Investment In Countries Research Articles

The influence of income, economic policy uncertainty, geopolitical risk, and urbanization on renewable energy investments in G7 countries

Renewable energy infrastructure development is seen as critical to solving environmental issues. Nevertheless, researchers have not adequately paid attention to how the socioeconomic and geopolitical environment affects renewable energy investments (REINV), which are important for promoting clean energy. In line with this gap, this research aims to analyze the role of economic policy uncertainty (EPU) and geopolitical risk (GPR), as well as controlling economic growth (GDP) and urbanization (URB) in G7 countries by considering their leading role in both economic and political areas. To this end, the study applies the augmented mean group (AMG) approach by constructing three different models for the period 2004–2018. The panel data results reveal that (i) GDP has a significantly increasing effect on REINV; (ii) EPU, GPR, and URB have a decreasing effect on REINV; (iii) the effect of EPU is much stronger than that of GPR; (iv) institutional structure, represented by government efficiency and regulatory quality, has no effect on REINV. Based on the results, the study points out that G7 countries need to promote transmission mechanisms that encourage REINV and take steps to minimize the negative effect of EPU and GPR on clean energy investments.

Politically connected business and real earnings management: the moderating role of family control and audit quality

PurposeThis study examines whether real earnings management (REM) choices are connected with the ownership structure of politically connected businesses (PCBs). The authors also discuss the moderating role of audit quality (AQ) and family control (FC) on the relationship between PCBs and REM.Design/methodology/approachThe authors' study sample comprises firms registered on the Pakistan Stock Exchange (PSE). The sample examines the financial data of the firms that remained listed for the last eight years, i.e. from 2011 to 2018, excluding nonfinance companies and firms with incomplete data. The authors test the hypothesis using feasible generalized least squares (FGLS) regression methods.FindingsThe authors find that PCBs show a high level of involvement in income-decreasing REM compared to nonPCBs due to lower litigation risk in REM. However, the authors' results also show that two monitoring mechanisms, AQ and FC, curb the opportunistic behavior of PCBs and reduce the intensity of REM in PCBs.Practical implicationsThe findings of the study are beneficial in decision-making for both internal and external stakeholders, such as creditors, shareholders and competitors. In countries like Pakistan, which fall in the category of emerging economies, PCBs show involvement in income-decreasing REM to change the accurate picture of financial information to attain personal goals, and investors in such countries have a low level of knowledge about earnings management strategies; thus, this study offers detailed knowledge and information to investors and shareholders about political connections and REM. This plays a crucial role for regulators in stiffening the rules and regulations to further assist in more secure financial reporting.Originality/valueThis study contributes to the literature by providing a nuanced understanding of the interplay between political connections, REM, FC and AQ in the business context. Second, family-controlled businesses often exhibit distinct characteristics and governance structures compared to nonfamily-controlled firms. Exploring the moderating role of FC in the following relationship could provide valuable insights into how family dynamics influence the financial reporting practices of PCBs. Third, AQ is a critical factor in ensuring financial reporting transparency. However, the interaction between AQ, political connections, and REM remains relatively unexplored. This study explains how audit oversight affects the earnings management behavior of PCBs.

How bilateral foreign direct investment influences environmental convergence

AbstractThis paper analyzes environmental convergence and its determinants. We construct our analysis in a bilateral setting and hypothesize that, through foreign direct investment (FDI), one or more investor countries could impact the environmental performance of their hosts, leading thus to a possible environmental convergence between home and host economies. To do this, we construct an original database on bilateral FDI encompassing 128 countries for the period 2000–2012. Our results suggest that, in general, FDI does not directly impact environmental convergence, except for the case of FDI originating from major investor countries. Under specific conditions, FDI can be expected to influence environmental convergence along with other variables such as GDP per capita, industrial development, geographical proximity, or cultural and historical ties. Overall, these effects may vary depending on the type of partnership considered (North–North, North–South, South–North, and South–South).

Arbitration Involving Dual Nationals Under Investment Treaties: A New Area of Conflicting Rulings in International Law

Objective: The paramount purpose of the study is to put forth conflicting decisions in International Law while arbitrating dual nationals under investment treaties.
 
 Method: The majority of investment treaties are predicated on clauses that are somewhat wide and define qualified standards.
 
 Result: According to the findings of a number of studies, the increased participation of dual nationals in investments in host countries will likely result in future issues for international investment law (IIL), particularly the ISA system. Because of this, it is essential to conduct an in-depth investigation on the level of protection that dual nationals receive from investment deals, especially from Investor-State Dispute Settlement’s point of view.
 
