion also constitute critical focal points in addressing the challenges at hand. Hence, this journal provides a comprehensive insight into the impact of FDI on Indonesia's economic growth while highlighting the issues that demand further attention. This study serves as a roadmap for policy makers, stakeholders, and researchers to formulate a more effective strategies in maximizing the benefits of FDI while addressing the challenges that arise.

The antecedents and outcome of foreign direct divestment for developing economies

PurposeThis paper aims to investigate the drivers of foreign direct divestment (FDD), how it relates to foreign direct investment (FDI) flows and stocks and its implications for developing countries. While divestment occurs for various reasons, it can be explained by reversing the propositions implied by FDI theories.Design/methodology/approachThe authors combine FDI data and FDI theories to provide theoretical explanations for FDD and what it means for developing countries. FDI stock and flow data are used to derive inferences on trends in FDD and examine the implications of FDI theories on FDD.FindingsChanges in the modes of global production and the rise of COVID-19 have reinforced the trend of stagnant or diminishing FDI flows observed since the global financial crisis, with implications for FDD. The authors demonstrate how the various FDI theories can be used to explain FDD, except for the currency areas hypothesis. By reviewing the costs and benefits of FDI, it is concluded that shrinking FDI flows and stocks may not be as detrimental for developing economies as it is typically portrayed.Originality/valueThe paper uses two original approaches to measure and explain the motives for FDD. The first is a reassessment of FDI theories in a way that makes them valid theories for FDD. The second original approach is to interpret data on FDI flows and stocks to imply the trends governing FDD, which is useful, as data on foreign divestment are not available on a country or regional basis.

Comprehensive evaluation of the foreign direct investment (FDI) opportunities in Iraq: the Karbala Cement Manufacturing Company as a case study

This paper explores the benefits of foreign direct investment (FDI) into the Karbala Cement Manufacturing Company (KCMC) as a case study. The benefits of FDI by the French company LAFARGE were measured by conducting a comparison before and after investment. To do so, information held in archival records and documents before and after the LAFARGE investment were reviewed, analysed and triangulated with the secondary literature. The findings show a remarkable growth in production after the rehabilitation of the first and second production lines following the LAFARGE investment, together with a significant decrease in costs, with KCMC benefitting from economies of scale. In addition, sales increased notably, with a considerable increase in the areas of market location, plus three new types of cement and a ready mixed concrete were added to the product portfolio to strengthen market position. This research contributes to the literature published on the benefits of investment into companies in developing countries such as Iraq. The practical contribution of this study is the increased awareness of the potential improvement of not only the cement industry in Iraq, but the lessening of oil dependency for the country, and the potential increased revenues for the government.

Benefits of foreign direct investment subsidies: The role of funding sources

AbstractUsing a two‐country model with heterogeneous firms, we show that the optimal level and welfare gains of foreign direct investment (FDI) subsidies critically depend on how they are funded. In a setting that resembles tax distortions in emerging markets, we compare the effects of distortionary taxes that are imposed to fund FDI subsidies and examine their cross‐country spillovers. We find that the optimal level of FDI subsidies and the associated welfare gains are much lower than those for non‐distortionary taxes. FDI subsidies funded by distortionary taxes are also found to be beggar thy neighbour, although they generate positive cross‐country spillovers if funded by non‐distortionary taxes.

How Does the Competitiveness Index Promote Foreign Direct Investment at the Provincial Level in Vietnam? An Integrated Grey Delphi–DEA Model Approach

Foreign direct investment (FDI) is an important factor in building a strong economy for a country, particularly in developing and emerging markets. Both domestic enterprises and policy makers have been motivated to attract FDI for the benefits of FDI, such as technological transfers, spillover benefits, and rising competition. There is a need for a functional model to assess how the competitive index affects FDI attractiveness. Therefore, in this study, the authors use an integrated model of Grey Delphi, the Data Envelopment Analysis Super Slack-Based Measure Model (DEA–Super SBM), and the Malmquist Model (DEA–Malmquist) to evaluate the FDI attractiveness of Vietnamese provinces from 2017 to 2021. Firstly, ten critical dimensions of the provincial competitive index (PCI) affecting the number of FDI by cases and amount of FDI capital were validated via the Grey Delphi method. Secondly, the Super-SBM model is applied to assess the FDI efficiency of 63 provinces in Vietnam from 2017 to 2021. Then, the DEA–Malmquist model is employed to analyze the total change in the productivity of 63 provinces’ FDI performance in Vietnam. The findings of this study revealed that the efficiency of FDI in Vietnam’s provinces is relatively low, and there is a significant variation in the attractiveness of FDI among the provinces. This study can provide valuable insights for policy makers and other stakeholders in developing effective strategies to attract FDI and foster economic development.

