FDI Destination Research Articles

Investment Cooperation of the EAEU Countries and Latin America in Modern Conditions

The relevance of the study is related to the trend of the states of the "global" South towards a polycentric world, accompanied by an independent foreign economic course. The EAEU is interested in expanding cooperation with Latin American countries. The purpose is to conduct a comparative analysis of the macroeconomic indicators of the EAEU and LAC countries and FDI destinations based on statistical data. Objectives: to analyze the current state of macroeconomic indicators of the integration associations of the EAEU and LAC in order to identify identical development indicators; to characterize the country and sectoral directions of FDI of the EAEU countries in the countries of Latin America and the Caribbean in comparison with similar investments of the countries of the "collective" West and the United States. Methodology. Investment cooperation is analyzed within the framework of the theory of structural functionalism (Parsons) using macroeconomic indicators of foreign trade cooperation based on UNCTAD statistics on world investments, data from the central banks of Bolivia, Brazil, statistical agencies CEPAL and the Bank of Russia. Results. It has been proved that investment flows between the EAEU and LAC have developed unevenly, and the volume of investments has fluctuated significantly. This trend reflects the general stagnation of the EAEU's investment activity in Latin America outside the commodity sectors. The leading sector attracting investment is the software and IT services sector in LAC. Conclusions. There is a trend towards an increase in the volume of trade turnover between the regions of the EAEU and the LAC, but investment cooperation between the countries is slowed down due to the logistical inaccessibility of the region, the insufficient development of the port infrastructure of the LAC, the lack of interbank relations, and insufficient state support in the LAC.

What makes Vietnam a more attractive FDI destination than India

The study examines the crucial drivers that make Vietnam a preferred FDI destination over India following the ‘China plus one’ strategic initiative by the global MNCs to diversify their supply chains and expand operations beyond China. Findings reveal that Vietnam offers numerous benefits, including closeness to China, competitive manufacturing costs, a favorable investment climate, and excellent manufacturing capabilities. However, challenges like infrastructural development and talent shortages must be addressed. In addition, labor, trade, and financial freedom are the prospective areas where India need to expedite its reforms to provide conducive business environment.

Cayman Over China: Trends and Accounting Factors of South Korea’s Outward Foreign Direct Investment

We examine recent trends of South Korea’s outward foreign direct investment from 2001 to 2021, which shows substantial change in terms of the total amount and compositions. Using gravity models, we test whether these differential time trends across the industries and destination countries survive after incorporating economic factors. Controlling for economic conditions, we find that the FDI to China has been declining much earlier than the China–South Korea political dispute, while the FDI to USA shows a steady increase, making it the top FDI destination throughout the sample period. Investment in tax haven shows rapid increase across all sizes of South Korean investors and therefore, further research is needed on its implications for tax evasion.

An Empirical Study Identifying the Most Favored Foreign Direct Investment Inflows Destination in the Gulf Cooperation Council Countries

This study aims to identify the most favored foreign direct investment destination in the Gulf Cooperation Council countries. The study compares the global rankings of each GCC country on investment decision parameters: market size, economic growth, infrastructure, technology adoption, innovation friendliness, productive and diversified labor force, financial infrastructure, taxation, political risk, corruption, and ease of doing business. This study confirms that the UAE is the most favored FDI destination in the GCC. Moreover, the current policies and regulations promulgated indicate the country's intent to become more investor-friendly and attractive to live in.

Report on the 7th Annual EFILA Conference 2022 on Whether the EU is Still an Attractive FDI Destination Post-Achmea and Komstroy

The European Federation for Investment Law and Arbitration (EFILA) held its 7th Annual Conference on Thursday, 9 June 2022 in Amsterdam. Over a series of four expert panels and a keynote speech delivered by Prof. Dr. Anne van Aaken (Hamburg University), panelists discussed the future of FDI in Europe in the wake of “anti-isds” decisions of the CJEU such as Slovak Republic v Achmea and Republic of Moldova v Komstroy.

