Direct Investment Research Articles

Effect of Corporate Governance on Increasing Foreign Direct Investment in Saudi Arabia

This research paper aimed to investigate the relationship between corporate governance and foreign direct investment (FDI) in the Kingdom of Saudi Arabia. It examined various aspects of corporate governance such as executive compensation, financial reporting, board composition and the shareholder rights. It analyzed the trends, patterns and factors that may affect the decisions of foreign direct investors. The findings revealed that the Kingdom of Saudi Arabia has conducted a great progress in the field of utilizing corporate governance on increasing the foreign direct investments; however, there is a need for improving the quality. The study also provided some recommendations to create more stable environment to support FDI adequately as well as utilizing adequate corporate governance practices such as strengthening the independent board oversight and enhancing the rights of shareholders are among these factors. Improving the executive compensation practices and adopting international financial reporting can increase the number of investments as well as there will be coherence between the economic regulations in the Kingdom and those of other countries. Increasing the corporate social responsibility as well as strengthening the regulatory framework to facilitate applying corporate governance measures as well as enhancing foreign direct investments are recommended as well. Fostering the culture of good governance and providing facilities to attract foreign investments are suggested along with asserting the importance of enhancing the international cooperations.

Energy Transition in the Middle East and North Africa Region: Regional Solutions for Climate Change Challenges Amid Economic Sanctions

As the world grapples with the urgent priority of transitioning to a net-zero future, there exists a shared need to make all efforts to reduce anthropogenic greenhouse gas emissions, mostly caused by burning fossil fuels. The Middle East and North Africa (MENA) region plays an important role because of its oil and natural gas output. Additionally, this region has experienced significant conflict and numerous wars. This article will focus on one of the many challenges that some key states in the MENA region, with a main focus on Iran, are facing in their energy transition. Several countries in the MENA region are or have recently been subject to some form of economic sanctions. Sanctions appear to have had a material impact on these countries’ abilities to fulfill their contributions to transitioning to a net-zero economy. Research suggests that the chief obstacles they face regarding that transition is the lack of access to the latest technologies, a dearth of financing, limited or often no direct investments in low carbon industry, diplomatic isolation, and the concomitant economic volatility caused by sanctions, which in sum, take away from the financial capacity of a target country to save and invest for the transition to net zero. Therefore, it is crucial to revisit sanctions laws and policies, ensuring that they do not hinder the global community from achieving its climate goals. This article proposes establishing a regional ‘climate savings account’ to serve as a strategic mechanism to balance geopolitical interests and environmental goals.

Poverty Inflation, FDI Consumption, and Economic Growth in Indonesia in the Vector Autoregressive Model Analysis

The difference in the results from previous studies on the impact of inflation on poverty, coupled with an increase in the money supply from direct investment, inspired this research. This study aimed to ascertain how poverty, inflation, and foreign investment affect consumption spending in Indonesia based on 1997-2021 time series data. This study used Vector Autoregression estimation, utilizing data sources from the World Bank. The data will be processed with econometric models. From the study’s findings, it may be inferred that overall consumption affects inflation, which can be seen from the Granger causality test that shows that this variable has a one-way causal relationship. The results of the same test also show that FDI has an effect on total consumption and conversely consumption has an effect on FDI. However, the poverty variable does not affect total consumption and vice versa, because according to the causality test, the variable obtains an insignificant probability value. However, the VECM results explain that poverty has an effect on total consumption, and that the effect of consumption on inflation is due to the larger t-statistic value and has a positive relationship. This implies that the rate of inflation will increase the lower the level of consumption. However, the Impulse Reason test shows that poverty has a negative trend, as does the FDI variable. Keywords: poverty, inflation, FDI, consumption, economic growth, Indonesia

Multilevel actor networks in China’s growing fossil-fuel based role in the global electricity sector