 Conclusion: In investor-state arbitration (ISA) context, one's nationality is an extremely vital factor. Most investment treaties provide that in order to be eligible for the protections afforded by the treaty, an investor needs to hold citizenship in the home state. However, determining a person's nationality for the reason of an investment treaty can be an especially challenging endeavour, as it brings up a number of unanswered problems that are of significant relevance in practical terms.

Governance, Investors Motivations and Foreign Direct Investment Inflow in Selected African Countries: Does John Dunning’s Eclectic Paradigm Matters?

Abstract Over the years, studies have focused on the implications of institutional quality as a key factor of FDI inflows into Africa and how it influences the economic processes of various African countries. However, in the studies on Africa, investors’ motivations as determinants of foreign direct investment inflows into African regions are grossly understudied and yet determined. As a result, there is a need to investigate the impact of FDI inflows on African countries, as well as the implications of home and host country investment phenomena. The study employs ex-post-facto research using panel data obtained from different World Bank publications; world development indicators, and the Transparency Index database from 1997 to 2022. The System Generalized Method of Moments (SGMM) was used to examine the data. The results reveal that governance and investor motivations have a negative impact on each other; the effect of the interacted variables is less than the total of the impacts of governance and investor motivations separately. Therefore, FDI in the selecte3d African countries will decline by 7.5 points for every unit increase in the level of poor governance and investor motivations, and this validates the locational assumption of John Dunning Eclectic Paradigm with the proposition that FDI inflows is a function of the home and host investment phenomena As a result, we recommend that African governments implement Regulatory reform, market reform, complete streets policies, and contingency-based planning that are FDI inflow induced.

Digital financial inclusion, environmental quality, and economic development: the contributions of financial development and investments in OECD countries.

Economic development has long acknowledged the significance of financial innovation and technological advancement. Communication technology increases the availability of information, generates new modes of communication, restructures production processes, and enhances the efficacy of a wide range of economic operations. This study investigates the effects of digital financial inclusion and information and communication technology (ICT) on economic growth in 38 OECD nations between 2004 and 2020, with a focus on the contributions of financial development and investments in non-financial assets. To this end, advanced econometric methodologies are employed to conduct an exhaustive empirical analysis utilizing second-generation panel unit root and cointegration techniques. The results demonstrate a positive correlation between digital financial inclusion, information and communication technology, population growth, and non-financial investments in OECD nations. It is recommended that OECD policymakers promote digital financial inclusion by utilizing cost-effective digital technologies to reach currently financially excluded and underserved populations. This can be achieved through a variety of formal financial services that are tailored to their needs and responsibly delivered at a cost that is affordable to customers and sustainable for providers. Moreover, policymakers are recommended to promote information and communication technologies that strengthen the means for implementing Sustainable Development Goals through international cooperation and coordination, technology transfer, capacity building, strengthening multi-stakeholder partnerships, and data monitoring and accountability. Finally, a detailed conclusion is provided to discuss the research limitations and future directions.

Monetary Policy and Investment in ASEAN-5 Countries

Central bank policy interest rate has a role in economic activity such as investment in 5 ASEAN countries. The occurrence of the Asian Financial Crisis (AFC) in 1997-1998 changed the number of investments in the ASEAN-5 countries that were previously the destination of investors from developed countries. The declining level of economic and industrial stability in ASEAN-5 countries has reduced investor interest in investment. However, after AFC, from 2000 to 2019, 5 Southeast Asian countries (Singapore, Indonesia, Malaysia, the Philippines, and Thailand) experienced an increase in investment. This study aims to analyze the effect of Central bank policy interest and macroeconomic variables such as GDP, Exchange Rate, Inflation, and Labor rate on investment in 5 ASEAN countries. The analytical method used in this study is Panel Autoregressive Distributed Lag (ARDL) with Pooled Mean Group (PMG) estimation. The results showed that the Central bank policy interest rate, Inflation, and Labor have a positive and significant effect on investment in the long term. Meanwhile, in the short-term, GDP has a positive and insignificant effect on investment.

FDI spillovers, new industry development, and economic growth

AbstractThe paper investigates the optimal strategy of a small open economy receiving foreign direct investment (FDI) in an optimal growth context. We prove that no domestic firm can enter the new industry when the multinational enterprise's productivity or the fixed entry cost is high. Nevertheless, the host country's investment stock converges to a higher steady state than an economy without FDI. A domestic firm enters the new industry if its productivity is high enough. Moreover, the domestic firm can dominate or even eliminate its foreign counterpart.