Is investment facilitation a substitute or supplement? A comparative analysis of China and Brazil practices

Investment facilitation, which tackles ground-level obstacles to FDI and has no substantial challenges to regulatory space, is emerging as a new trend of global governance. Meanwhile, the content and method to implement investment facilitation are still evolving. Both as top FDI destinations and largest emerging countries in South America and Asia respectively, Brazil and China have adopted somewhat different approaches towards investment facilitation. Due to traditional resistance to BITs network, Brazilian developed a new model of investment treaty, i.e., Cooperation and Investment Facilitation Agreement (CIFA). CFIAs primarily focus on investment facilitation through institutional cooperation, but the scope and degree of investment protection are quite insufficient. China’s approaches towards investment regime are inclusive, i.e., it is a practitioner of investment facilitation as well as a proponent of IIAs with a balanced ISDS mechanism. On the one hand, while investment protection and liberalization system are essential part of good business environment, IIAs don’t necessarily lead to friendly regulatory environment to attract FDI inflows. In this regard, the policy of investment facilitation is complementary to existing international investment regime. It is suggest that China draws some experiences from Brazil in terms of institutional governance and establishing a similar and effective dispute prevention system. On the other hand, access to justice is still important to foreign investors, the policy of investment facilitation can’t act as a total substitute of traditional BITs worldwide. Considering the Brazilian investors’ increasing outbound investment and the growing needs of investment protection, it is suggested that China’s open and liberal policies are worth learning for Brazil.

Diagnosis of the Foreign Direct Investment Landscape in India

There is a great flow of funds among countries, money flowing to more attractive destinations than others. Investors prefer to invest in destinations that offer attractive returns and are relatively less risky. FDI gives access to capital that would otherwise be not available, and provides much-needed foreign exchange, and therefore helps to adjust some of the macroeconomic imbalances in developing countries. India is in the growth mode, trying to boost the growth rate, but the resources available are limited; hence India is competing against others to make the investment climate more investor-friendly. This study aims to find out the status of India as an FDI destination, the factors that attract and hinder the inflow of FDI, and how to capitalize on them. This study is based on secondary data and covers a period of five years. The study analysis various determinants of FDI and reveals that India has the potential, decent growth, political stability, organized financial system and acceptable policy that makes it attractive to FDI.

75 Years of India's Economic Development: Evaluation, Challenges, and Way forward

After 75 years of India's Independence, India is now one of the fastest-growing economies; hot FDI destinations of the World; India is the sixth-largest economy globally, with a GDP of $2.66 trillion. India is the world's largest producer of milk, pulses, and jute and ranks as the second-largest producer of rice, wheat, sugarcane, groundnut, vegetables, fruit, and cotton. It is also one of the leading producers of spices, fish, poultry, livestock, and plantation crops. (FAO 2018), It also produced 25 percent of the world's pulses, as of last decade, until 2019. (1BEF, 2021) Whereas India still has many areas of concern. Despite having food security, India has 97.7 million living below the poverty line, which is around 6 percent of the population in 2021, as per the World Poverty Clock.; India's rank is 66 out of 109 countries in United Nations Global Multidimensional Poverty Index 2021: India ranked 101st out of 116 countries in the Global Hunger Index 2021. India ranked 131 out of 189 countries on the U.N. Human Development Index 2020; India ranked 139 out of 149 countries in U.N. World Happiness Index 2021. In this research article, the data of major socio-economic factors are analyzed to track the journey of India's growth in the past 75 years and has analyzed it using simple statistical tools like percentage and growth rate. The data about 75 years of India's Independence, GDP, Per capita Income Growth, Capital formation, Savings, Foreign Trade, Agriculture, Indebtedness, Industry, MSME, Infrastructure, Poverty, Inequality are analyzed, and meaningful analyses were drawn. The Challenges to the Indian economy, the way forward, and the lessons India can learn from China and South Korea are also discussed. India can surge ahead to its potential and celebrate the 100th year of India's Independence as a World Economic Superpower if India invests 6 percent of its GDP in imparting quality skill education, 4 percent of its GDP on providing quality health; increase the domestic capital formation to 40 percent, create world-class.

Report on the 7th Annual EFILA Conference 2022 on Whether the EU Is Still an Attractive FDI Destination Post-Achmea and Komstroy

The European Federation for Investment Law and Arbitration (EFILA) held its 7th Annual Conference on Thursday, 9 June 2022 in Amsterdam. Over a series of four expert panels and a keynote speech delivered by Prof. Dr. Anne van Aaken (Hamburg University), panelists discussed the future of FDI in Europe in the wake of “anti-ISDS” decisions of the CJEU such as Slovak Republic v Achmea and Republic of Moldova v Komstroy.

Political Risk, Volume of FDI, and Ownership Strategy: Contextual Analysis of African Markets

This research examines the relationship between political risk and the volume of FDI activity and ownership strategy of foreign firms in Africa. Our study employs panel regression models to examine 2,360 FDIs into four low political risk and five high political risk African countries during the period 2010-2017. This data represents FDIs from the top 10 countries with the most investments in Africa (UNCTAD, 2018). We find that there is a progressive increase in the volume of FDI activity by multinationals in high political risk countries, even though low political risk countries remain the preferred FDI destinations. We also find that joint venture (JV) is the preferred ownership strategy by foreign multinationals in high political risk African countries. The preferred ownership strategy in this research helps firms mitigate potential hostile government policies such as expropriations. This research contributes both theoretically and empirically to enrich the political economy and international business literature.

