Sector FDI Research Articles

Public sector corruption, FDI and sustainable development in Africa: Does the pollution halo or haven hypothesis hold in Ghana?

This paper examines the effects of corruption and FDI on sustainable development in Africa, particularly Ghana. The study observes the behaviour of firms using foreign direct investment to track MNEs' role in carbon emission. The study employs a quantitative approach with an ex-post facto research design type to inquiry using data from the World Bank, the Global Footprint Network and Transparency International from 1980 to 2023. The symmetric result discloses that corruption and FDI depress sustainability significantly in the long run. In the short run, it turns out that corruption and FDI stimulate sustainability. However, the short-run asymmetric effect shows that the positive and negative shocks of corruption and FDI exude negative effects on sustainability. This provides strong and consistent evidence of the pollution haven hypothesis of FDI in Ghana. Therefore, firms under the one-district, one-factory (1D1F) flagship policy and beyond must be encouraged to adhere to the strict carbon policy of the host country. The decision of the government to introduce an emission tax in the 2024 budget is tenable but the tax must be properly targeted to achieve the desired outcome.

Faktor-Faktor Makroekonomi yang Mempengaruhi Investasi Asing pada Sektor Industri, Perdagangan dan Pertanian di Jawa Timur

The purpose of this study was to analyze several macroeconomic factors that influence sectoral investment development in East Java through secondary data obtained from BPS East Java over a 10-year period with multiple linear regression analysis tools with the Statistical Program for Social Science version 13. Results Simultaneous analysis of independent variables significantly affects the dependent variable. Whereas from partial testing of Foreign Exchange Rate-free variables significantly affect the FDI of the Industrial Sector and PMA in the Trade Sector this is because the exchange rate can affect investment. The independent variable of Economic Growth and Inflation has no partial effect on Industrial Sector FDI and Trade Sector PMA. For Foreign Investment in the Agricultural Sector there is no independent variable in the partial test that affects the dependent variable because the agricultural sector is not the main choice of investors to invest.

FURTHER DISCUSSION ON INVESTMENT LAW, CYBERSECURITY LAW AND RECOMMENDATIONS FOR ATTRACTING FOREIGN INVESTMENT (FDI)

The purpose of this article is to present Further Discussion on Investment Law, Cybersecurity Law and Recommendations for Attracting Foreign Investment (FDI). Based on collects statisti-cal data from the statistical yearbooks of the provinces/cities from 2010 to 2021. We found FDI inflows have a positive impact on labor productivity in Vietnamese localities. Specifically, locali-ties have (i) the larger the proportion of FDI in progress in the total investment capital of the economy, (ii) the larger the number of projects, the more accumulated FDI in operation, (iii) FDI sector activity and (iv) the larger the share of net revenue of the FDI sector, the higher the labor productivity. Moreover, investors need to pay attention to cybersecurity law: Acts of distorting history, denying revolutionary achievements, and sabotaging the great unity bloc whole nation, offending religion, discriminating on gender, racial discrimination; Acts of spreading information harmful to organizations and individuals, including: false information causing confusion among the people, causing damage to socio-economic activities, causing difficulties for activities. actions of state agencies or official duty performers, infringing upon the lawful rights and interests of other agencies, organizations and individuals

Spillover effects of foreign and domestic exporting firms on export decisions of local manufacturing firms: Evidence from Vietnam

Our study examines the spillover effects that arise from foreign and domestic exporting firms on the export decisions of local manufacturing firms in Vietnam between 2010 and 2018. There are positive horizontal spillover effects from both foreign and domestic exporting firms, while negative spillover effects are detected through the backward channel. Domestic exporting firms are found to generate positive forward spillover effects, whereas foreign direct investment exporting firms have negative forward spillover effects. Moreover, we observe opposite spillover effects from foreign and domestic exporting firms on the export exit of domestic firms, with a negative impact under the horizontal channel and a positive impact under the backward channel. Our research also reveals the effects of firms’ characteristics on the export participation and exit of domestic firms. The study suggests that the Vietnamese government should focus on enabling the FDI sector to create positive spillover effects, attracting foreign firms with export potential as well as supporting domestic exporting firms using and providing local intermediate inputs, and improving the technological and absorptive capabilities of domestic firms.

