FDI Performance Research Articles

Key barriers to foreign direct investment: are they different across manufacturing and services sectors in Malaysia?

Despite an increase in FDI inflows to Malaysia in 2021, FDI performance has generally weakened in the past decade. The trend highlighted the importance of understanding the barriers that hinder FDI in Malaysia. Using the latest Enterprise Surveys (2019) data from 930 firms, this study explores the key barriers to FDI in Malaysia and, more importantly, identifies whether there is a difference across the manufacturing and services sectors in Malaysia. The results of the Bayesian logistic regression indicate that access to finance is generally the key barrier to FDI in Malaysia, although this varies significantly across sectors. Specifically, the manufacturing sector faces challenges related to access to finance as the main barrier to FDI. Conversely, political instability appears to be the main barrier to FDI in the services sector. These findings emphasise the importance of a robust investment climate characterised by stable institutions and diverse financing options for foreign investors.

Impact of Foreign Direct Investment on Financial Institution Performance in Nigeria: A Study of Jos Metroplolitan City of Plateau State

Financial institutions are confronted thru gradually keen opposition and increasing effect of supervisory necessities, financial plus high-tech innovations, influential grief and new dares which have melodramatic effects on their concerts. The ambition of this paper is to examine impact of foreign direct investment on financial institution performance in Nigeria. The study was grounded on three theories (revenue maximization principle, pecking order theory and Internationalization Model) in relation FDI performance. This study employs a survey design because which aimed at establishing effects of the variables of independence on dependent variable, population of this study was based on 10 selected financial institution operating in Jos Metropolitan city of Plateau Nigeria as at 1^st January, 2022. Each bank is represented by its Chief finance officer (CFO). Primary data and secondary data was obtained thru yearly financial statement of selected financial institution through the respective Chief finance officers also, books, journals and publications, while primary data was obtained via questionnaire. Descriptive statistics and content analysis were used to analyze the data collected. The results reveled that that FDI variables indicates a strong impact on financial institution performance among Nigeria financial institutions, it recommends that solid framework ought to be set up in order to curtails bottle neck and other issues in relation to FDI among Financial institution performance. The study concludes FDI with financial institutions transaction be able to be intermediated thru its dimensions (Foreign exchange, Capital adequacy, Equity capital and Reinvested foreign earning).

Impact of foreign direct investment on financial institution performance in Nigeria: A study of Jos Metropolitan City of Plateau State

Financial institutions are faced with increasingly keen competition and rising costs as a result of regulatory requirements, financial and technological innovations, institutional distress and other challenges which have dramatic effects on their performances. The aim of this study is to examine the impact of foreign direct investment on financial institution performance in Nigeria. The study was grounded in profit maximization theory in relation to FDI performance. This study employs a survey design aimed at establishing the effects of the variables of foreign direct investment as the independent variable on financial institution performance as the dependent variable. The population of this study was based on 10 selected financial institutions operating in Jos Metropolitan city of Plateau Nigeria as at 1st January 2022. Each bank is represented by its Chief finance officer (CFO). Primary data and secondary data were collected from the annual financial statement of selected financial institutions through the respective Chief finance officers also, books, journals and publications, while primary data was collected through questionnaire, while the scope dwells on the deposit money banks in Jos, Plateau State. Descriptive statistics and content analysis were used to analyze the data collected. The results revealed that the FDI variables indicate a strong impact on financial institution performance in Nigeria. The study recommends that a solid framework should be set up in order to curtail bottlenecks and other issues in relation to FDI among Financial institution performance. The study concludes that FDI in relation to financial institutions’ transactions can be intermediated by its dimensions (Foreign exchange).

