Role Of FDI Research Articles

Foreign Direct Investment and Growth: A Study in the Context of Kuwait

Foreign Direct Investment is considered an encouraging impetus for economic development of an economy by enhancing competitiveness through offering employment, transferring sophisticated technologies, boosting productivity and promoting infrastructure, etc. In the recent times, the downtrend of oil prices has affected adversely the GDP of GCC regions as revenue from oil has been major source of inflow of funds for them. This economic turmoil has caused a serious concern among these countries and attracted immediate attention of the government and policy makers. This has led the members to focus on non-oil units in order to get revenues by promoting FDI, abolishing subsidies, proposal to impose tax, cost cutting and downsizing of employment especially in public sectors to accentuate the drivers of growth. Kuwait is not an exception to it. In the light of above mentioned facts, present study examines the role of FDI to the economic rise of Kuwait. Here, the trends of FDI and GDP in GCC have been explained in general; and for Kuwait, in particular. The statistical tools such as correlation, Analysis of Variance (ANOVA) and regression have been employed to glean the desired results. The result shows a positive relationship between FDI and GDP of Kuwait.

Inequality in Laos and the role of FDI

The paper examines the changes in inequality in Laos between 2002/03 and 2007/08 when there was a rapid influx of FDI. The empirical findings show that both inequalities in consumption expenditure and in assets have risen in this period. Inequality rates in assets are higher and have grown faster in Laos. Within group inequality continues to be the major source of inequality in consumption expenditure whereas between-group inequality is the major cause of variation in assets. This study substantiates the fact that there is a weak negative relationship between FDI and inequality in Laos. Although the relationship between growth and inequality in Laos might be moving along the Kuznets curve, the problem of inequality should not be neglected in the development agenda of Laos because improvement in income distribution reduces poverty. Therefore, this paper proposes region specific and broad-based policies as the keys to reducing inequality in Laos.

An anatomy of China’s eco-efficiency gains: the role of FDI

This paper quantifies the role of FDI in the remarkable fivefold gains in eco-efficiency in China’s manufacturing during the period 1995–2006. We refine the conventional index decomposition method and apply it to China’s emission. We find that (i) foreign-invested enterprises (FIEs) have shifted production toward cleaner industries; (ii) the better abatement technique of FIEs explains 23% of the eco-efficiency gains; and (iii) another 69% of the eco-efficiency gains come from by progress in domestic firms’ abatement technique, which is associated with forward environmental spillovers from FIEs. Findings (ii) and (iii) lend support to the so-called Pollution Halo Hypothesis.

Business Cycle Synchronization in the EnlargedEU: The Role of Bilateral Trade andFDI

AbstractThe aim of this paper is to investigate the determinants of business cycle (BC) synchronization across 21 (old and new) countries of the enlargedEuropeanUnion (EU). It utilizes international data to evaluate the linkages among bilateral trade in goods, bilateral foreign direct investment (FDI) flows andBCco‐movements. The paper contributes to the current literature by examining the relationship using the latest available data (sample range: 1998–2011), and thus taking into account the European sovereign debt crisis period. It also examines the role ofFDI, which though increasingly important in the flows of international production factors, is currently neglected by the literature. Preliminary results show thatFDIhas no direct effect onBCsynchronization while international trade helps to synchronizeBCs but only before the recent financial crisis (pre‐2008) and only for the traditionalEUcountries.

Do Foreign Investors Comprehend the Opportunities of Indian Retailing?

India is one of the largest budding markets, with a population of over one billion. Indian retail industry is one of the sunrise sectors with huge growth potential. According to the Investment Commission of India, the retail sector is expected to grow almost three times its current levels to $660 billion by 2015. However, in spite of the recent developments in retailing and its immense contribution to the economy, retailing continues to be the least evolved industries and the growth of organized retailing in India has been much slower as compared to rest of the world. Undoubtedly, this dismal situation of the retail sector, despite the on-going wave of incessant liberalization and globalization stems from the absence of an FDI encouraging policy in the Indian retail sector. This paper is going to try to give a better view of what is the Retailing, what are the types of retailing, Retail trade in India also explains different polices of FDI in India, and role of FDI in Indian retail industry, benefits of FDI. In this paper has also we tried to give an analytical perspective on FDI in retail sector and it’s repercussions on competitive market environment in India.

