FDI Attraction Research Articles

The impact of intangible capital on the territorial attractiveness of FDI in Morocco: econometric modeling

Since the speech from the throne of King Mohammed VI in 2014, on evaluating the intangible wealth of Morocco, intangible capital unanimous research. It is noted that wealth cannot be considered as capital that once identified, classified and evaluated. Before analyzing the correlation between intangible capital and attractiveness of the territory, it is first necessary to define, identify, mitigate and adapt this concept to the particularities and Moroccan background. Nobody can deny that Morocco is a country rich in its history, its culture, its heritage, its diversity and its people that wealth can be an engine of growth, value creation and even a source of attractiveness of territories. This is where our communication fits. Its purpose is to analyze the correlation between intangible capital and attractiveness of the Moroccan territory, for that Three points will be studied: Definition, identification and measurement of intangible capital; Study the context of the national debate on intangible capital; Analysis of the relationship between intellectual capital and attractiveness of the Moroccan territory.

Measuring the Success of EU Expansion Process Comparing FDI Levels before and after the Accession to EU In Relation to CPI-Based Real Effective Exchange Rate Indices

The economic impact of the EU expansion on individual member states belong to imperative justifications of the EU enlargement. These contributions reward the union membership becoming the partial sovereignty loss trade-off. FDI inflow is considered one of such key benefits for new members. While the FDI impacts on economies have been studied from many angles, factors that cause the attraction of FDI are to be analysed as they are an important influence in future investment decisions making part of the enlargement justification, justifying the sovereignty loss trade-off. Future FDI inflows may be signalled by variables such as Real Effective Exchange Rate, being a proxy for trade competitiveness, expected to differ in economies prior to and after the entry to EU. The analysis of the relationship between the Real Effective Exchange Rate and the FDI inflow is performed on selected Eastern European countries before and after the accession, with the conclusion that convincing arguments for the FDI inflow indications, at least when measuring them through the lens of Real Effective Exchange Rate and GDP, may not be present.

Analysis of Sino-Tanzania Trade Relations: The Gravity Model Approach

Abstract This paper explores the bilateral trade relations between Tanzania and China by examining the trend, intensity, and the determinants of the Tanzania exports to China from 1988 to 2018. It augments the traditional Gravity Model of bilateral trade and employs the dynamic Autoregressive Distributed Lag and Error Correction Model techniques. In general, the two partners have witnessed a tremendous trade increase over time. Empirically, the influence of Tanzania’s economic size and foreign inflows on exports are significant in the short and long run. Specifically, the effect of the economic size is positive throughout, while foreign capital is positive in the short run. On the other hand, the estimated coefficients of the population, exchange rate, and relative distance are significant only in the long run. This study recommends expanding the national income and strategic FDI attraction, among others, to enhance Tanzania’s export capacity and eventually trade with China and the globe.

Factors Affecting Investment Decisions of EU Investors in Vietnam

EU investors were present in 18 out of 21 important economic sectors, focusing on manufacturing and processing industry 36.3%, refining and petrochemical 11%, textiles and garments 6.94%, electronics 6.4%, food processing 5.6%, cars and means of transport 5.2%; production and distribution of electricity and gas 20.7%, real estate 11%, information and communication 6.6% (GSO, 2020); contributed significantly to Vietnam’s economic growth. On the basis of that, attracting FDI is a subjective activity of the investee, that is, the investee will perform activities affecting the factors of the investee to increase the attractiveness of the investor. foreign investor. Thus, in order to effectively attract FDI from EU investors into Vietnam associated with the characteristics of each investor, it is necessary to assess the degree of influence of factors on FDI attraction, which is also the factors affecting the decision of EU investors. This study uses an exploratory factor analysis (EFA) model to analyze the factors affecting the investment decisions of EU investors in Vietnam, thereby proposing solutions to enhance the attractiveness of EU investors effective FDI from the EU into Vietnam in the coming time.