Abstract Chinese investments into fossil fuel-based electricity generation capacity under its Belt and Road Initiative will create lock-in for decades. Despite China’s recent rise as major public finance provider for the electricity sector of the developing world and the related environmental impacts, there is limited knowledge of the extent and characteristics of non-Chinese participation in Chinese-funded projects. We apply complexity theory approaches and network modelling on a new dataset that links funding activities of Developmental Institutions (Chinese Developmental Institutions (CDIs), Western-backed Multilateral Development Banks (MDBs)) and the involvement of companies in different roles (i.e., as direct investors, contractors, equipment suppliers, and other service providers) to power plants around the world at the unit-level (1999-2020). Previous literature suggests that CDI funded projects show preference to Chinese commercial partners, but we find more than 70% include non-Chinese participants. This also applies for fossil-fuel based technologies where we observe increasing shares of international actors that together account for nearly every third commercial linkage. However, involvement levels and interaction patterns not only differ by technologies (fossils, hydro, non-hydro renewable, nuclear) but also by the time period and types of commercial partners and we observe overall convergence between the CDI- and MDB-supported power plant networks over time. The decreasing involvement of Chinese companies in CDI-funded projects, across technologies, in favour of increasing Western involvement, has important implications for development and climate policy on which we elaborate. However, the failure of both MDB and CDI funding to promote domestic company involvement in the recipient countries may be the largest failing of both sets of agencies in the pursuit of development outcomes.

Impact of short- and long-term factors on the growth of gross agricultural products in Azerbaijan: ARDL analysis

Purpose. The main purpose of this research is to assess the factors affecting the gross agricultural products in Azerbaijan in the short and long term. Methodology / approach. This study uses an Autoregressive Distributional Lag (ARDL) model to analyse the relationship between gross agricultural output and total government expenditure on agriculture, the volume of credit used in agriculture, direct investment in fixed assets in agriculture, and the country’s net agricultural exports. In our study, unlike most existing research, the variables are integrated in the second order, which increases the importance of this study. Results. The results of the study indicate that, despite the “crowding in” effect created by the state budget expenditures as the main factor in the short term, the effect on the growth of gross agricultural products in the long term is not so important. Credit resources and net exports have a negative effect in this relationship. In the long term, investment in fixed capital is a crucial factor in the growth of production. In general, the positive balance of net exports is a “mirror” reflection of investments, especially innovation-oriented investments. Considering that the predominance of imports in the total demand for agricultural products significantly reduces the multiplier effect that can occur in the field in general, it minimises the multiplier effect of the total expenditure. From this point of view, foreign investments can play an important role in creating a positive balance in the trade balance of agriculture. Originality / scientific novelty. The scientific value of the research is the selection of main factors as direct contributions to the growth of the gross agricultural products and their effects. Through the ARDL program, we determined what factors are short-term and which are long-term, and we analysed the causes and consequences of these dependencies and put forward relevant proposals. Practical value / implications. The practical value of the research lies in the given proposals that can directly affect the net export of agricultural products and create positive changes in its balance. Because, massive investments, especially foreign investments, can modernise the rural economy in a short period of time and, accordingly, not only increase the competitiveness of its products in foreign markets, but also raise the level of self-sufficiency.

Automatic for the (tax) people: information sharing and cross-border investment in tax havens

Summary This paper examines the impact of international automatic exchange of information (AEOI) treaties on cross-border investments in tax havens. Using a restricted version of the BIS Locational Banking Statistics, we find that AEOIs significantly reduced cross-border deposits. A sectoral breakdown assessment reveals that households were the key driving force behind this contraction. However, we also document evidence of households’ deposits shifting to non-AEOI haven countries and larger deposits by non-bank financial institutions between tax haven countries, suggesting an increased use of shell corporation networks since AEOI introduction. Extending the analysis to portfolio and direct investment, we observe that changes in investment patterns vis-à-vis tax havens are consistent with a significant impact of AEOI treaties on these forms of cross-border investment.

China's Direct Investment in the Russian Soybean Market in the Context of Risk Management Strategy

This article is based on the multifaceted impact factors of China's direct foreign investment in the Russian soybean market, identifying potential risks encountered in the investment process, including political, economic, logistics and supply chain, socio-cultural, and environmental risks. On the basis of these risks, the paper proposes a comprehensive set of risk management measures, and validates the effectiveness and practicality of these risk mitigation strategies through the analysis of successful investment cases. Overall, the paper underscores the significance of comprehensive risk management for sustainable development, providing systematic and comprehensive risk management advice for Chinese enterprises engaged in direct investments in the Russian soybean market

The impact of China’s direct investment on energy industry development in Kazakhstan