Knowledge Spillovers of FDI

Abstract The role of FDI in sustainable development is a long debated topic within scientists’ community. Mainly generated positive effects in terms of increasing the technological level of the economy are often offset by negative effects on the competitiveness of national firms. However, spillover and propagation effects, especially in terms of technological knowledge and know-how, enable the creation of robust innovativeness growth both horizontally and vertically. The paper aims to seek the evaluation of knowledge spillovers intensity's effects on economic activity in the host country.

The Role of FDI in Fostering Exports from the Host Country

In this paper, I propose a theoretical model analyzing the impact of FDI on exports from the host country. Using the framework of monopolistic competition with heterogenous firms, I show that the entry of highly efficient MNEs increases competition in the export market, which leads to crowding-out of domestic exporters. As a result, even though overall efficiency of the industry increases, exports by this industry may decrease.Further on, I add into my model a potential spillover effect that FDI can induce by lowering costs associated to export activities for all firms. I show that in such situation, the increased efficiency is more likely to outweigh the negative competition effect, resulting in larger exports from the host country.

FDI and Economic Growth in Central and Eastern Europe

This paper discusses the major trends in scholarship about the role of FDI and exports on economic growth, the effect of tax policies on FDI, the formation of the economic catch up of the Central and Eastern Europe (CEE) region and the determinants of FDI inflows in CEE nations. I am specifically interested in how previous research investigated the influence of FDI on host country economic growth, the inward FDI stock as a percentage of GDP, the features and restrictions of fiscal schemes in CEE economies and the institutional soundness displayed in policies towards FDI. The analysis presented in this paper contributes to research on FDI as a mechanism in the transition to the market, the dissimilarities in the FDI-assisted development methods among the CEE nations, the impact of FDI inflows for productivity convergence in CEE and the current slowing of growth in emerging Europe.

Capital Movements Between the European Union and Turkey Within the Integration Processes

The institutional model used in the integration process between the European Union (EU) and Turkey was that of establishment of a customs union under an Association Agreement. In the context of the difficulties that have occurred in the membership negotiations between the EU and Turkey, the question arises whether real economic integration between them has gone further than that achieved at the stage of a customs union. Free movement of capital, constituting one of the so-called four fundamental freedoms within the single European market, is the subject of examination in this paper. The obligations of Turkey, as an EU candidate country, in the field of free movement of capital are more demanding under the EU scheme of liberalization of capital flows than within the OECD, which is regulated by the Code of Liberalisation of Capital Movements and the Code of Liberalisation of Current Invisible Operations. Real economic integration between the EU and Turkey requires further liberalization of the free movement of capital. While Turkey encourages the inflow foreign direct investment using a generous package of incentives, the role of FDI in its economy still remains moderate.

La Croatie dans l'Union européenne : une insertion différenciée

L’objectif de cet article est d’analyser l’insertion de la Croatie dans l’économie mondiale. Cette dernière étant en pleine mutation, la stratégie d’insertion doit également s’adapter. Le pays ne peut plus choisir simplement entre une insertion basée sur les exportations ou celle fondée sur l’économie interne. De plus, nous connaissons bien aujourd’hui les limites d’une stratégie de croissance uniquement fondée sur les exportations. L’article présente les trois principaux atouts de la stratégie de croissance de la Croatie : des exportations liées au tourisme, une spécialisation industrielle et un rôle clé des IDE pour financer ce développement. La Croatie reste pourtant menacée car ses exportations industrielles restent très dépendantes de sa compétitivité-prix et une politique de taux de change élevé la pénaliserait fortement.

Local Investment Climate and the Role of (Sustainable) FDI: The Case of Georgia

The article focuses on the role of FDI in Georgia’s economic development for the last decade. To attract as much FDI as possible a proper investment climate should be on the place - institutional, policy and regulatory environment. Well developed investment climate is the chance and motivation for both, local economy and foreign companies, to generate maximum income, create new work places and improve the quality of life. FDI trend is one of the best indicators of country’s economic sustainability and its attractiveness. Especially for small and developing countries, the amount of FDI matters, therefore most of such countries are trying to compete with each other through improving their investment climate according to different world famous indexes. As a result of impressive reforms since 2003, Georgian economy was benefited with large invasion of FDI, however the level of per capita GDP is still law in comparison to Eastern European countries and it should be improved. The main idea of the paper is to show a real linkage between FDI and employment ration, on the case of Georgian economy.

