Effects Of Foreign Investment Research Articles

Strategic Response to Corporate Governance Reform of Family Business Groups

Based on the scheme of principal–principal conflicts, we investigate both how family business group-affiliates and foreign investors respond to a board regulation requiring appointment of independent directors and the consequence of corporate proactive compliance on performance. It shows empirically that the more foreign investment leads to a proactive strategy whereas family controlled business group-affiliated (FBG-affiliated) decrease the probability. This positive effect of foreign investment is more prominent in FBG-affiliates, suggesting foreigners’ sensitivity to the principal–principal issue. We also found improved profitability is directly and positively impacted by the adopted proactive response, which shed lights on existing controversies on the issue. Our results provide relevant theoretical and practical implications.

Determinants of Economic Growth in Central Java

Central Java Province is one of the province in Java Island which has potential natural resources and human resources , but current Central Java economic growth is still far from other provinces on Java island. With the abudance of resources in Central Java the province and still low Growth Economics, this study analyze the effects of foreign investment, labor, and human capital investment, to the economic growth in ten regencies / city of Central Java Province. The analysis method in this study is using the panel data method with some criteria in the panel data, then the best model is the fixed effect or Least Square Dummy Variable (LSDV). The result of the research are: (1) Foreign investment has positive and insignificant effect, (2) the workforce has positive and significant influence, (3) human capital investment has positive and significant influence, (4) Semarang regency becomes the most economic growth area High compared with ten other districts / cities. The implications of this research are first, in increase the economic growth of ten regencies / cities in Central Java Province, the local government should create a conducive investment climate and simplify the investment licensing process so it will increase domestic and foreign investment and encourage economic growth. Second, the government's labor skill training can be an alternative for unskilled workers. Third, local governments can provide budget allocations for education and health so that the capital which portrayed by workers quality can deliver positive results.Keywords: Economic Growth, Foreign Direct Investment (FDI), Labora, and Human Capital Investment.

Efectos de la llegada de flujos de inversión extranjera en el sector hidroeléctrico colombiano

It is known that the world today is moving around of the globalization of markets; it is there that foreign investment flows play an important role in the economic development of Latin America, as in the case of Colombia. In recent years, foreign investment flows have generated not only economic growth but also international relations with the strengthening of trade agreements, the exchange of innovation in technology, processes, and knowledge, allowing the economy to have a progressive development, reflecting that foreign investment can have positive effects on the country’s GDP. The research is based on a descriptive methodology, which shows the growth of foreign direct investment in the Colombian hydroelectric sector, encouraging the strengthening of the sector from 2012 to 2016, for which economic and resource protection policies have been developed to guarantee a continuation of this sector. The research results reflect the positive effects of foreign investment, showing a growth in the hydroelectric sector closely related to GDP in 2016, as well as the increase in Colombian energy production.

Environment and Attraction Policy of Foreign Investment in the Central Asia Countries

The Positive effect of foreign investment includes inflow of stable capital from abroad and various effects such as increase of economic integration, raise of competition, transfer of technology, improvement of international balance of payments, and the promotion of employment. Therefore the greater part of countries in the world drive forward lasting liberalization of investment system. The keynote of economic policy of the Central Asia countries is bound for simultaneous direction, i.e., Received (June 09, 2015), Review Request(June 10, 2015), Review Result(June 29, 2015) Accepted(July 19, 2015), Published(August 31, 2015) 712-714 Lecturer. Dept. Economics and Dept. Russian Language & Studies, Daegu Univ., 201, Daegudea-ro, Gyeongsan-si, Gyeongsangbuk-do, Republic of Korea email: brcho@hanmail.net 2(Corresponding Author) 712-714, Professor. Dept. Economics, Daegu Univ., 201, Daegudea-ro, Gyeongsan-si, Gyeongsangbuk-do, Republic of Korea. email: tkchang1@hanmail.net * 이 논문은 2014학년도 대구대학교 학술연구비 지원에 의하여 연구되었음 * This research was supported by the Deagu University Research Grant, 2014 Environment and Attraction Policy of Foreign Investment in the Central Asia Countries Copyright c 2015 HSST 732 export-oriented and import substitution industrialization policy and the present each government's policy focuses on extension of inward foreign investment. For revitalization of domestic and foreign investment and accomplishment of development of industry and economy, every government authorities in Central Asia should establish proper and timely policy of foreign investment attraction and should actively attract foreign direct investment. Furthermore the Central Asia countries must set up and perform strategies in accord with actual circumstances. It is necessary to expand and support investment incentives, for example tax incentive system on foreign investment into each Central Asia countries, especially in regard to priority field for economic development of itself, including economic development project with priority.