The purpose of the research is to study the impact of China’s direct investment on Kazakhstan's Energy industry, it enables them to fi gure out what type of Energy sources need more investment, and the demand level on the Energy services, which require for investigating the feasibility behind investing in Energy industry in Kazakhstan. Research methodology - a regression model of the impact of China’s direct investment on Kazakhstan's Energy industry is established to study the impact of Chinese direct investment on Kazakhstan's Energy industry from four variables: net foreign direct investment in Kazakhstan, Kazakhstan's GDP, China's direct investment in Kazakhstan, and China's direct investment in Kazakhstan's Energy industry. Original / value of the research – China's direct investment in Kazakhstan's Energy industry, compared with other factors, can have a more important impact on Kazakhstan's Energy industry, so Kazakhstan can through cooperation with foreign capital, especially China’s capital, the establishment of joint ventures, to improve the current situation in Kazakhstan's Energy industry bad development. Findings. The results show that the impact of net FDI in Kazakhstan, Kazakhstan's GDP, China's direct investment in Kazakhstan, and China's direct investment in Kazakhstan's Energy industry on Kazakhstan's Energy development is signifi cant and positively related.

Dynamic changes and improvement paths of China's emergency logistics response capabilities under public emergencies-research based on the entropy weight TOPSIS method.

Due to global industrialization and urbanization, natural disasters, accidents, and public health emergencies happen frequently. These events cause significant loss of life and property damage to countries worldwide. In the context of frequent public emergencies, enhancing emergency logistics response capabilities is crucial, ensuring rapid supply of rescue materials and support for rescue personnel, thereby saving lives and reducing economic losses. In order to identify the changes and enhancement paths of the emergency logistics response capability of Chinese regions under the shocks of public emergencies, this paper innovatively constructs emergency logistics response capability measurement indicators. This paper uses the entropy weight TOPSIS method and panel quantile regression model to quantify the change and enhancement paths of China's regional emergency logistics response capability under different events. It is found that: (1) The gap in emergency logistics response capability among Chinese regions is widening, with the internal difference in the eastern region higher than that in the west, while the difference in the central region is relatively low. (2) China's emergency management department can effectively transform social logistics into emergency logistics, thereby promoting the improvement of emergency logistics response capabilities. (3) Sudden geological disasters break through the limits of social logistics resources when they cross lower scales, resulting in the failure of emergency logistics response capabilities. This paper expands research on assessing emergency logistics capabilities, addressing issues in existing assessments such as reliance on single indicators and subjective measurement methods. Additionally, it quantifies the dynamic changes in China's regional emergency logistics response capabilities under public emergencies by extending the study of event content, types, and impacts. This enhances discussions on the effects of public emergencies. Finally, from an empirical perspective, the paper explores pathways to enhance regional emergency logistics response capabilities in China. In practice, this paper assists countries worldwide in assessing whether different regions of China can effectively provide emergency support for various resources in direct investments, thus providing a scientific basis for investment decisions.

Research on the Effect of China's Direct Investment on Countries along the Belt and Road Based on RMB Internationalization

Research on the Effect of China's Direct Investment on Countries along the Belt and Road Based on RMB Internationalization

Literature Review on Economic Effects of the RCEP

Since the outbreak of the COVID-19 pandemic, there have been significant fluctuations in the global economy and trade, leading to a pivotal moment in the global economic system. In this context, the Regional Comprehensive Economic Partnership (RCEP) has been officially established, showing positive effects on trade activities and economic progress among its member nations. This study systematically reviews the relevant literature on RCEP and draws the following conclusions: First, RCEP was formed against the backdrop of global economic and trade turbulence and holds significant implications for fostering economic and trade growth in the East Asian region, as well as advancing the process of Asian integration. Second, upon reviewing the literature on RCEP, it was observed that the majority of current literature concentrates on the national level, with less emphasis on the firm level. At the national level, the literature primarily focuses on trade exchange and international investment. Last, most of the literature concerning the impact areas of the RCEP concentrates on international trade and direct investment, while there is still significant potential for research on the mechanisms and potential negative consequences of indirect investment and international trade, as well as sustainable development in emerging research areas.