Foreign Direct Investment and Local Firm’s Performance

This paper investigates the effect of FDI on performance of manufacturing firms in Kenya. Little is documented about the link between FDI and performance of local firms in Kenya . The study has sought to establish the overall effect of FDI on the performance-manufacturing firms in Kenya. The population of study comprised 100 companies registered with Kenya Association Manufacturing as at the time of data collection in 2019 and that had over 10 percent foreign ownership. The respondents were the CEOs of organization. The study used a structured questionnaire to collect primary data. Descriptive and inferential statistics were both used to analyze the data. Data was pretested for normality, linearity, multicollinearity, autocorrelation and homoscedasticity and the data found to meet most of these preconditions. The study developed hypothesis which was tested using simple linear regression to establish the effect of FDI on performance of manufacturing firms. The results revealed that there was a statistically significant relationship between FDI and firm performance. This imply that to achieve better firm performance, the government need to come up with polices geared to attracting more FDI into the key sectors of the economy.

Outward FDI and Innovation Performance of Chinese Firms: Why Can Home-Grown Political Ties Be A Liability?

We explain how home-grown political ties of Chinese firms negatively influence the effect of outward foreign direct investment (OFDI) on the innovation performance of their parent firms. Our results show that these ties can turn into a liability in the host countries (particularly developed ones) due to their misfit with the local institutional environment, hampering the parent firms’ innovation performance from OFDI. We also clarify how absorptive capacity of the parent firm mediates the relationship between OFDI and innovation performance. Our study furthers understanding of the link between internationalization and innovation performance and the ‘dark side’ of political ties.

Impact of hydropower consumption, foreign direct investment and manufacturing performance on CO2 emissions in the ASEAN-4 countries

PurposeThe continuous increase in the discharges of carbon emissions (CO2) in the global atmosphere and the likely negative consequences of this practice on the atmosphere draw the attention of researchers and policymakers to argue on the causes and perpetrators of CO2 emissions. This paper aims to examine the impacts of hydropower consumption, FDI and manufacturing performance on CO2 emissions in the Association of southeast Asian nations (ASEAN)-4 countries.Design/methodology/approachThe study uses the data on variables, such as hydro-power consumption, FDI, manufacturing value added and CO2 emissions spanning the period 1980–2015. Autoregressive Distributive Lag Bound test approach was used to assess the relationships among the variables.FindingsThe long run estimation of elasticities for all the countries indicates that the coefficient of hydro power consumption was found to be significantly related to CO2 emissions only in Malaysia. Additionally, the coefficients manufacturing performance were found to be significant in influence the amount of CO2 emission in all the ASEAN-4 countries. Furthermore, the coefficients of FDI inflows were found to be significant in explaining CO2 emissions in Malaysia and the Philippines, respectively. In the short run, the estimated results show that all the variables were found to be significant in explaining CO2 emissions in the countries under study.Research limitations/implicationsSingapore is excluded from the ASEAN-4 due to insufficient data on hydro energy consumption.Practical implicationsThe study recommends that as Hydro power energy is a clean source of renewable electricity. Its consumption indicates a negative relationship with CO2 emissions. The countries should emphasize more on the use of hydro source of energy than the other sources which increase the rate of CO2 emissions in the atmosphere.Originality/valueAs most of the relevant previous studies did not consider the simultaneous impact of hydro energy consumption, FDI and manufacturing value added on CO2 emissions in the ASEAN-4, this study is an important contribution to the existing relevant literature.

ASSESSING THE ROLE OF AGRICULTURE AND ENERGY USE ON ENVIRONMENTAL SUSTAINABILITY: EVIDENCE FROM RALS COINTEGRATION TECHNIQUE