The effect of Foreign direct investment and financial development on economic growth: Evidence from global income countries

Prior researchers have explored the role of FDI and economic growth or financial development and economic growth in a particular sample of countries or region while no collective studies on the effect of FDI, banks and stock market on economic growth in region or income-based groups have been conducted yet. Using a balanced panel data set of the globe of 193 upper middle income (UMI), lower middle income (LMI) and high income (HMI) countries for the period of 1998 to 2018, the study ever the first time explore the role of FDI, banks and stock markets financial development on economic growth by employing static methods and Dynamic approaches which contributes to the scarce literature on the collective and across income-based groups of countries. All model findings for the global panel indicates that FDI affect economic growth significantly and positively in the global panel, lower middle income (LMI) and upper middle income (UMI) countries where it’s not true for high income (HI) countries. Banking sector development also affect economic growth significantly but negatively in the global panel, high income and upper middle-income countries while not significant for the lower middle income (LMI) countries. Stock market development also affects economic growth significantly but negatively in the global panel. Furthermore, the result concludes that FDI have a larger effect on economic growth than does banks or stock market financial development. This study suggest high income countries regards improving FDI attraction, lower middle income (LMI) countries in regards improve banking sector and collectively suggest to improve major driver and functioning of banking sector and stock markets to spur economic growth. This study is beneficial for the government channels and financial sector of the study countries to make further decision.

Governance and foreign direct investment: is the low and middle income Africa region different?

This paper examines the effect of political governance, economic governance and institutional governance on FDI inflows on a sample of 32 African countries: 15 low income countries and 17 middle income countries, over the period of 1996–2019. Our empirical study used both aggregated analysis and the system generalised method of moments (System-GMM). The aggregate approach consists to use three composite indicators [Political Governance encompassing political stability (PS) and voice and accountability (VA)], economic governance [representing by government effectiveness (GE) and regulatory quality (RQ)] and institutional governance [including the control of corruption (CC), the rule of law (RL)]. Our findings show that overall governance indicators attract FDI inflows in African and its sub-regions. Therefore, improvements in political governance, economic governance and institutional governance are deterministic conditions in the attractiveness of FDI in African economies.

FORECASTING VOLUMES OF FDI OF COUNTRIES BASED ON INDICATORS OF THEIR INVESTMENT ATTRACTIVENESS

Objective. The objective of the article is the analysis of the state and features of the development of special economic zones in the world.. Methods. The following methods and techniques of cognition are applied in the research process: theoretical generalization and comparison, analysis and synthesis, induction and deduction, grouping, correlation-regression analysis, clustering. Results. It is determined that among the wide list of indicators of investment attractiveness, the following indicators are most often used and are the most authoritative ones: Doing business Index, The Global Competitiveness Index, Global Innovation Index, Fragile States Index, Legatum Prosperity Index, Index of Economic Freedom, as well as credit ratings international rating agencies, including Moody's, Fitch, etc. Based on the analysis of the relationship between indicators of investment attractiveness and the actual volumes of FDI attraction of 101 countries of the world in 2015-2020, it is established that this relationship can be described as direct (Doing business Index, The Global Competitiveness Index, Global Innovation Index , Index of Economic Freedom) or the reverse (Fragile States index, Legatum Prosperity index); weak (Doing Business Index, Index of Economic Freedom, Fragile States Index) or moderate (Global Competitiveness Index, Legatum Prosperity (economy) Index).It is substantiated that despite the fact that the most representative indicators of investment attractiveness, according to the calculated values ​​of the correlation coefficients, are the Global Competitiveness Index and the Global Innovation Index, however, they do not have a significant impact on the actual volumes of FDI attraction of countries (the correlation coefficient varies within 0, 15-0.39), cannot be used as a dominant determinant for forecasting FDI volumes. It is substantiated that for forecasting the volume of FDI, it is advisable to use not one, but a set of indicators of investment attractiveness. It is established that the composite four-factor regression model based on individual regression equations of countries on indicators of investment attractiveness according to their cluster affiliation has the greatest predictive power.

