FDI In Host Country Research Articles

Aid, State-Ownership, and the Location Decision of Chinese MNEs in Africa

With the hybrid nature of government agencies and market players, state-owned enterprises (SOEs) tend to play multiple roles when they conduct FDI in host countries that receive aid from their home country. Bridging the literature that studies the impact of aid on FDI with the research on SOEs, we propose that SOEs are more likely to make FDI in aid recipient countries than privately-owned enterprises (POEs) from the same country. In addition, SOEs’ FDI in recipient countries not only mediates the positive impact of aid on POEs’ FDI in recipient countries, but also strengthens the impact as a moderator. Empirical research based on data of 3,758 Chinese FDI projects in Africa during 2001-2015 delivered support to the above arguments. The findings of this study extend the research on the relationship between aid and FDI, as well as the SOE literature.

Screening of Foreign Investments and the Bilateral Investment Treaties of Bangladesh

Since 1960, about 2852 bilateral investment treaties (BITs) have been signed. Of them, 2298 BITs are in force at present. In the last 61 years, the WTO members failed to conclude a global treaty to regulate FDI in host countries, consequently, the BITs have played a significant role to regulate FDI. As a member of the WTO, Bangladesh has signed 31 BITs so far with various states to allow and increase the inflow of FDI into the country. Bangladeshi foreign investment laws and BITs mainly protect foreign investors. However, neither of them has any specific provision regarding the screening of foreign investments in Bangladesh. Two questions have been addressed in this paper: (a) Do the BITs of Bangladesh allow the host state for screening of foreign investments at the entry stage? (b) Should the screening of FDI be required during the pre-entry stage in Bangladesh? In this paper, a doctrinal research method has been used to critically analyze 15 BITs to explore whether there is any reference for screening of foreign investments in Bangladesh. We find that the existing Bangladesh BITs have provisions to promote and protect foreign investments but have no reference in relation to the screening of foreign investments. Therefore, the author has recommended that the Government of Bangladesh can consider specific provisions for screening of FDI in future BITs.

The effects of competition policy, regulatory quality and trust on inward FDI in host countries

This article develops a comparative institutionalist framework to investigate how pro-enforcement reforms leading to a change in competition policy regimes attracts FDI in host countries, and how this relationship is moderated by the interplay between key formal and informal institutions. We revisit the FDI theory by integrating insights from economics of competition policy and the most recent debate on how institutions matter to international business. We contend that the effectiveness of competition policy enforcement is a crucial factor in attracting FDI, but only in host countries characterized by institutional configurations where the lack of trust is concomitant with a high-quality regulatory institutional environment. Our analysis on a sample of 63 countries followed in the 1980–2017 period supports our hypotheses. This paper contributes to a deeper understanding on the competition policy–FDI relationship at national level and has implications for policy makers.

Game Theory-Based Pathway Selection for Fair and Reciprocal Cooperation among Ports along the Maritime Silk Road

The transport infrastructure connection is the fundamental base for the promotion of the Silk Road Economic Belt and the 21st Century Maritime Silk Road under the background of the Belt and Road Initiative. Ports, as the core elements in the connection, contribute to the practical infrastructure connections along the maritime road. A multihierarchical cooperation framework in between the ports and based on the fair and mutual benefit concept is the cornerstone of constructing the 21st Century Maritime Silk Road and the engine fuelling the updation of Chinese seaports and growth. This paper first defines the port cooperation along the 21st Century Maritime Silk Road and analyses the opportunity and challenges from the perspectives of the port-industrial and the port-region interaction. Then, it develops research into port cooperation, path selection, cooperation mechanisms, and application conditions in analysing port FDI, BOT, port alliances, multimode transport, and the institutional innovation of China’s ports. In conclusion, we develop a game theory selection analysis to study multiwin cooperation for port FDI in host countries along the 21st Century Maritime Silk Road.

Duopolistic Competition and Optimal Switching Time From Export to FDI in Uncertainty

This paper aimed to extend previous real option models to features of multinational firms’ activities such as market competition and trade barriers. Few researchers have studied multinationals’ optimal switching time from export to FDI using real options, and those who have done so have ignored trade policies and strategic interactions between firms. Yet, the presence of local competitors and trade costs influences the option value of waiting. We find that FDI in host countries with uncertain demand, strong competition and few barriers to trade will likely to be delayed with respect to immediate investment. In terms of policy implications, we find that the trade and competition policies of host countries have lower deterrent effects on FDI when uncertainty is reduced.

Do the FDI inflows affect domestic investment?: Issues before India and South Asia

South Asian countries are characterised with varied pattern of FDI inflows, Gross Domestic Product (GDP) and Domestic Investment. It is interesting to have an analysis of these factors for evaluating the impact of FDI on domestic investment and GDP. FDI has an important role in promoting growth by accelerating domestic investment in the host country. Many a times it is observed that FDI in host countries deviate much from the expected role of promotion of domestic investment by displacing domestic investment. South Asia, with an annual average of 6.7 percent increase in real GDP over the past decade, holds the world’s third largest position in terms of GDP. However, South Asia’s FDI inflows as a share of GDP is observed to be the lowest among all developing regions. A detailed analysis is performed with the help of methodology used by Agosin and Mayor (2000) to measure the impact of FDI in this paper. The beneficial/harmful effect of FDI are termed as crowding in/out effects. For this purpose, panel data analysis is performed for the years ranging from 2003 to 2013. The World Bank data of 2005 base year is put to use. Three variables such as FDI inflows to GDP ratio, Growth of Gross Domestic Product (GDP) and Domestic Investment (DINV) are considered for Seemingly Unrelated time series analysis for India and for the Seemingly Unrelated panel data analysis for South Asian countries. The results obtained highlight important findings with regard to FDI in bringing about crowding in and crowding out impacts of FDI. It also brought to light the compatibility between domestic investment and Foreign Direct Investment in India and South Asia. The SUR results for the entire South Asian region indicate Crowding Out effect of FDI Inflows as it can be observed from the β LT value which is −7.023. This implies that additional one dollar of FDI displaces roughly seven dollars of domestic investment from the South Asian countries. The SUR time series analysis performed individually for India indicates that India too shows mild crowding out impact of FDI in its economy. In the past decade, though South Asia witnessed an increase in FDI inflows, it resulted in the displacement of domestic investment, which is a great cause of worry. FDI policies have to be instrumental in preventing the entry of harmful type of FDI inflows and in promoting the entry of the right type of FDI into South Asia.