Do the sector-orientation and the origin of foreign direct investment explain types of corruption in Sub-Saharan Africa?

This paper focuses on analysing the effects of sector orientation and the origin of FDI on the types of corruption. The GMM technique and the IV-2SLS on a panel of Sub-Saharan African countries were used. Globally, we find that FDI increases political corruption in SSA. Moreover, the study shows that sector orientation and the origin of FDI have significant effects on each type of corruption. Primary sector FDI enhances public sector corruption and reduces judicial corruption. Secondary sector FDI increases executive, public, and judicial corruption. In the tertiary sector, executive and public corruption are enhanced while judiciary corruption is reduced. Regarding the origin, FDI from France increases public sector corruption whereas FDI from China and the USA reduces it. Executive corruption is reduced by FDI, regardless of its origin. FDI from France and the USA discourages judiciary corruption while FDI from China increases it. FDI from China reduces legislative corruption, while FDI from the USA tends to increase it. Furthermore, the analysis of the transmission channels shows education and development levels as important channels through which FDI could reduce corruption in SSA. Relevant policy implications derived from this study include the necessity for policy-makers to combat all types of corruption and mostly public corruption.

Foreign Direct Investment and Forest Land: A Sectoral Investigation

This is a study of the effects of sectoral FDI inflows on the rates of change of forest land and the ecological footprint of economic activity measured in forest land. We test the “FDI ecological halo” hypothesis (Doytch, 2020) for nine distinct sectoral FDI inflows, including agricultural FDI, mining FDI, manufacturing FDI, construction FDI, financial FDI, transport FDI, tourism FDI, communications FDI, and trade services FDI, in addition to total FDI, using a global sample of countries and a GMM econometric approach. We find that one percentage increase (% GDP) in agricultural FDI, mining FDI, manufacturing FDI, and construction FDI can reduce 2.87 %, 1.76 %, 0.19 %, and 1.28 % of forest land area, respectively, and all but manufacturing FDI, increase the forest land footprint from. At the same time, the results associated with services FDI are mixed: trade services FDI hurts the forest environment, while one percentage increase (% GDP) in communications FDI, financial FDI, and transport FDI can increase forest land area to 0.24 %, 0.02 %, and 3.02 %, respectively. In the case of tourism FDI, the results are mixed. The results suggest that FDI in sectors that are “closer to nature”, such as agriculture and mining are more prone to cause harm to forests and therefore need to be regulated with maximum stringency. Some services FDI, such as communications FDI and financial FDI could be stimulated without harm to the forest environment.

Sustainability of the Service Sector of India

The paper examined the linear and non-linear trends of the share of the service sector as a percentage of GDP in India during 1960-2021 using the Regression Analysis and the Hamilton Regression Filter Model. It also studied the relationship between the service sector share and FDI, trade, total debt service and Inflation in India during 1970-2021. The paper verified the convergence of net state value added in services of Indian states from 2004/05-2021/22. The paper found a significant upward linear trend, and in nonlinear cases, the share of the services showed cycles, cyclical trends and seasonal variations. The share of the service sector positively affects trade, total debt service, inflation of the economy and FDI. The net state value added in services showed significant Sigma convergence and insignificant Beta convergence from 2004/05- 2021/22.

A Study on Impact of Foreign Direct Investment and its Challenges Post Liberalization