Relative strength and foreign direct investment in civil conflicts

AbstractWhat factors contribute to the differences in foreign direct investment (FDI) levels in environments characterized as high risk? While research shows that armed conflict influences foreign investment decisions, it remains unclear how conflict dynamics, specifically the relative power capabilities of warring parties, affect FDI. This study explores the effects of rebel strength relative to government forces on FDI. We argue that there is a reduction in foreign investments in civil conflict countries as rebels gain a military advantage relative to the government. Stronger insurgents send a signal that the government is losing its strength in the conflict, creating uncertainty regarding conflict outcomes and posing economic and security risks for investors. To avoid facing economic and property losses due to increasing rebel strength, investors are incentivized to decrease their investment in the conflict state. Using data on insurgent troop size relative to government forces and FDI, our findings show that higher military capabilities of rebel forces relative to the government are associated with less FDI inflows in conflict-affected countries.

Foreign direct investment, human capital and export diversification in Africa: A panel smooth transition regression (PSTR) model analysis

This paper investigates the role of local human capital in facilitating the export diversification improvement effect of foreign direct investment (FDI) in African countries. To this end, we use a panel smooth transition regression (PSTR) model which is able to deal with the heterogeneity issue associated with the cross-country data. Based on a sample of 30 African countries over the period 1996–2019, the results show that there is a minimum threshold of human capital beyond which the export diversification enhancing effect of FDI is unlocked in African countries. In other words, only countries located above a certain threshold of human capital benefit from the positive effect of FDI on export diversification. These results suggest that policymakers in African countries should focus on improving the conditions for acquiring local human capital (education and health) in order to extract economic gains from FDI.

Political implications of the activities of TNCs: Current trends and impact on the concepts of power, legitimacy and sovereignty

Amidst dramatic transformation of international relations, both traditional and new actors are undergoing major changes. The multinational corporations (MNCs), which have dramatically strengthened their positions in the world economy and politics since the middle of the 20th century due to favorable economic environment, as well as their ability to quickly convert considerable material, financial, intellectual and institutional resources into political clout, are no exception. All this points to the need to address MNCs as full-fledged political entities and examine their impact on traditional actors in a changing international context. The first section examines various approaches to conceptualization of the evolution of MNCs as actors of world politics. It also identifies the specifics of their position within the framework of the contemporary international relations system. The author focuses on such trends as digitalization, growing influence of companies with a platform business model, increasing engagement of corporations in addressing global issues, scaling up investments in the host countries’ infrastructure through new formats of public-private partnership, as well as growth in the number of state-owned TNCs. The second section examines the activities of TNCs as political actors in contemporary international relations from two angles. On the one hand, it considers the TNCs’ operations in terms of power, legitimacy and sovereignty that is how these categories manifest themselves in the activities of corporations and their interactions with other actors and society. On the other hand, it poses the question about how various trends in the development of TNCs, in turn, affect the content and essence of these categories. The author concludes that cooperation with TNCs offers national states new economic, social and political opportunities. At the same time, corporations are becoming increasingly autonomous, which can have a serious impact on conventional ideas of power, legitimacy and sovereignty, up to the erosion of the state monopoly on legitimate violence. The latter may have a serious impact on conventional ideas of power, legitimacy and sovereignty, up to the erosion of the state monopoly on legitimate violence. There is thus a pressing need to further study various types of TNCs, their functioning and interactions with individual countries, as well as the impact of new technologies, in particular, artificial intelligence on corporate activities.

Quality of Government as an Attracting Factor of FDI - Evidence from Chosen Southeastern Europe Countries

This paper aims to examine the indicators of the quality of government of selected countries in South-Eastern Europe, which significantly influence the attractiveness of foreign direct investment. With the aim of quantifying the influence of certain factors on FDI, Montenegro, Serbia, Bosnia and Herzegovina, Romania, Bulgaria, Croatia, Albania and Northern Macedonia are included as the selected countries of the region, with the period of analysis limited to the period from 2007 to 2021. The results of the empirical analysis of the influence of the factors have shown that the factors referred to as the Rule of Law Index, Government Efficiency Index, Public Administration Efficiency Index and Political Stability Index have a significant and positive influence on the attractiveness of the country for foreign investors, while some other factors such as the cost of starting a new business have a negative influence on the country's attractiveness.