ROLE OF ECONOMIC AND POLITICAL FREEDOM IN COUNTRY'S ATTRACTIVENESS OF FOREIGN DIRECT INVESTMENT (FDI): EVIDENCE FROM THE SOUTH EAST EUROPE

<jats:p>The aim of this research is to empirically explore impact of economic and political freedom as two nontraditional factors on FDI inflows in eight of South East Europe countries between 2002 and 2020. Accordingly, the study hypothesis that high level of economic and political freedom is positively associated with FDI. The study uses panel data techniques. The obtained findings of the study failed to confirm contribution of economic freedom on FDI in eight South East European countries. It can be explained that a given level of reforms conducted in the field of business freedom, trade freedom, monetary freedom, investment freedom, government size, property rights, freedom from corruption, labour freedom, financial freedom, and fiscal freedom are still lagging from developed countries. On the contrary, the findings confirmed the impact of political freedom on FDI attractiveness and that given level of political freedom contributes to growth of FDI.</jats:p>

ASSESSMENT OF FDI RESULTS AND EFFICIENCY IN VIETNAM: FROM THEORY TO PRACTICE

In fact, for many years now and especially during the implementation of development planning in Vietnam; in general, places are very confused when studying the issue of FDI results and efficiency. The first is to evaluate how the results of FDI attraction are identified, how the effectiveness of FDI is evaluated, by what criteria and compared with the standard level. In the process of studying the effectiveness and efficiency of local economic management and studying the impact of FDI on the socio-economic development of provinces in Vietnam, the author of this article recognizes many useful issues for research on FDI results and efficiency in the context of Vietnam. In a series of important issues, the author wants to present some outstanding issues to get more information for those who want to refer

Eclectic Theory and Foreign Direct Investment in Nigeria: A Contextual Overview

Abstract Foreign direct investment (FDI) is an integral and indispensable source of foreign capital for both the developed and developing countries aside its catalytic economic growth accompanying it. Hence, the competition to court more to maximizing its positives by countries is intensified in the contemporary world and eclectic theory offers significant insights on the tripartite and interrelated platforms of ownership, location, and internalization advantages to the appropriation of FDI to an economy. Therefore, this article main objective is to examine Nigeria’s experience in this regard. The case study research method is adopted to carry out a contextual assessment of Nigeria’s FDI position within the eclectic theory framework using secondary data sources. The findings reveal that Nigeria’s location advantages are not too conducive for FDI attraction and optimum exploitation of the internalization advantages by firms which consequently deprived the country of its benefits of export-driven economy objective and employment generation amongst others. The study recommends diversification of her economy and recalibration of the country’s political, economic and policy environment to enable positive predictability, FDI attraction, and its inherent returns appropriation.

RELATIONSHIP BETWEEN THE STOCK MARKET DEVELOPMENT, BANKING SECTOR DEVELOPMENT AND ECONOMIC GROWTH IN THE CEE COUNTRIES

The stock markets of most CEE countries have been actively developing and improving over the past decades but they still do not belong to the developed markets according to MSCI classification, the financial systems of these countries tends towards the bank-oriented type. Does the level of stock market development affect economic growth in CEE countries and do these countries need to develop their stock markets accordingly? The purpose of this article is to identify the direction of the causal link between stock market development, banking sector development and economic growth in Central and Eastern European (CEE) countries. The subject of the research is the relationship between the stock market development, banking sector development and economic growth in the CEE countries. Methodology. The research is based on the annual data for two time periods 1999-2012 and 1999-2015 for the 8 and 5 CEE countries, respectively. The study is based on the Granger causality test and linear regression models. According to results of the research the stock market development plays an important role in attracting foreign direct investment and economic growth in CEE countries in the long-run period. There are revealed the channels of indirect influence of the stock market capitalization on the economic growth. Stock market capitalization has impact on the banking sector and gross capital formation, which in turn have impact on the economic growth of CEE countries. There is the impact of both the stock market and the banking sector development on the economic growth in CEE countries during 1999-2015. However, the impact of the stock market size on the economic growth is positive and the impact of domestic credit to private sector is negative. Practical implications. The study proves the reasonable need for the CEE countries to move towards further development of the stock market, improving the market infrastructure and institutional environment in order to expand the size of the stock market and thereby contribute to the economic growth of this countries. Value/originality. The obtained conclusion about the role of the stock market in economic growth and attraction of FDI is of great importance both for Ukraine and other countries with similar trajectory of economic development in general and similar historical aspects of the origin of stock markets in particular and should be taken into account by state leaders when making decisions on the need to create conditions for development of such element of the country’s financial system as the stock market.