An empirical investigation on the effect of foreign investment on export development

Article history: Received September 10, 2013 Received in revised format 10 December 2013 Accepted December 12 2013 Available online December 16 2013 One of the methods to reach continuous improvement on economy is to boost export and target international market. However, there are some limits on available resources, which present most developing countries for improvement of export activities. One way to overcome such trouble is to use foreign direct investment but this may happen only when we could determine major barriers and overcome the challenges. The present study presents an empirical investigation to detect important barriers on foreign direct investment in Iranian industries. The proposed study uses structural equation modeling to detect major barriers for export development. The results of our survey indicate that there were four factors including economic factors, feasibility study, infrastructure for investment and investment resources influencing on foreign direct investment. © 2014 Growing Science Ltd. All rights reserved.

Foreign Investment and Firm Level Operating Performance: Case of Reliance and Tata

Operating performance of a firm is dependent on many factors of which foreign investment today is considered a highly crucial one. This is more so in a developing open economy like India where domestic capital base for targeted growth is relatively weak. Evidences of relationship between foreign investment and firm level performance and the degree of influence of the former on the later have been argued through many research studies so far. However, there still appears a gap-filling scope with special reference to the impact of foreign investment on the operating performance at the firm level in India. The present paper addresses this important issue with a view to providing further empirical evidence. Taking the case of two major Indian companies from the BSE-30 group i.e., Reliance Industries Ltd. and Tata Steel Ltd., the paper evaluates the magnitude of influence of inward foreign investment on their operating performance. Using multiple regression technique the paper first estimates the relative effect of foreign investment on both the companies’ operating performance and then attempts to examine whether the presence of foreign investment strengthens the operating performance of said firms. It is found that the influence of foreign investment has been quite significant on operating performance in both the firms.

Foreign direct investment spillover effects in China: Are they different across industries with different technological levels?

Despite the impressive magnitude of inward FDI in China, empirical studies on its spillover effects are relatively scarce and have failed to find conclusive evidence. By exploring a vast firm-level panel dataset, this study aims to test empirically whether the horizontal and vertical FDI spillover effects are different among industries classified by their technological levels. Key findings are as followings: First, foreign investments in the same industry are more likely to engender negative influences on the local Chinese firms. Second, these negative horizontal effects are particularly prominent in low technology sectors. Third, the effects of foreign investments in other industries appear to be positive and significant relatively evenly across industries with different technological levels. Considered in the context of Chinese policies on FDI, these findings suggest that government policies could be a crucial factor in taking advantage of FDI spillovers.

Diverse Effects of FDI in Regional Innovation Systems: Synergy Measurement, Complexity Theory, and Entropy Statistics

The aim of this study is to show regional differences as local effects of foreign investments in the dual economy of Hungary. We first introduce three knowledge functions (knowledge exploitation, knowledge exploration, and organizational control) of innovation systems. These functions are operationalized using entropy statistics. Regional innovation systems can then be expected to self-organize in terms of a synergy — that is, reduction of uncertainty — among these functions. Analyzing one-, two-, three-, and four-dimensional entropies of high-tech and medium-tech firms, and knowledge-intensive services, we measure the synergy among the distributions of geographical addresses, organizational size (number of employees), and technologies (NACE codes of the OECD). Synergy is defined as mutual information among these three dimensions; the fourth dimension is used to bring internationalization into the model. Our results show that regional innovation systems in Hungary are self-organized differently, in relation to a small set of foreign firms that have an overwhelming positive effect in regions between the Hungarian capital and the Austrian border. Foreign direct investment, however, has negative effects on local economies and disturbs the domestic synergy in the lagging Eastern and Southern provinces of the country.