Підходи до комерціалізації результатів інноваційної діяльності спільних підприємств

Various approaches to the commercialization of the results of innovative activities of joint enterprises are considered. According to the results of the review of the results of the evaluation of the innovative activity of the countries of the world, a ranking scheme of the leading countries in terms of the directions of innovative activity was generated. The process of commercialization of the results of innovative activities of enterprises is described. Systematized methods of evaluating the potential of commercialization of innovative activity, among which the method of technological audit, the method of fuzzy logic and the four-dimensional approach are highlighted. Approaches to evaluating its effectiveness are considered. Emphasis is placed on the main criteria in approaches to the commercialization of innovations, namely on the evaluation of the potential of commercialization and the assessment of its effectiveness. The list of indicators allowing to evaluate the financial result of the commercialization of the company’s innovations is highlighted. Methods of assessing the prospects and readiness for market commercialization of innovative developments, which are most adaptable for joint ventures, are described. The priority list includes the methodology for assessing the readiness for market commercialization of scientific developments, the TRL (Technology Readiness Level) methodology, developed by the US National Aerospace Agency NASA, and the TPRL (Technology Project Readiness Level) methodology. The main centers of transformation of innovative ideas or research results into marketable products or services are highlighted. The focus is on Technology Transfer Offices (TTO), startup accelerators and incubators, public-private partnerships, direct investment in research and development, open innovation, cluster innovation projects, and market-oriented innovation. The procedure for assessing the levels of suitability for commercialization of innovative development is illustrated. Based on the results of the conducted research, a general scheme for the commercialization of innovations was built.

Belt and Road countries’ external debt and China’s new strategies

ABSTRACT Since the Belt and Road (B&R) initiative was put forward in 2013, China has signed cooperation documents with more than 150 countries and more than 30 international organizations. The Chinese government and banks have lent a large amount to B&R countries for infrastructure development, and China’s foreign contracted projects and trade with these countries have increased significantly. However, many B&R countries face severe debt repayment problems, and China has actively engaged in debt relief. To avoid debt crises, China needs to adopt new B&R development strategies, including putting B&R development firmly on commercial principles, reducing government loans to B&R countries and restructuring debt, expanding trade with B&R countries, increasing imports from debtor countries, and encouraging private enterprises’ direct investment in these countries.

Game theoretical analysis of incumbent platform investment and the supplier entry strategies in an e-supply chain

We investigate the interaction of platform investment strategy and a supplier entry strategy in an e-supply chain with a supplier and two e-commerce platforms. In addition to selling through the incumbent platform, the supplier may enter the entrant platform. The incumbent platform may prevent this by investing in the supplier to reduce production costs (indirect investment) or investing in its value-added service to enhance its own demand (direct investment). We analyze the incumbent platform's investment strategy with and without supplier entry to the entrant platform. Without entry, the incumbent platform prefers indirect investment only when the production cost is high and the indirect investment cost is low. With entry, however, the incumbent platform prefers indirect investment when the direct investment cost is high. We also explore the effect of the incumbent platform's investment strategy on the supplier's entry strategy. Counterintuitively, we find that direct investment by the incumbent platform increases the supplier's incentive to enter the entrant platform. Under certain conditions, the incumbent platform can effectively prevent this entrance through an indirect investment strategy. Even if the supplier enters the entrant platform, it is optimal for the incumbent platform to maintain investment. Furthermore, we further extend that the two platforms have the same commission rate to the case where the two platforms have different commission rates and show that the main results still hold. We have also expanded the situation where both platforms have investments. Interestingly, we find that when the production cost is high, the supplier's entry into the entrant platform and the entrant platform's indirect investment may benefit the incumbent platform.