Impact of Foreign Direct Investment on Welfare in Africa: Empirical Evidence from Guinea

The recent economic and financial hardship has resuscitated controversies over the role of Foreign Capital in economic growth and welfare enhancement in emerging nations, particularly in Guinea. The literature that scrutinizes the causal interaction among FDI and poverty alleviation is relatively abundant, the fundamental statement shared by these empirical studies is that GDP growth is assumed to be relevant proxy of people well-being. However, Guinea and its FDI attraction policies have not been well approached by some of these paper. This empirical study examines the interaction between FDI inflows and poverty alleviation in Guinea from 1990 to 2017. The Human Development Index (HDI) and the per capita FDI net inflows are respectively employed as key welfare and FDI indicators.The findings from the Error Correction Model (ECM) confirm that, in the long term the variables converge in the same direction. The outcomes also exhibit that per capita FDI in the long run, negatively impacts welfare but not significantly, while Inflation’s coefficient remains positive and significant. With trade openness, we still found the same positive interaction but not significant. The results from the Auto Regressive Distributed Lag Model (ARDL) exhibit that per capita FDI flows [current value and L2.] have positive but not significant impact on HDI whereas FDI [L1] has a negative interaction with welfare at 10% significance level. The trade openness variable [current value] is negatively but not significantly associated with HDI, while inflation [L1 and L2] influence on human advancement is positive and significant.Overall, Foreign direct investment in Guinea is still resource seeking investment which impact on the domestic economy is very limited. Hence, government should introduce new policies and incentives in order to attract more market seeking or other types of FDI that may promote inclusive growth and alleviate poverty.

FDI inflows in Europe: Does investment promotion work?

Can active investment promotion efforts attract FDI towards areas and sectors that would not otherwise be targeted? This paper leverages an ad hoc survey on national and sub-national Investment Promotion Agencies (IPAs) in Europe and applies state-of-the-art policy evaluation methods to estimate the impact of IPAs on FDI attraction. The results show that FDI responds to IPAs even in advanced economies. Sub-national IPAs, operating in closer proximity to investors' operations, attract FDI in particular towards less developed areas where market and institutional failures are stronger. IPAs influence FDI over and above other policies targeting the general economic improvement of the host economies. Impacts are concentrated in knowledge-intensive sectors where collaborative systemic conditions are more relevant. IPAs work best for less experienced companies - ‘occasional’ investors - more likely to suffer from institutional failures. Finally, IPAs are equally effective in attracting companies from both outside and inside the EU Single Market even if the latter are less likely to suffer from regulatory or information asymmetries. Overall, this evidence sheds new light on the role of sub-national IPAs as local ‘institutional plumbers’ in support of foreign investors and their operations.

COVID‐19’s impacts on global value chains, as seen in the apparel industry

AbstractMotivationThe COVID‐19 pandemic has massively disrupted international trade and global value chains. Impacts, however, differ across regions and industries. This article contributes to a better understanding of the scale of disruptions to industries and value chains integral to the economies of and livelihoods in developing countries, and what role policy can play to mitigate harm.PurposeThis article aims to: (1) analyse and characterize disruptions to the global apparel value chain caused by the COVID‐19 pandemic, focusing on how developing countries have been impacted, and; (2) identify key policies to support a resilient, inclusive and sustainable recovery.Approach and methodsWe review COVID‐19 related reports published by international and non‐governmental organizations, international trade and production statistics, industry surveys and media reports. We frame our analysis predominantly within the Global Value Chains literature.FindingsThe global apparel value chain has been severely disrupted by the pandemic, owing to direct effects of sickness on workers in factories, reduced output of materials—cloth, thread, etc.—used to fabricate clothing, and to reduced demand for apparel in high‐income countries. Developing countries are suffering disproportionately in terms of profits, wages, job security and job safety. Women workers in the apparel chain have been hit especially hard, not only because most workers in the chain are women, but also because they have experienced increasing unpaid care work and higher risk of gender‐based violence.Policy implicationsFive key areas of policy to support a resilient, inclusive and sustainable recovery stand out: (1) delivering emergency responses to ensure firm survival and the protection of workers’ livelihoods; (2) reformulating FDI attraction strategies and promoting market diversification; (3) supporting technology adoption and skills development; (4) deploying labour standards to improve workers’ conditions and strengthening social protection systems; and (5) adopting gender‐sensitive responses.