A paper on foreign direct investment (FDI) and foreign institutional investment (FII)

Foreign investment refers to investments made by the residents of a country in the financial assets and production processes of another country. The effect of foreign investment, however, varies from country to country. It can affect the factor productivity of the recipient country and can also affect the balance of payments. Foreign investment provides a channel through which countries can gain access to foreign capital. It can come in two forms: foreign direct investment (FDI) and foreign institutional investment (FII). Foreign direct investment involves in direct production activities and is also of a medium- to long-term nature. But foreign institutional investment is a short-term investment, mostly in the financial markets. FII, given its short-term nature, can have bidirectional causation with the returns of other domestic financial markets such as money markets, stock markets, and foreign exchange markets. Hence, understanding the determinants of FII is very important for any emerging economy as FII exerts a larger impact on the domestic financial markets in the short run and a real impact in the long run. India, being a capital scarce country, has taken many measures to attract foreign investment since the beginning of reforms in 1991. India is the second largest country in the world, with a population of over 1 billion people. As a developing country, India's economy is characterized by wage rates that are significantly lower than those in most developed countries. These two traits combine to make India a natural destination for foreign direct investment (FDI) and foreign institutional investment (FII). Until recently, however, India has attracted only a small share of global foreign direct investment (FDI) and foreign institutional investment (FII), primarily due to government restrictions on foreign involvement in the economy. But beginning in 1991 and accelerating rapidly since 2000, India has liberalized its investment regulations and actively encouraged new foreign investment, a sharp reversal from decades of discouraging economic integration with the global economy.

THE FINANCIAL MARKET OF UKRAINE AND THE ROLE OF FOREIGN DIRECT INVESTMENT

Abstract. The main objective of this paper is to investigate the characteristics of the institutional structure of the Ukrainian financial market and to analyze the impact of foreign direct investment on it. The following methods of research were used by the authors: economic-statistical, tabular, and comparative (in empirical analysis; to make comparisons across different types of financial institutions, to investigate and evaluate the volumes of foreign direct investment by countries and their relation to the size of the domestic financial sector); systematic and logical (determining and analyzing the scope of the positive and negative effects of foreign investment on the financial market of Ukraine).The conclusions are as the follows: the structure of the financial market of Ukraine is rather nonbalanced and fragile; most foreign investors have changed their strategies on the Ukrainian financial market from aggressive to share-keeping; more attention should be paid to the development of the constructive policy concerning FDI to ensure the stability and even the development of the domestic financial market as well as to raise its investment attractiveness.Key words: financial market, commercial bank, non-bank financial institutions (NBFIs), foreign investment, investment attractiveness

A Quantitative Study of the Effect of Foreign Investment on Nonresident Patenting in Developing Countries, 1980-2010

This study examines whether foreign investment is a significant predictor of nonresident patent counts in developing countries over time. Unbalanced panel data are observed for 64 developing countries over a 31 year time period from 1980 to 2010 to test a hypothesis stating that countries with higher levels of inward accumulated foreign direct investment (FDI) stocks have higher nonresident patent counts, controlling for other explanatory factors such as population size, level of economic development, education rates, government expenditures, levels of domestic investment, and resident patent counts. Predicted counts of nonresident patents are estimated with Random Effects Negative Binomial (RENB) regression to model the effects of different independent variables on nonresident patenting in each country. Results confirm this study’s hypothesis by showing a significant and robust positive effect for accumulated FDI stocks on nonresident patent counts, while controlling for the effects of other variables over time in the sample of 64 developing countries included in this analysis. This study advances a sociological approach to theories of intellectual property and posits the accumulation of FDI stock as critical to predicting patterns of ownership of intangible capital wealth in developing countries over time. It remains to be seen if developed country FDI influences nonresident patent activities in similar or different ways to developing countries. Future studies may compare between groups of developed and developing countries to determine if nonresident and resident patent activities evolve in the same fashion. Finally, future research may also focus on the nuances between different types of intellectual property (patents, copyrights, trademarks, etc.) in order to more accurately predict each class of intangible capital wealth.