The role of international consulting in improving the international investment activity of the IT business

In wartime, the IT industry increases the provision of IT services not only in the domestic market, but also in foreign sales markets due to the increase in the export of IT products. However, there is a problem regarding the financing of foreign projects, so the purpose of the paper is to determine modern sources of financing IT business investment activities in order to enter the international sales markets of IT products and the use of international consulting as an effective management system for the development of foreign economic activities of domestic business entities in the field of IT. Such methods of scientific research as: systematization, comparison and systematic approach for finding sources of financing of international activities in the IT industry are applied; induction and deduction for the justification of preferential taxation and crediting, as well as the use of international consulting services for conducting export operations in the field of IT technologies. The modern conditions of taxation, crediting and financing of business entities are considered, which include: preferential taxation, credit programs for importers of IT products, inclusion of the IT industry in the "5-7-9" lending program, direct investment, use of crowdinvesting operations and fundraising. It is proposed to introduce a group of "small businesses and entrepreneurs" for IT enterprises and IT entrepreneurs as residents of Diya City and to create conditions for their preferential taxation. Measures have been developed to implement a special program for crediting the export of IT products through the export credit agency with the help of long-term bonds, as well as a special fund for crediting the IT business at the expense of deductions from all types of taxes and fees of Diya City residents. For the effectiveness of the proposed investment decisions, it is suggested to use the services of international consulting for the support of foreign economic activity.

Rethinking Indonesia’s Geothermal Foreign Direct Investment Policy: Certainty and Economic Analysis of Law Perspective

This study aims to anylize Indonesian government policy regarding the 100% ownership over geothermal sector projects by foreign direct investors, based on the certainty and effectivity using economic analysis of law perspective. This study is formulated as legal research, using statutory approach, conceptual approach, and comparative approach, as research method. The results of this Based on these explanations, it can be concluded that in terms of certainty, renewable energy investment policies in Indonesia, which frequently change, ultimately reduce the value of that certainty. This is different from Germany which tends to be more stable because it has a renewable energy policy that does not change too often, for example this can be seen in German policy regarding providing incentives to foreign investors. Furthermore, regarding the effectiveness of the policy of 100% ownership by foreign investors for geothermal development projects, based on EaL and game theory, this policy can be said to be effective. However, improvements are needed so that the policy does not conflict with SoNR principles. This improvement, for example, is by using the BOOT scheme used by the Philippines in relation to the geothermal development sector, not only can it be 100% owned by foreign investors without a certain period of time.

Exploring the spatialisation of the performance of residential REITs investment and direct investment in the housing market

ABSTRACT Despite numerous studies about the housing sector, the connection between the performance of residential real estate investment trusts (REITs) investment and direct investment in the housing market is still under-researched. To help fill this gap, we used quarterly data of the Australian Securities Exchange (ASX) residential REITs index and direct housing returns of Australia and its major cities, spanning March 1983 to June 2021, and adopted a suite of econometric methods to document the following findings. First, publicly listed housing (residential REITs) and private housing markets are not separated, but both are closely related in terms of their investment performance. Second, the performance of direct investment in the housing market of Adelaide, Brisbane, Melbourne and Sydney could lead to positive investment performances for residential REITs over time, while no comparable evidence is found for Canberra, Darwin, Hobart and Perth. Third, further analyses revealed a one-way direction of performance, flowing from the housing market of Brisbane, Melbourne and Sydney to residential REITs, while no similar evidence of performance flow was found for Adelaide. Our study has provided new evidence that could contribute to the discussion on the expansion of residential properties in the portfolio of institutional investors.

Analysis of the Influencing Factors of Neighboring Countries’ Direct Investment in Myanmar

Analysis of the Influencing Factors of Neighboring Countries’ Direct Investment in Myanmar

External asset network and international transmission of economic policy uncertainty

With the gradual deepening of economic globalization, the international external asset holdings has reached an astonishing scale, and its role in the international transmission of Economic Policy Uncertainty should be given sufficient attention. By using the Rolling-Lasso method to construct a cross-border transmission network of Economic Policy Uncertainty, this article explores how the transmission is affected by the external asset and its structure. The results show that: (1) There is a significant positive correlation between the scale of external asset and the cross-border transmission of Economic Policy Uncertainty. (2) The impact of external asset shows structural characteristics, i.e., the effect of Portfolio Investment and Direct Investment is relatively more significant than that of bond assets in equity assets. (3) For those countries with lower level of financial openness or pegging and anchoring exchange rate regimes, they are more likely to transmit Economic Policy Uncertainty to the destinations of external investment.

Direct Investment on Economic Growth a Panel Empirical Evidence from Macro Economics Perspective During the Period From (2000 to 2020)

Direct Investment on Economic Growth a Panel Empirical Evidence from Macro Economics Perspective During the Period From (2000 to 2020)