In the beginning of liberalization when India was facing the financial crises for meeting the external commitments, during the Prime minister Chandra Sekhar government, India had to pledge its gold before World Bank to repay the foreign debts as India had only $ 1 billion foreign exchange reserves, at the same time, the immediate external payment was more than $ 25 billion. Therefore, India was bound to opt for liberal economic policy for the inflow and outflow of foreign investment and depreciation of Indian rupees by 300% in comparison of dollar from rupees 8 to rupees 28 per dollar. By which the foreign investors started attracted and investing their funds in India, as the India had and has potential for the growth and diversification of business, since then the India has made remarkable progress in the field of foreign direct Investment but there are lot many challenges and issues needs to be resolved to promote and attract foreign direct investment. The following issues and challenges are listed in the papers: lack of transparent and specific sectoral FDI policy and a limited FDI regime Contributing factors include high tariff rates compared to international standards, a lack of state government decision making power, a limited number of export processing zones, the absence of exit barrier liberalization, stringent labor laws, financial sector reforms, fluctuating exchange rates, and unclear political leadership. In this post, the authors have made an effort to update the best and most plausible conclusions for the justification of foreign direct investment.

Tax Revenue, FDI, and Agricultural Sector: A Dynamic Interaction with Regulatory Quality as the Moderation

This study aims to analyze the effect of Foreign Direct Investment (FDI), and share of agriculture on Tax Revenue in ASEAN countries with Regulatory Quality as the moderating variable. The research method used is descriptive quantitative with panel data regression analysis and the econometric model is estimated by Panel Corrected Standard Errors (PCSE). The result indicates that FDI, share of agriculture, regulatory-quality-moderated FDI and share of agriculture simultaneously have a significant effect on Tax Revenue. Partially, the result shows that FDI has a positive and significant effect on Tax Revenue. Regulatory Quality and Share of Agriculture have no effect on Tax Revenue. Furthermore, Regulatory Quality weakens the positive relationship of FDI and Tax Revenue, whereas Regulatory Quality strengthens the negative relationship between Share of Agriculture and Tax Revenue. Based on the generated results, there will be a necessity for government to create a comprehensive economic and fiscal policy to increase tax revenue and to strengthen the tax base in the ASEAN countries.

Determinants of Tax Revenue in South Asian Countries

Taxation is a fundamental facet of a modern-day economy and the effort of government remains to maximize revenue via tax collection to support its financial spending. This article examines the impact of economic, productive specialization and social factors along with banking sector development on tax revenue, across South Asian countries over the period 2008–2017 by employing static panel data­techniques. The findings show significant positive impact of trade openness and life expectancy, whereas a negative impact of infant mortality rate to determine tax revenue in South Asian countries. The results also revealed the importance of FDI and banking sector development in determining tax ­revenue. Gross domestic product per capita growth rate and agriculture showed positive relationships with tax revenue, although the relationships are not significant. South Asian countries should focus on ­expansion of trade with the outside world to generate different forms of taxes and thereby tax ­collection. Conducive environment for the inflow of foreign investments would also enhance tax-generating activities, thereby increasing tax revenue in the South Asian countries. Attention is also needed on social factors such as quality of life, health and economic welfare of the population to ensure greater workforce entering tax paying sectors.

IMPROVE THE INVESTMENT ENVIRONMENT TO STRENGTHEN ATTRACT FOREIGN INVESTMENT IN VIETNAM

The World Bank (WB) has forecast the lowest growth outlook for the global market since 1993 with a growth rate of 1.7% (except for the two years of the Covid 19 pandemic). This reflects the difficult situation of the world economy when facing the consequences of the global COVID 19 epidemic, strategic competition between major countries, geopolitical conflicts in Europe, and the Russia - Ukraine war and the recent outbreak of conflict in the Middle East between Israel and Harmas. These events have made the economic recession more and more severe, pushing the risk of increased inflation, supply chain disruption, and the risk of food shortage globally. Vietnam is one of the few countries with growth in the years affected by the pandemic, however the growth rate in 2023 does not meet expectations (6.5%) and Inflation is at risk of increasing. However, attracting foreign investment is one of the important momentium forces to help the economy quickly restore growth. Exports (including crude oil) of the region foreign investment (FDI) in 2022 reached more than 275.9 billion USD, an increase of 11.8% compared to 2021, accounting for 74.3% of the country's total export turnover. Imports reached more than 233.2 billion USD, an increase of 6.7% compared to 2021, accounting for 65% of the country's total import turnover. The FDI sector had a trade surplus of more than 42.7 billion USD, including crude oil, while the domestic business sector had a trade deficit of more than 30.3 billion USD. The FDI sector's contribution to the state budget reached about 21.2 billion USD, an increase of 21.4% compared to 2021, accounting for 28% of total state budget revenue, an increase of more than 2.2% compared to the proportion of contributions to the state budget. total budget revenue in 2021. With such a crucial role, foreign investment capital tended to decrease in 2022, total foreign investment capital (including new registration, adjustment and capital contribution and share purchase) reached nearly 29.3 billion USD, down 24.6% over the same period in 2021. Facing both domestic and international challenges, Vietnam has many solutions to continue improving the investment environment both institutions. mechanisms as well as the business environment to continue to be an attractive destination for foreign investors.