Interaction Between FDI, Institutional Quality, Pandemic and Economic Growth Inthe Mena Region: Application On Dynamic Panel Data (GMM)

The objective of this work is to study the interaction between four different indicators namely FDI, institutional quality, pandemic and economic growth. In other words, this paper presents the effects of institutional quality in a pandemic context on the attraction of FDI to stimulate economic growth while showing the types of FDI that can be attracted during the period 2011-2020. The latter is characterized by two types of the pandemic namely the Ebola epidemic in Africa and the Covid-19 epidemic in Asia. Our empirical contribution is based on dynamic panel data (GMM) using the Arellano and Bond (1998) approach. The results found validate the hypothesis that institutional quality is the engine of economic growth. In addition, among the main results found when the interpretation has serious and clarifieted the implications for countries just below the threshold of institutional quality. Any reform in the area of democratic accountability, the quality of the bureaucracy, ethnic or military tensions in politics is likely to result in a gradual increase in the benefits of FDI, even for countries well below the threshold. However, due to institutional complementarities, reforms targeting specific characteristics of institutional quality may in fact bring other characteristics of their relevance closer together to show this work focused on institutional quality to attract FDI to stimulate growth in a context of the epidemic.

ПРЯМІ ІНОЗЕМНІ ІНВЕСТИЦІЇ У КРАЇНИ ЄВРОЗОНИ: СТОХАСТИЧНІСТЬ ФІНАНСОВИХ ФАКТОРІВ ВПЛИВУ

Анотація. В умовах глобалізації та лібералізації ринку капіталу увага зосереджується на міжнародних потоках інвестиційних ресурсів. Особливої актуальності набуває дослідження інтересів іноземних інвесторів і сфер їхньої реалізації за країнами Єврозони, кожна з яких має свої специфічні особливості як у структурній будові економіки, так і у формуванні політики стимулів. З метою доведення гіпотези про стохастичний характер впливу фінансових факторів на залучення ПІІ проведено групування країн Єврозони за їхньою привабливістю для іноземних інвесторів у далекій ретроспективі та 2018 року. Задля цього використано інструменти кластерного аналізу, методи Уорда та Евклідової відстані, які дозволили встановити чотири кластери країн Єврозони: перший кластер чітко представлений Нідерландами (країна, що залишається привабливою для іноземних інвесторів і має високий рівень потоку ПІІ у ВВП); до другого увійшли Ірландія і Люксембург (країни, що тривалий час були привабливими для інвесторів-нерезидентів, проте останнім часом спостерігається відплив іноземного інвестиційного капіталу з них); третій кластер включає Австрію, Словацьку Республіку, Португалію, Іспанію, Бельгію та Естонію (із помірним накопиченням ПІІ в економіці та відносно стабільним їхнім потоком); четвертий кластер охоплює Фінляндію, Німеччину, Францію, Словенію, Грецію та Італію (країни, що найменш чутливі до іноземних інвестицій, не орієнтують свою політику на їхнє активне залучення). Інструментарієм для визначення зв’язку потоку прямих іноземних інвестицій і факторів макро- (рівень інфляції, державного боргу, довгострокові процентні ставки за державними облігаціями, рівень сальдо поточного рахунку балансу у ВВП і ставки корпоративного оподаткування) і мікрорівня (прибутковість фінансових і нефінансових корпорацій та рівень їхньої заборгованості як чинник ризику) за групами країн використано коефіцієнти рангової кореляції Кенделла (Kendall tau rank correlation coefficient) і Спірмена (Spearman correlation coefficient). Їхній аналіз дозволив установити, що недоцільно уніфікувати інвестиційну політику фінансових стимулів за різними країнами, адже вони характеризуються диференційованою структурною будовою економіки; під час ухвалення рішень їхні інвестори зацікавлені в різних аспектах і мають різні сподівання щодо макроекономічної політики приймаючих країн. Наведене спростовує певні усталені теоретичні погляди на детермінований зв’язок інвестиційної активності та фінансових факторів впливу на неї. Ключові слова: прямі іноземні інвестиції, фактор, фінанси, рангова кореляція, аналіз. Формул: 3; рис.: 2; табл.: 4; бібл.: 34.