Foreign Investment Effects on the Banking Sector in Georgia

Using data from 2004-2008, we investigate the effect of foreign ownership on banks efficiency and financial performance. The data is a balanced panel consisting of 16 banks and 640 observations. In random effect regression, to investigate the influence of foreign ownership type banks’, we use the efficiency measures ROA (return on asset) and ROE (return on equity). Appling stochastic frontier analysis, we estimate banks cost efficiency. The efficiency analysis reveals that banks with foreign strategic ownership or international financial institutions involvement (EBRD or IFC) are more cost efficient than their domestic counterparts. The study also found that foreign strategic ownership positively affects the return on equity but negatively affects the banks’ return on assets. Investigation of how efficiently foreign majority owned banks are using their inputs showed that banks with foreign majority ownership are significantly less cost efficient than those with foreign strategic ownership. We find that foreign majority ownership has ambiguous effects on financial performance – it increases the return on assets but decreases the return on equity. This research highlights the importance for bank performance of a large strategic shareholder who takes a controlling interest in the bank.

Do MNCs spur financial markets in corrupt host countries?

This study investigates how MNCs can sway the growth of financial markets in the developing countries with prevalent political corruption. Using annual data of panel of 22 developing countries and applying dynamic generalized method of moment (GMM) technique, we find foreign firms can spur financial markets in the developing countries through direct investment. Furthermore, our results indicate the stimulus effect of foreign investment on financial development is stronger in the more corrupt countries.

Bringing the firms into globalization research: The effects of foreign investment and exports on wages in Mexican manufacturing firms

Researchers specializing in organizations and labor markets have paid insufficient attention to the effects that foreign ownership of a firm and its orientation towards export production may have on the wages it pays to its workers. Using information from a nationally-representative sample of manufacturing firms in Mexico, a paradigmatic case of a developing country that is highly integrated into world markets, we find that foreign-owned and export-oriented firms pay considerably more than nationally-owned firms engaged in the production of goods for sale in the domestic market. Second, beyond paying higher wages to their workers, foreign-owned firms also raise the wages paid by domestic firms operating in the same regional labor markets. The wage premium in foreign and export-oriented firms cannot be explained by their size, industry, geographical location, productivity, use of advanced technology, or the sociodemographic composition of their workforce. We find evidence that wages in foreign-owned companies in Mexico are dependent on the country of origin of the capital investment. A greater difference between the industry-specific wages paid in the country of ownership and Mexico is associated with a higher wage premium in Mexican affiliates. Future work should strive to link information from foreign-owned affiliates with their parent companies abroad.

Does foreign investment matter? Effects of foreign investment on the institutionalisation of corporate social responsibility by Japanese firms

The increase in foreign direct and portfolio investment and the growing interest in the institutionalisation of Corporate Social Responsibility (CSR), such as the establishment of particular CSR sections, the appointment of CSR executives, and the documentation of guidelines for CSR, are two of the most notable phenomena in the Japanese business world in recent years. We examine whether these phenomena are associated by asking whether foreign investment matters in Japanese firms’ institutionalisation of CSR. To answer this question, we begin by discussing two competing views on how foreign investors are perceived by Japanese managers: Are foreign investors pursuers of short-term profit or diffusers of innovative practices? We then proceed to an empirical analysis where we examine if there is any statistically significant relationship between foreign investment and CSR, using a data set covering 749 Japanese firms. The results indicate that foreign investment is positively associated with the institutionalisation of CSR. Our analysis also suggests that the degree of international business contact, firm size and membership of certain business groups are positively related with the institutionalisation of CSR, whereas sectoral differences seem to have no effect.