Transition towards a green economy: role of FDI

The energy use in India is at present considerably higher than a few decades ago, mainly as a result of economic growth. The primary source of energy in India, thermal power, is a source of greenhouse gas emissions. To stabilise the CO2 emissions and promote sustainable development, economic development must go hand in hand with low-carbon society’s development. A transition towards a green economy will require a shift away from current production and consumption patterns of energy. This is achievable through improved process and end-use energy efficiency, and increased adoption of cleaner energy sources. Fostering increased investments in clean energy and energy efficiency is an important step to achieving more sustainable economic development. Therefore, we have undertaken this study that attempts to examine the impact of FDI in Indian power sector on the path of clean energy.

The Role of FDI in the Economic Development of Transition Countries

FDI are considered a key instrument in the process of transforming the former centrally planned economies and stimulate economic growth in the transition period. Economic theory suggests that FDI are an important factor for the economic growth of the host-country, while according to empirical research in general, there is a positive correlation between FDI and the economic growth, but the causality direction is not clear: FDI inflow stimulates economic growth, but in the same time FDI inflows grow with the country’s economic development. Therefore, the objective of research in the paper is the relationship between FDI and economic growth in SEE and CIS countries. The relationship between the FDI and the economic growth in transition countries is examined by linear regression correlation of the relevant variables, covering the period from 2004 to 2011. Through the Pierce coefficient and the coefficient of determination, the interaction between the relevant variables and the dependence intensity is examine, and in this context general conclusions are drawn about the effects of FDI in the SEE and CIS countries. At the same time, the beta-coefficient is used to examine the value of the change in each variable separately, in order to make a more detailed analysis of the results obtained. In order to determine the direction of causality between the FDI and the economic growth of the country, research is carried out the influence of the transition indicators on the FDI inflow in the SEE and CIS countries from 2004 to 2011.

An Anatomy of China's Eco-Efficiency Gains: The Role of FDI

This paper identifies the main contributors to the remarkable five-fold improvement of eco-efficiency (output per pollution emission) in China's manufacturing during the period 1995-2006. We are especially interested in the role of FDI in this improvement. We refine the conventional index decomposition method to differentiate the impacts of foreign-invested enterprises (FIEs) from those of domestic firms. Applying the method to China's SO2 emissions, we find that (i) both FIEs and domestic firms have shifted towards cleaner industries; (ii) the better production or abatement techniques of FIEs explain 23% of China's eco-efficiency gains; and (iii) another 69% of China's eco-efficiency gains can be accounted for by progress in the production or abatement techniques of domestic firms, which is positively associated with horizontal and vertical spillovers from FIEs. Findings (ii) and (iii) lend support to the so-called Pollution Halo Hypothesis.

International business cycle co-movement: the role of FDI

This article investigates the relationship between FDI and business cycle synchronization in the period 1982 to 2011 for eight industrialized countries. We find that more synchronized business cycles are associated with stronger FDI relations in the period 1995 to 2011, but not before 1995. More intensive FDI links are also associated with a greater vulnerability to lagged output spillovers from abroad. Our findings suggest that FDI has become a separate channel through which economies may affect each other and that FDI stocks are now an essential aspect of economic interdependence.

Inward FDI, Growth and Environmental Policy

Persistent disparities in regional economic conditions within developed countries continue to offer challenges to policymakers. Yet the process of regional growth has become even more complex, owing in part to the expending role of inward foreign direct investment. The role of FDI in stimulating regional growth is likely to be as strong as there is environmental policy context. The main objective of this study is to empirically examine FDI inflow effect on the gulf Persian region's economic growth as environmental policies improve over the period 1980 - 2012. The results show that FDI inflow help increase of the region's economic growth, as environmental policy has improved. Porter hypothesis is valid in this region.