O papel do Estado na regulação do investimento direto na China

ABSTRACT This article intends to corroborate the argument advocated by heterodox economists such as Akyüz, Chang and Furtado that state regulation is crucial to extracting the possible benefits of foreign direct investment (FDI). We do so by analyzing the policies used by China since its opening to this type of investment in 1979. The article innovates by scrutinizing China’s major FDI laws, regulations and guidelines that compose the formal framework under which foreign-owned enterprises have operated in the country for almost 40 years. We then address the traditional view that China developed simply because it increasingly opened its market to foreign investment and adopted a foreign investment-led growth model. We argue that it was because of this strong regulation that FDI had such a positive effect, contributing to technological transfer and trade expansion, although not defining the ratio of capital accumulation.

Determinants of FDI in Cape Verde: Empirical Evidence for the Period 1986-2019

Cape Verde has attracted high Foreign Direct Investment (FDI) flows in the last 15 years. Although there is growing literature on the determinants of FDI in developing countries, only a few studies are available addressing African countries. This paper aims to fill this gap and identify the main economic and political determinants of FDI in Cape Verde, a small African country. The analysis is based on data from 1986 to 2019 concerning several macroeconomic and political variables that are potential determinants of Cape Verde's FDI inflows. Firstly, several unit root tests are run, such as the Augmented Dickey-Fuller, Dickey-Fuller-GLS, Phillips-Perron and KPSS tests. As the time series are generally integrated, they are tested for cointegration using Johansen's maximum-eigenvalue and trace tests. Then, a vector error correction model (VECM) is fitted to the data and its goodness-of-fit is satisfactory, enabling the estimation of a long-run regression equation for the FDI, our primary purpose. The fitted model concludes that market growth, macroeconomic instability, infrastructures, political stability, and trade openness are important determinants of FDI inflows. As expected, all but macroeconomic instability have a positive impact on FDI, which means that: economic growth attracts FDI; macroeconomic instability deters FDI; a country with good infrastructure quality can attract larger FDI inflows; a country's political stability brings larger FDI inflows; trade openness also induces FDI, and its impact is quite strong. Furthermore, the estimate of FDI's speed of adjustment or error correction towards the equilibrium is 0.16 percentage points. Maximizing the benefits of FDI requires policymakers to implement appropriate domestic policies. Thus, the above determinants have to be regarded as crucial competitiveness tools for Cape Verde's success as an FDI host country, namely boosting economic growth and ensuring its sustainability, keeping price (macroeconomic) stability, investing in building infrastructures and developing Information and Communication Technologies, ensuring political stability and good government practices, and implementing reforms towards a more export-oriented trade regime.

Do human capital and governance thresholds matter for the environmental impact of FDI? The evidence from MENA countries.

This paper studies whether foreign direct investment (FDI)-CO2 emissions relationship may change depending on the data-driven estimated threshold levels for the country characteristics (CC) including human capital and governance in a sample of 13 Middle East and North Africa (MENA) economies during the 1996-2019 period. Our results strongly suggest that endogenously estimated CC thresholds matter for the impact of FDI on CO2 emissions. The pollution haven hypothesis, which maintains that FDI is associated with higher levels of pollution, appears to be valid for economies with weak CC. In addition to this, the pollution halo argument suggesting FDI lowers the emissions appears to be hold in countries with strong CC. The results in this study may indicate that policies aiming to improve human capital and governance may be expected not only to increase the economic benefits of FDI in terms of growth but also mitigate the negative environmental impacts of FDI in the MENA region.

THE IMPACT OF FOREIGN DIRECT INVESTMENT ON FINANCIAL DEEPENING IN NIGERIA

The quest for economic growth and development has been the primary focus of economies worldwide, leading to the formulation of various policies and strategies. Foreign Direct Investment (FDI) is one such strategy, serving as a means to earn foreign reserves and finance capital formation, technology transfer, and trade. Nigeria has consistently been a top beneficiary of significant FDI in sub-Saharan Africa, with FDI inflows fluctuating over time. Despite the benefits of FDI, its impact on financial deepening and economic growth varies across countries and depends on factors such as absorptive capacity and the type of FDI. This study aims to examine the impact of FDI on financial deepening in Nigeria from 1980 to 2022. The research questions address the trend of FDI and financial deepening in Nigeria and the relationship between the two variables. The study will use theoretical frameworks, including the MacDougall-Kemp hypothesis and Dunning's eclectic paradigm, to explore the role of FDI in promoting financial deepening. The findings of this research could have significant implications for policymakers, the Nigerian government, investors, and businesses. Understanding the impact of FDI on financial deepening will help inform appropriate policy measures and strategies to enhance Nigeria's financial sector and spur economic growth. Additionally, the study contributes to the existing literature on FDI and financial deepening, providing valuable insights for future research in this area.