This study is relevant towards determining the ability of Turkey in mitigating environmental degradation which is one of the major areas of concern. Therefore, we aimed to examine the linkage among agriculture, energy use, economic performance and FDI with environmental sustainability. To this end, ecological footprint has been considered as a more comprehensive and reliable indicator to measure the level of environmental degradation. This relationship has been investigated with different approaches such as the Residual Augmented Least Squares Augmented Dickey -Fuller (RALS-ADF), Residual Augmented Least Squares Engle and Granger (RALS-EG) and leveraged bootstrap causality test for the period from 1970 to 2017. The RALS procedure was utilized to analyze the stationarity level of each variable and their cointegration relationship. The findings confirmed that all the variables investigated have cointegration relationship and have positive and statistically significant effect on environmental degradation in Turkey. The results of leveraged bootstrap causality test showed that there are bidirectional causal relationships of environmental sustainability with agriculture sector as well as FDI and economic performance. Moreover, the unidirectional causal relationship runs from environmental degradation to energy use and from FDI to economic performance and agriculture sector. The other unidirectional causal relationship running from agriculture sector to energy use and from economic performance to energy use. Also, our findings confirmed the inverted U-shaped EKC hypothesis for the relationship of economic performance and environmental sustainability. Therefore, our findings provide insights for policymakers to consider investigated variables as a surest way to have environmental sustainability.Keywords: Agriculture, FDI, Energy consumption, RALS cointegration, TurkeyJEL Classifications: Q43. F64. C32DOI: https://doi.org/10.32479/ijeep.11842

Mediating Role of Absorptive Capacity on the Relationship between Foreign Direct Investment and Local Firm’s Performance

There is little documentation on the role of absorptive capacity on the relationship between FDI and performance of firms. This paper investigates the mediating role of absorptive capacity on the relationship between FDI and performance of manufacturing firms in Kenya. The population of study comprised 100 companies registered with Kenya Association of Manufacturers that had over 10 percent foreign ownership as at the time of data collection in 2019. The respondents were the CEOs of organization or their designated officers. The study used a structured questionnaire to collect primary data. The respondent were required to indicate how the introduction of FDI impacted on organizations capital flow, advanced production technology, marketing expertise and management knowhow. They were also to indicate the extent their Organisation had invested in absorptive capacity and the effect absorptive capacity had on the relationship between FDI and local firm performance. Descriptive and inferential statistics were both used to analyze the data. The results revealed that absorptive capacity has statistically significant mediating effect on the relationship between FDI and firm performance. This imply that an incremental change in the absorptive capacity would generate growth in company’s performance. As such Kenyan and other sub-Sahara African countries government need to come up with polices geared to supporting improvement of firms absorptive capacities so as to spur the growth of their key sectors of the economy.

Nexus between financial innovations, remittances and credit performance: Evidence from augmented ARDL and nonlinear ARDL

The motivation for this study is to assess the impact of financial innovation and remittances on bank-based financial institutions’ credit performance in Bangladesh for the period 1981–2019. The study applies augmented ARDL (AARDL) and nonlinear ARDL (NARDL) to identify both long-run and short-run effects and directional causality by performing non-granger casualty tests. AARDL confirms the presence of a long-run association between financial innovation, remittance, trade openness, FDI, and credit performance, which is measured by non-performing loans. In the long run, financial innovation and FDI volatility expose a positive link with NPLs, but remittance inflows and trade openness establish a negative association. Asymmetry shocks in financial innovation reveal a positive relationship with credit performance. In contrast, the asymmetric shock of remittance and trade openness unveil a negative tie to credit performance, especially in the long run. Furthermore, directional causality provides evidence to support a feedback hypothesis explaining causality between financial innovation and credit performance, as well as remittance inflows and credit performance. These findings suggest that credit performance is guided by future development in remittances and financial innovation; thus, closer attention from policymakers and financial experts is persistent to capitalize or mitigate the impact of the financial system.

Moderating Effect of Business Environment on the Relationship Between Foreign Direct Investment and Local Firm’s Performance

This paper focuses on investigating the moderating role of business environment on the relationship between FDI and the performance of manufacturing firms in Kenya. Little information is documented on the role of business environment on the relationship between FDI and the performance of firms. The study population comprised of 100 companies registered with KAM as at the time of data collection in 2019, with 10 percent or more foreign ownership. The research used a structured questionnaire to collect primary data. To analyze data, descriptive and inferential statistics was used. The results revealed that there was a statistically significant moderating effect on the relationship between FDI and firm performance. This implies that an incremental change in the interaction between FDI and business environment would generate growth in company’s performance. In Kenya and other SubSahara African countries, the government needs to come up with polices geared towards improving their business environment to spur the growth of the key sectors of the economy.