Determinants of FDI inflows to Next 11 countries: A panel data analysis

As the inclination to FDI shifts from developed to developing economies, investors are flocking to emerging markets, particularly to the Next-11 nations, which render additional growth and investment opportunities. Meanwhile, these countries have become popular FDI destinations; the goal of this study is to look at the major factors that make these countries appealing to FDI destinations. As a result, this research examines the factors that influenced FDI inflows into these nations from 1995 to 2019. Market size, trade openness, natural resource availability, economic stability, and infrastructure facilities are among the potential explanatory factors identified in this research. On the panel data set, which includes data from 11 nations, a fixed-effect model is used. The data show that market size, trade openness, natural resource availability, and economic stability are all possible predictors of FDI inflows to these nations, whereas infrastructure appears to be a minor one.

FOREIGN DIRECT INVESTMENT IN THE KINGDOM OF SAUDI ARABIA: A DIAGNOSTIC ANALYSIS

This study aims to identify the status of Saudi Arabia as a destination for FDI, the factors that attract FDI into Saudi Arabia, and the factors that hinder the flow of FDI into Saudi Arabia. The study covers a period of five years from 2015 to 2019. The study analysis various determinants of FDI: market size, infrastructure, technology adoption, innovation friendliness, productive and diversified labor force, financial infrastructure, taxation, political risk, corruption, and ease of doing business. The study finds that several factors like market size, well-developed infrastructure, a higher degree of technology adoption, innovation-friendliness, the banking system that is well-capitalized and liquid, low corporate taxes, political stability, low transfer risk, low expropriation risk, low levels of corruption, and a stable currency make Saudi Arabia an attractive destination for FDI. At the same time, the low labor market efficiency and the low ranking in ease of doing business makes it less attractive to FDI.

Social Enterprise and Entrepreneurship: Lesson Learnt from Pandemic Crisis

Social Enterprise and Entrepreneurship: Lesson Learnt from Pandemic Crisis

Modelling European regional FDI flows using a Bayesian spatial Poisson interaction model

This paper presents an empirical study of spatial origin and destination effects of European regional FDI dyads. Recent regional studies primarily focus on locational determinants, but ignore bilateral origin- and intervening factors, as well as associated spatial dependence. This paper fills this gap by using observations on interregional FDI flows within a spatially augmented Poisson interaction model. We explicitly distinguish FDI activities between three different stages of the value chain. Our results provide important insights on drivers of regional FDI activities, both from origin and destination perspectives. We moreover show that spatial dependence plays a key role in both dimensions.

Efficacy of Foreign Direct Investment in India - An Evaluation

Foreign investment plays a noteworthy role in all walks of development. Foreign Direct Investment bridges the gap between saving and investment. In the process of economic development, foreign capital helps to cover the domestic saving constraint and provide access to the superior technology that promotes efficiency and productivity of the existing production capacity and generate new production opportunity. The perceptible growth of India’s GDP, particularly in the past few decades has lifted millions of people from sever poverty on the one hand and made the country a conducive ground for foreign direct investment on the other hand. A recent UNCTAD survey projected India as the second most important FDI destination after China for transnational corporations during 2010-2015. Services, telecommunication, construction activities, computer software & hardware and automobile are major sectors, which attracted higher inflows of FDI in India. Few nations such as Singapore, Mauritius, the US, and the UK were among the leading suppliers of FDI in India. This paper intends to examine the degree of global countries’ participation, the sector-wise inflow of foreign capital and the recent initiatives of the government policy towards foreign direct investment.

Institutional distance as a determinant of outward FDI from India

PurposeThe purpose of the paper is to examine the role of institutional distance as a determinant of outward foreign direct investment (OFDI) from India. The study combines a nuanced view of institutional distance, with traditional location factors to analyze Indian OFDI flows to developed and emerging economies (EEs) during the period 2009 to 2017.Design/methodology/approachThe paper employs fixed effects panel regression model on an unbalanced panel data set.FindingsThe findings suggest that India's OFDI is undeterred by the isomorphic pressures caused by regulatory and normative institutional distance, but cognitive institutional distance acts as a deterrent in developed economies. Indian MNEs engage in institutional arbitrage as they simultaneously engage in strategies of institutional escapism and institutional exploitation. The study also finds that emerging economies have emerged as an important destination for strategic asset seeking FDI, in addition to developed economies.Practical implicationsThe findings of the study present important implications for policymakers and corporate managers. For policymakers, the study points toward the need for improving the general business environment at home to prevent escapist OFDI and trade enhancement as a tool to overcome cognitive barriers and behavioristic stereotypes. For corporate managers, the study's findings underline the importance of adopting different strategies for dealing with different isomorphic pressures in developed and emerging economies.Originality/valueThe study adds value to the sparse literature using the IBV in the emerging markets context, to supplement and enrich existing theoretical frameworks. It is a pioneering study in its use of institutional distance as an explanatory factor for Indian OFDI and provides evidence of institutional arbitrage.