Capital Structure and Debt Maturity in Europe: The Role of FDI in European Integration

This paper explores the importance of supply of capital for corporate financing. To identify this relation, we examine the impact of two exogenous events, entry to the EU and the adoption of Euro, which caused shifts in equity and credit markets during European integration. Following membership to EU, which eased access to equity capital, firms increase equity financing. Firms increase debt financing after the adoption of Euro, which improved access to international debt capital. We control for globalisation, ongoing developments in equity and credit channels, firm characteristics, and the moderating effects of the country of origin.

Attractivity of the FDI in Western Balkans: Evidence from the Central and Eastern European Countries (CEEC)

One lesson of the transformation of CEECs during the 1990s and early 2000s has been that FDI was not initially considered as a tool for boosting economic transformations in the region. Today most of these economies rely on the accumulated stocks and the annual flows of capital to develop their specializations, deepen their economic transformation and linking their economies to the most advanced economies of the EU. There has not been clear vision of the role of FDI at the beginning of the transformation. Poland and the Czech Republic, for instance, have set up policies of transformation, notably privatizations, to avoid the presence of foreign investors. Privatizations in Hungary has been a blessing in disguise (see P. Mihaly): selling assets to foreign investors has speed up the adjustment, transforming whole regions of the country, (Western Hungary, Budapest) into a new industrial network welcoming investment in sectors with strong added value. In other countries, achieving the systemic transformation, matching the objectives set up by the EU to become future members, (even for late comers like Slovakia) have paved the way to create a strong attractivity to FDI which account, in many ways (rate of investment, share in the GDP, share in value added, in exports, etc.) in the economic performance of these economies (see G. Hunya). To sum up, attractivity can be explained by different factors such as former specialization of those economies (see S. Radosevic), proximity, fragmentation and outsourcing of some functions of big corporations (Renault in Romania), macro policies, increasing local demand, etc.Concerning Western Balkan economies we will elaborate two questions: • Do capital flows continue to poor in the region in direction of the “late comers” which have delayed their economic adjustment? • What kind of competitive advantage can be build up in the region in order to follow what has been done in CEECs?

Deconstructing Service and Investment Negotiating Stance: A case study of India at WTO GATS and Investment Fora

While India has gradually embraced a unilateral liberal policy on the limit of inward foreign investment in the country, its negotiating position on the same at the multilateral forum, i.e., WTO, is still comparatively defensive. The key question raised by the current analysis is, whether India is right to adopt a hard negotiating stand at WTO on investment issues, covered under GATS Mode 3 and Trade and Investment Negotiations. An associated concern is whether a softening of India’s present standpoint is expected in coming future. For this purpose, the current study explores the long-run co-integrating relationship between India’s FDI and economic growth, in addition to exploring their direction of causality applying Granger causality test. The obtained empirical results lead to the following observations. First, regarding the question of the justifiability of the Indian standpoint, it is observed that though foreign investment inflow in the country continues to benefit several sectors through backward and forward linkage effects, the role of FDI on overall growth has not been statistically significant. Second, it can be concluded from the findings of the Granger causality test that a number of foreign investors has targeted India in recent period, given the high growth rate witnessed by Indian economy even in the aftermath of the 2009 recession vis-à-vis other developing economies. We conclude that India’s present standpoint at WTO negotiations on investment reflects the uncertain trade-off between growth repercussion expectations from the incremental FDI inflows resulting from the additional multilateral commitments. Therefore, a quick transformation of the present negotiating standpoint is not expected in India’s case.

Price transmission in the milk sectors of Poland and Hungary

Rapid and thorough changes have recently taken place in the dairy supply chain in the whole of Central and Eastern Europe. Growing concerns have been expressed that these changes may negatively affect farmers' relative position vis-a-vis the downstream industry, owing to market power exercised by the latter. This article investigates the price transmission mechanism in two countries from the region, Poland and Hungary, and contrasts the results with dairy market organisations specific to these countries. Using cointegrated vector autoregression and controlling for potential structural breaks, it is shown that Polish milk prices, unlike Hungarian ones, are characterised by short-term and long-term asymmetries. We discuss a number of potential explanations for these results, and consider, among others, differences between the dairy chain structures and the role of FDI.