A Literature Review on the Relationship between Motives of FDI and Subsidiary Performance

A Literature Review on the Relationship between Motives of FDI and Subsidiary Performance

A Literature Review on the Relationship between Motives of FDI and Subsidiary Performance

A Literature Review on the Relationship between Motives of FDI and Subsidiary Performance

Natural disasters' influence on industrial growth, foreign direct investment, and export performance in the South Asian region of Belt and road initiative

The study was conducted to elaborate on the impact of two main components of natural disasters (Population affected and damages) on FDI, industrial growth, and export performance of the South Asian region alongside the Belt and road initiative over 1990–2016. We have conducted cross-sectional dependence (CDP) and slope homogeneity analysis of the data; after finding that the slopes are heterogeneous and CDP found, we have employed second-generation cointegration, Westerlund, the empirical results supported there is a cointegration relationship between the variables. The empirical results obtained from the Augmented mean group long run estimator concluded that the impact of severe natural disasters on FDI is negative; we have found a partially positive effect on exports and a significantly positive relationship with industrial growth for the study area. The role of income and trade openness acts as substantial and positive determinants towards FDI, exports, and the industrial growth for the South Asian countries. However, interestingly, the empirics found the impression of energy consumption partially influential for all the models. In addition, inflation poses a negative role in the dependent variable for the study area. Finally, the policies are discussed for the negative responses of natural disasters and the positive responses that have been reached in the current study.

Foreign Direct Investment and Local firm’s Performance

This paper investigates the effect of FDI on performance of manufacturing firms in Kenya. Little is documented about the link between FDI variables of capital flow, advanced production technology, marketing expertise and management know-how and performance of firms. The study’s sought to establish the effect of each individual FDI variables on firm’s performance. It also sought to established the overall effect of the performance manufacturing firms in Kenya. The population of study comprised 100 companies registered with Kenya Association Manufacturing as at the time of data collection in 2019 and that had over 10 percent foreign ownership. The respondents were the CEOs of organization. The study used a structured questionnaire to collect primary data. Descriptive and inferential statistics were both used to analyze the data. Data was pretested for normality, linearity, multicollinearity, autocorrelation and homoscedasticity and the data found to meet most of these preconditions. The Pearson correlation analysis was employed to discern not only the strength but also the direction of the interrelationships involving the variables. The researcher tested the effect of the components of FDI on performance of manufacturing firms. The study developed one hypothesis and four sub hypothesis. The results revealed that there was a statistically significant relationship between FDI and firm performance. This imply that to achieve better firm performance, the government need to come up with policies geared to attracting more FDI into the key sectors of the economy. Keywords: Foreign Direct Investment, Firm Performance, Capital Flow, Advanced Production Technology, Marketing Expertise, Management Knowhow.

Empirical Study on the Influence of Cultural Distance and Board Capital on the Performance of Foreign Direct Investment of Beijing’s Cultural and Creative Enterprises

Based on the background that China enterprises are becoming more and more active in capital operation in the international scope, this paper selects 14 cultural and creative enterprises in Beijing as the research objects, and analyzes the relationship between cultural distance, geographical distance, capital elements of the board of directors and enterprises' FDI performance. This paper crawled data from the stock exchange and other websites, and further used SPSS data processing software to model and analyze the data obtained, and obtained the empirical research results as follows. The empirical results showed that cultural distance and geographical distance were significantly negatively correlated with FDI performance, which was consistent with the original research hypothesis of the paper. And among the capital factors of the board of directors, the gender diversity, education level, scale and internationalization degree of the board are significantly positively correlated with FDI performance. Finally, the corresponding conclusions and Suggestions are put forward according to the empirical analysis results.