Economic Growth, Trade, and Foreign Direct Investment Interrelationships in South Asian Countries

This paper surveys the complex relationships between economic growth and Foreign Direct Investment (FDI) in South Asian countries, taking into account the specific conditions and environments that influence foreign investment in each country's economy. The study analyzes annual data from 1991-2020 focuses on India, Pakistan, and Bangladesh and uses co-integration and granger causality tests to determine that every country is at a distinct stage of outreach based on factors such as population, resources, and international trade. Results declare that FDI, economic development, and exports have robust relationship. The study concludes that creating a favorable environment for investors can increase foreign investment, leading to increase per capita GDP growth within the country

The impact of Ukraine’s international image on the prospects of its post-war innovative development

The aim of the article. Is to determine the impact of the international image of Ukraine (considering changes in its characteristics during the war period) on the prospects of the post-war recovery of the national economy in the concept of innovative development. The results of the analyses. It was established that the international image of the country directly affects the formation of its national brand. The interdependence of the national brands’ positions with indicators of business entities’ innovative activity and network readiness of the respective countries was established. These countries determine the competitiveness of national economies and businesses on international markets in the conditions of the fourth industrial revolution (IR4.0). The positive influence of Ukrainians’ resistance in the war with Russia on the international image of Ukraine was substantiated. The world community perceived Ukraine as a country with a rich history and culture, good natural conditions, a free, democratic, industrial-agrarian state open to cooperation with high technologies and a powerful resource base, a free-spirited, inventive, hardworking, highly educated and tolerant people, a member of the European family. These characteristics are attributes of Ukraine's positive international image, which directly affects the attitude of economic counterparties and contact audiences in international markets, and accordingly, the country's investment attractiveness, the competitiveness of the national economy and business. The positive influence of Ukraine’s international image formed during the war on the prospects of innovative development of its industries and enterprises was determined. The range of problems caused by positive perception of Ukrainians and Ukraine by the world community was outlined. In particular, a huge brain drain and intellectual capital loss necessary for post-war recovery and innovative growth. Activities to prevent these problems were proposed. The prerequisites for the post-war innovative growth of Ukrainian economy are outlined: a positive international image, intellectual capital, institutional support for the innovative process. The competitive advantages and shortcomings of Ukraine from the standpoint of the formation and implementation of its post-war innovative development strategy were determined. Conclusions and direction for further research. The obtained results deepen the principles of innovation marketing in terms of the development of an information and analytical base for managing the international image of the state in the context of the formation of prerequisites for its innovative development in the conditions of IR4.0. They also develop principles of innovation management in terms of improving the marketing support of the innovative development strategies of the state in the conditions of IR4.0. Further research should be aimed at forming the foundations of the organizational and economic management mechanism of the post-war recovery of the state and its innovative growth in the conditions of technological transformations caused by IR4.0 and changes in technological way.

Forecast of changes in the macroeconomic situation in Ukraine: smart economy of the future

Aims: to theoretical development of methodological tools for selecting national priorities for sustainable economic development based on the concept of a smart future economy. Methodology. This article uses a systematic approach to the study of change processes in the fields of macroeconomics, analysis and synthesis, induction and deduction, quantitative and qualitative scientific abstraction, comparison and analysis. Based on the modeling method, the article proposes a model for planning economic growth based on the indicators of socio-economic, investment, and innovation development of Ukraine and major countries of the world. Results. The paper proves the complexity of the problem of choosing the country's development priorities and its specialization, which is observed in many works of Ukrainian scientists and researchers from other countries. For this purpose, 40 scientific papers by foreign and domestic scholars were analyzed, and macroeconomic statistics data presented on official statistics websites were used. Based on the analyzed sources, the main problems of the socio-economic development of the country are determined, and the model provides a systematic approach to the formation and implementation of strategies for sustainable socio-economic development. The knowledge industry was developed, and a model was created for the selection of national innovative development priorities based on two main parameters: Overview of the national structure of innovative and specialized industries. The approach of information and communication platforms as a methodological tool for the formation of strategies for local socio-economic development is proposed. Scientific Novelty. With the help of the developed model, it is possible to determine the factors affecting the growth of Ukraine's GDP and forecast the growth of the country's economy. It is found that the transition to a smart economy and the use of the latest innovative smart technologies have the greatest impact on national economic growth. The proposed model for forecasting and evaluating the national socio-economic, investment, and innovation policy can provide the main directions for resource allocation and budgeting. Conclusion. The proposed proposals will contribute to the further development of an innovative program for socio-economic development of the country by applying the principles of the European concept of smart specialization to the Ukrainian economy. Implementation. The research materials can be used as methodological support for demonstrating the directions of regional socio-economic development.