Terror, oil and repression in Algeria

This paper investigates the impact of foreign direct investment (FDI) on human rights in Algeria. No direct link is discovered between foreign investment and the repression of human rights. This is largely due to the peculiarities and, in the special case of Algeria, the location of the hydrocarbon sector, which together make repression less necessary. First, since the hydrocarbon sector uses relatively little labour, there are fewer occasions on which labour rights would be suppressed. Second, oil and gas reserves are concentrated in a thinly populated region of Algeria, where there are fewer people to protest the allegedly negative effects of foreign investment and, hence, fewer people to repress. Nevertheless, case study findings indicate that FDI has indirectly sustained repression in Algeria. Explanation is attributed to the centrality of the country's hydrocarbon resources to the global economy. It is suggested that countries in demand of Algeria's oil and gas have exercised restraint in criticising Algeria's human rights record. Buttressed by the diplomatic support of their partners as well as by large arms transfers, the Algerian government has been able to choose repression over concession as its primary response to domestic unrest. This study also points to ways in which the Algerian experience provides the grist for theoretical refinement. Specifically, it suggests that repression is more likely in industries that are more labour-intensive and concentrated in densely populated regions.

Foreign Investment, Government Expenditure, and Economic Growth in Malaysia

This study uses the ordinary least squares technique to examine the effect of foreign investment and government expenditure on the growth in GDP per capita in Malaysia over the period 1978-2005. The regression results showed that the growth of export and ratio of government expenditure to GDP are the driving forces in enhancing the economic growth in Malaysia. Foreign investment and previous year real income per capita growth depict positive impact, whereas population growth exerts a negative impact on economic growth.

La Longue Durée and Energy Security in the Gulf

Hydrocarbon riches have lifted the states of the Persian-Arabian Gulf out of poverty, but they also attract unwanted attention and external intervention. This essay examines the security goals of Gulf governments over five eras. It suggests that the expansion of state capacity is both cause and effect of foreign investment and other resource transfers, and argues that their hydrocarbon resources have been key assets of Gulf governments in pursuing their national and regional security interests.

Are the FDI policies of the Central European countries efficient?

This article examines the efficiency of the Central European countries' foreign direct investment policies by evaluating the spillover effects of foreign investment. It is argued that the poor contribution of foreign direct investment to the emergence of competitive indigenous firms is partly due to the adoption by Hungary, the Czech Republic, Poland and Slovakia of a very friendly FDI policy. The argumentation is based on a stylised comparison of the ‘Irish Model’ and the ‘TKC model’ (Taiwan, Korea, China) representing two main categories of FDI policies of countries which have built their development on integration in international trade. The comparison of the two families of FDI policies tends to demonstrate that the ‘TKC model’, built on strong state intervention in the industrial structure and in industrial guidance of FDI, has been more efficient in terms of the creation of competitive indigenous firms than the ‘Irish model’ which totally bans policies constraining FDI.

Foreign direct investment and productivity spillovers: a quantile analysis

This paper estimates the within-plant and spillover productivity effects of foreigninvestment in Mexican manufacturing plants. It contributes to the existing literature by analyzing whether FDI of North American origin differs from FDI from the rest of the world. I also use quantile regression analysis to determine whether spillovers are equal for plants of different productivity levels. The results indicate positive and significant spillovers from the presence of foreign firms. However, these spillovers accrue only to plants at the upper end of the productivity distribution. Furthermore, North American based FDI appears to yield slightly larger spillovers relative to FDI from the rest of the world; however the difference is not statistically significant. A deeper look at this issue reveals that Canadian FDI yields large productivity spillovers relative to both US and rest of the world FDI. These differences are highly statistically significant.