Bilateral investment treaties and backward linkages in Sub-Saharan Africa

This article is an original contribution to the understanding of the impact of bilateral investment treaties in developing countries. By exploiting a unique sample of foreign affiliates in nineteen Sub-Saharan Africa countries, we show that the presence of a bilateral investment treaty between FDI origin and destination countries is positively related to the propensity of foreign investors to generate linkages to local suppliers. In addition, we find evidence that such relationship is stronger for countries with lower institutional quality and that bilateral investment treaties become more effective the larger the difference in levels of development between source and host. The estimation technique we use is a two-limit Tobit model. Our results are of high importance from a political point of view. They support the argument that bilateral investment treaties can help countries with low levels of governance quality, as several Sub-Saharan African countries, to credibly remedy local institutional inefficiencies and, therefore, the participation in an international treaty make the opportunities for local sourcing more likely. These potential gains can justify the decision of policymakers in developing countries to sign BITs, despite such agreements impinging on their national sovereignty.

Examination of Potentialities of Vietnam as FDI Destination

Globalization has made worldwide mobility of money extremely easy. The investors prefer to invest in places that offer attractive returns and are relatively less risky. The inflow of FDI gives developing countries access to capital that would otherwise be not available. FDI also provides much needed foreign exchange and therefore helps to adjust some of the macroeconomic imbalances in developing countries. Vietnam is in the growth mode, trying to boost the growth rate from all corners, but the resources available is limited and very often insufficient, hence the country is competing against others to make the investment climate more investor-friendly and project itself as an investor-friendly destination for the FDI. The main objectives of this study are to find out the status of Vietnam as a destination for FDI, the factors that attracts FDI into Vietnam and how these can be enhanced, and the factors that hinder the flow of FDI into Vietnam and how these can be reduced. This study is based on secondary data and covers a period of five years. The study analysis various determinants of FDI like market size, economic growth, infrastructure, political risk, corruption, labor market, raw materials, technological readiness, innovation, financial system, taxation, cost of capital, ease of doing business and government policies. The study reveals that Vietnam has the potential, decent growth, political stability, organized financial system and acceptable policy that makes it attractive to foreign investors and suggests measures to enhance the attractiveness, similarly highlights the hindrances to the inflow of FDI into Vietnam and suggests measure to reduce them.

FDI Environment in China: A Critical Analysis

Investors prefer to invest in assets and places that offer attractive returns and are relatively less risky. China is one of the countries with the highest economic growth and is trying to attract investors from all corners of the world to invest and participate in the growth of China. The main objectives of this study are to evaluate the position of China as a destination for FDI, the factors that attract FDI into China, and the factors that hinder the flow of FDI into China. It also proposes to examine whether the attractiveness of China is increasing or is it on the decline and the rationale behind it. This study is based on secondary data, covers a period of five years, and analysis various determinants of FDI. The study reveals that China has the potential, political stability, and an organized financial system, but its market has started to shrink as the population growth is declining, the labor cost is increasing, labor market efficiency is decreasing, economic growth and infrastructure developments are decelerating, and corporate and individual tax rates are high.

Review of Foreign Direct Investment in Jordan

Globalization has made worldwide mobility of money extremely easy. The investors prefer to invest in places that offer attractive returns and are relatively less risky. The inflow of FDI gives developing countries access to capital that would otherwise not be available. FDI also provides much needed foreign exchange and therefore helps to adjust some of the macroeconomic imbalances in developing countries. Jordan is in the growth mode, but the resources available is limited and very often insufficient, hence they are also in the race to attract international investments. The main objectives of this study are to find out the status of Jordan as a destination for FDI, the factors that attracts FDI into Jordan, and the factors that hinder the flow of FDI into Jordan. This study is based on secondary data and covers a period of five years. The study analysis various determinants of FDI like market size, economic growth, infrastructure, political risk, corruption, labor market, raw materials, technological readiness, innovation, financial system, taxation, cost of capital and ease of doing business. The study reveals that Jordan’s position in the global FDI map is on the decline and most of its rankings by global agencies are dropping year after year.