Venture Capital as a New Approach to Developing Early-stage Firms in Emerging Countries;

This study aims to extend our knowledge of the new approaches to entrepreneurial finance that inspire the development of early-stage firms in developing countries. The role of entrepreneurship is well understood internationally owing to its substantial influence on new employment creation, and productivity, and a seedbed for the emergence of innovative young firms. The survival and prosperity of the HGFs are unswervingly linked to access to sustained financing during their early-stage growth, nonetheless, access to funding remains the topmost worry for young firms. Yet VC financing has a competitive edge over banks burrowing, which cannot easily substitute for VC in its absence. We developed a multi-regression model to measure the results using survey data of 61 VC companies dealing with over 327 investment rounds from 2015-2021. The study confirms that VC investment has a dramatically flourishing prominence in nurturing early-stage firms with potential growth. Our study makes three major contributions to advancing this debate: First, our finding is expected to benefit the policymakers and civil society in the practice of creating new VC policies or altering existing ones to attract increased foreign VC investment in active countries and beyond. The government’s increased funding to the VC companies might lead to higher survival rates for new innovative industries as observed in the developed. Moreover, we discover that this research arena is recognized by a paucity of theoretical and empirical research underpinning VC’s proficiency in nurturing high-growth firms and innovative entrepreneurship.

Impacts of FDI and Environmental Pollution in ASEAN Countries: The Role of Institutions

The study aims to examine the role of institutions in the relationship between foreign direct investment and environmental pollution in ASEAN countries from 2000 to 2019. With the General Moment method, the results show that foreign direct investment impacts increasing environmental pollution. At the same time, aspects of institutional quality such as the rule of law, government efficiency, political stability, quality regulations, and voice and accountability reduce environmental pollution. Furthermore, the study shows that institutional quality is essential in reducing the negative impact of foreign capital inflows on environmental pollution in ASEAN countries. From these results, the study recommends that ASEAN countries implement environmental protection plans when attracting foreign investment flows.

A Gravity Model Analysis of Portuguese Foreign Direct Investment

Cultural and linguistic affinities have been studied in international business through the gravity model and economics of language. International investment theories enable the assessment of organisational, location, and internalisation motivations. The present study assesses the impact of transport costs, common language and market size based on the arguments of the gravity model, economics of language, and international investment theory. This investigation evaluates the relationship between the Portuguese FDI and the gravity model, using panel data between 2005 and 2020. The OLS estimator, PPML-Poisson Pseudo-Maximum-Likelihood estimator, and panel quantile regressions were used as an econometric methodology. Regarding research, we sought to understand to what extent cultural and linguistic issues, namely Portuguese-speaking countries, contribute to explaining Portuguese FDI. The economic dimension of the Portuguese economy and investor countries were introduced into the regression model. In addition, transportation and transaction costs were analysed across geographical distances. The econometric results show that the common language and cultural aspects are positively correlated with the Portuguese FDI, which allows us to conclude that the Portuguese language reduces the asymmetries between the home market and the host country. When panel quantile regressions are applied, it is possible to observe that the Portuguese economy has dimension enough to attract FDI, just as the countries investing in the Portuguese economy have a return on the investment made. Finally, geographical distance negatively impacts FDI, showing that geographical proximity increases the probability of attracting FDI.

Globalization, Foreign Direct Investment, and Climate Change

Abstract There has been a dramatic increase in the long-term accumulation of foreign direct investment (FDI) in less-developed countries from 1980–2018. Scholars argue that these processes have harmful effects on climate change-inducing emissions. Here, the author argues that such expansions have beneficial impacts. He empirically evaluates such theorization using fixed effects (FE) panel regression models. Results provide support for his view. These results suggest that the long-term accumulation of foreign direct investment in less-developed countries has beneficial implications for the scale, intensity, and ecoefficiency of carbon dioxide emissions.

Political Risks to China’s Energy Infrastructure Investment in Countries along the Belt and Road

Energy infrastructure connectivity is a key implementation area for the success of the Belt and Road Initiative. In the current complex international environment, China’s energy infrastructure investment in the countries along the Belt and Road is often restricted due to varying degrees of heated disputes with the host countries, thus facing the political risk of investment loss or even failure. This paper used the Heckman two-stage selection model to overcome the sample selection problem in traditional literature and systematically studied the political risks to China’s energy infrastructure investment in countries along the Belt and Road within a unified framework. The results showed that Chinese energy infrastructure investments exhibited market-seeking and energy resource-seeking features; while political risks had a significant impact on choosing the locations of energy infrastructure investments, socio-environmental factors were not given sufficient attention. At the national level, the implementation of the Belt and Road Initiative was beneficial to China’s foreign energy infrastructure investments under certain regulatory levels and environmental policy performance.