Does well banking performance attract FDI? Empirical evidence from the SAARC economies

PurposeThis paper empirically examines the perceived relationship between banking sector performance and FDI inflows, thereby highlighting an underexplored area in the existing literature.Design/methodology/approachTo provide evidence from the South Asian context, this study selected five economies of the same region based on the data availability. A panel dataset, collected from the internationally reliable sources for the period 1998–2017, is analyzed with the help of different econometric techniques, including pooled least squares, fixed effects, generalized least square and two stages least squares.FindingsThe results indicate a significant negative relationship between banking sector performance and FDI inflows while demonstrating a significant positive association of inflation and trade openness with FDI inflows Moreover, higher per capita income, which is one of the indicators of a growing economy, exerts a statistically significant positive impact on FDI inflows. Finally, institutional factors have not played a significant role in attracting FDI in the sampled countries.Practical implicationsThe results demonstrate a unique outcome from the perspective of the relationship between banking sector performance and FDI inflows, and hence policymakers of the developing countries in general and South Asian countries in particular would benefit from the current study significantly.Originality/valueThe obtained results are original as we have provided comprehensive evidence on the relationship between FDI and banking sector performance in the SAARC context for the first time.

Institutional Performance and Trade-Led Growth Hypothesis: Evidence from Pakistan

Economic growth is a researchable debate in the context of trade openness relation in testing trade-led growth hypothesis. This study explores the relation of economic growth with trade openness to test the trade-led growth hypothesis by using a recently developed nonlinear ARDL model over the period 1984-2017 in Pakistan. The results reveal that trade openness affects economic growth differently when it decomposes into positive and negative components, and trade openness decrease has a more impact on economic growth in the presence of labor, capital, FDI and institutional performance as control variables. The mixed relationship of openness-growth in the long-run does not completely verify the trade-led growth and shows non-linear impacts of trade openness on economic growth in Pakistan. The study suggests the policies for government officials and policymakers after unearthing the asymmetric association between trade openness and economic growth that would help to make trade policies for Pakistan.

FDI and Economic Performance of Firms in India

FDI contributed positively to sales, profit, employment and wages of firms in India from 2004 to 2018. Foreign capital is complementing domestic capital well embodying technology and innovations required for expansion of domestic firms in it. Foreign promoters have played quite significant economic roles among firms across production sectors in manufacturing industry in India. Besides sales, total expenses, managerial remunerations and corporation taxes, involvement of foreign promoters are statistically significant determinants of profits, employment and wages among firms across all seven sectors of the manufacturing industry is clear from analysis of the Prowess database for years 2004, 2008, 2012 and 2014. These effects were even stronger in each of Modi–I years between 2015-2019 that followed the Make in India initiative in 2014. Reforms including the outright 100 per cent ownership provision in the automatic route in most industrial sectors have produced good outcomes that have not only raised the volume of FDI per capita from around 16 dollars in 2000 to 285 dollars in 2018 but also raised the global ranking of India to 63 out of 190 economies in 2019 on the ease of doing business, putting India 79 places above now than in 2014. Based on theoretical and empirical analysis it can be concluded that good sentiments of FDI in India in Modi–II years started in 2019 will prevent diminishing returns on capital and contribute towards sustainable growth in coming years. JEL Codes: F21, F23, F14, J31, O53

Dynamic common correlated effects of trade openness, FDI, and institutional performance on environmental quality: evidence from OIC countries.

The study aims to address the dynamic common correlated effects of trade openness, FDI, and institutional performance on environmental quality in OIC countries. Mostly, pollutants like CO2 and SO2 emissions are considered as the environmental indicators. However, for this study, we have selected ecological footprint as the indicator of environmental quality. The new econometric approach Dynamic Common Correlated Effects (DCCE) by Chudik and Pesaran (2015) has been used to measure the cross-sectional dependence among cross-sectional units. Results confirm that previous techniques for long panel data, like MG and PMG, give ambiguous outcomes in the presence of cross-sectional dependence. According to DCCE estimation, trade openness, FDI, and urbanization have a positive and significant relationship with ecological footprint while a significant and negative association is found between institutional performance and ecological footprint. The OIC countries must encourage green technology, clean production, and improved institutions for sustainable development and better environmental quality.

FDI Performance to Explore the Growth of the Indian Economy

FDI Performance to Explore the Growth of the Indian Economy