The nexus between FDI inflows and economic development in Ghana: empirical analysis from ARDL model

This study examined FDI and economic progress in Ghana. Using annualised time series data obtained from the World Bank over a period from 1984 to 2018, an ARDL approach was implemented. Our findings show that external factors affirm positive impact on FDI attraction and economic development. Specifically, inflation and population have a long and short run substantial impact on attraction of FDI into Ghana. Similarly, at the micro level, financial expansion in the financial sector exerts long- and short-term substantial positive effect on FDI attraction. A 1% rise in FDI inflow and population would result in 234% and 200% economic expansion in the long run. Financial development in the private sector, however, exerts a considerable effect in the short run. This implies a weak resilience against shock for FDI in the private sector. Overall, our model confirms FDI-led economic expansion in Ghana in the long-run. To sustain this, recommendation is policymakers should reduce total control and involvement in the markets by allowing and empowering private sector expansion.

Uganda’s growth Determinants: A Test of the Relevance of the Neoclassical Growth Theory

The purpose of this study is to investigate whether Uganda’s economic growth determinants can fully be analyzed within the framework of the neoclassical growth theory. The study uses quarterly data for the period 2007-2018. The underlying empirical models are estimated using IV-GMM in the specific-to-general modeling approach. Estimates show that unlike the factor of capital stock per worker, human capital per worker persists to be a significant factor that influences Uganda’s economic growth even when additional variables motivated by the endogenous growth theory are included in the empirical model. The factor of population growth remains theoretically plausible but reduces its strength of influence with the additional explanatory variables. The estimates suggest that the neoclassical growth model has the ability but does not fully explain growth variations in Uganda which manifests the theory’s fractional relevance. Estimates further show that other factors such as low lending interest rates, attraction of FDI and expansion of domestic credit are important enhancers for Uganda’s economic growth. Results do not support the notion of conditional convergence commonly cited in growth literature. Our point of departure from existing literature on Uganda’s growth determinants is the inclusion of productivity factors motivated by the endogenous growth proponents in the empirical model as control variables.

Labour market flexibility and FDI attraction: A macroeconomic analysis

Foreign direct investment is one mode of entry into international markets that can provide important benefits to host economies. For this reason, policymakers have sought to apply policies that attract foreign direct investment. Although there is extensive and relevant literature that explores the determinants of foreign direct investment, few studies exist that focus on the relationship between labour market flexibility and foreign direct investment; furthermore, most of these are firm-level studies and use old data. Thus, this study aims to analyze the influence of labour market flexibility on foreign direct investment based on macroeconomic data for a set of 180 countries and a relatively recent period of analysis (2004-2009). Using econometric techniques with panel data, the results show that labour market flexibility enhances the attraction of foreign direct investment. In particular, the rigidity of working hours is the dimension of labour market regulations that most negatively affects the attraction of foreign direct investment. Based on the control variables used, we found that the economic and financial incentives, trade barriers, the growth and the size of the market and the level of human capital are important determinants in the explanation of foreign direct investment patterns.

The Present and Future Prospects of Japanese FDI in Hungary

Traditionally, the cornerstones of Hungary’s competitiveness in FDI attraction have been the favourable geographic location and the availability of a qualified and cost-effective labour pool. Western countries are still far the most important sources of the FDI stock in Hungary, however Japan is the second largest investor among Asian nations. Most of the Japanese FDI has been concentrated in the automotive sector and has targeted Western, Central and Northeast Hungary. Some Japanese investors have already started to locate high-end manufacturing technologies to Hungary which was in line with the country’s goal to be at the forefront of Industry 4.0. The main challenge on the Hungarian side is whether the country can ensure the necessary pool of talents and skilled labour to maintain its attractiveness and to move up in the value chain.