Nonlinear effect of foreign direct investments on tourism demand

ABSTRACT This study examines whether FDI has asymmetric effects on tourism demand in China over the period 1982–2017. The non-linear autoregressive distributed lag approach is applied to examine asymmetric cointegration. Structural breaks are identified with the Bai-Perron test. Substitute prices are identified using principal component analysis (PCA). Causality is examined using the Toda-Yamamoto approach. The results indicate that a 1 percent increase in FDI increases tourism demand by 0.22 percent, whereas a 1 percent decrease in FDI decreases tourism demand by 0.54 percent. Unidirectional causality from FDI to tourism is noted. The contribution is reflected in the asymmetric association between FDIs and tourism in China. Specifically, tourism demand is 2.5 times more sensitive to declines in FDI compared to increases. The results provide useful insights for policymakers managing tourism sector FDI.

Asian Tiger's economic progression and Influence of Sectoral FDI

In this paper, we scrutinize the sectoral FDI's influence on economic progression over the period of 2006-2015(the case study of Asian Tigers: (Hong Kong, Singapore, and Taiwan). The outcomes of the paper recommend that sectoral FDI has an affirmative and noteworthy influence on the economic progression of Asian Tigers. In light of our findings we suggest, to avail the fruits of economic growth through FDI, developing countries should invest more in human capital and improve financial openness.

How does the sectoral composition of FDI induce economic growth in developing countries? The key role of business regulations

The prior empirical outcomes on the FDI-growth relationship are vastly conflicting. The key possible reason for these conflicting findings is the use of aggregate FDI, while FDI impacts largely depend on the receiving sectors of the host country. This study empirically estimated the influence of sectoral FDI on the economic growth and the role of business regulations in influencing the FDI-growth connection of 85 developing countries, for the time 1996–2019 and applied 2SLS method. The outcomes indicate the significant contribution of sectoral FDI inflows to economic growth. In contrast, the interaction of regulations with sectoral FDI negatively impacted host countries’ economic growth. Furthermore, in low income countries, only agriculture and industry FDI have growth promoting effect, while manufacturing and services FDI are insignificant. Similarly, FDI inflows to all sectors positively affect middle income countries’ economic growth except services FDI. However, FDI inflows to all sectors enhance high income countries economic growth. The regulations’ interaction with all types of FDI adversely affects the economic growth across all income groups, except agriculture and services FDI in the case of low and high income countries, which are found insignificant. The outcomes are consistent by employing diverse econometric techniques and model specifications.

Does the pollution halo hypothesis exist in this "better" world? The evidence from STIRPAT model.

Multinational corporation has changed their host countries. The new wave of FDI inflow attracted the interest of policymakers. FDI has significant effects on both productivity and carbon dioxide emissions. The host countries should carefully consider the advantages and disadvantages of FDI to their nation. The previous literature has not illustrated the global context’s theoretical halo or haven pollution hypothesis. Using panel data of 96 countries between 2004 and 2014, our empirical results confirm the haven pollution hypothesis in both developing and developed countries. We employ the different general methods of moments (GMMs) to engage FDI in traditional STIRPAT theoretical frameworks. The empirical results contribute to the evidence of the EKC theory. The country’s income level has been used to modify our models. The affluence of the economy, urbanization, FDI, and industrial sector would cause harmful effects on carbon dioxin emissions globally. The paper implies the two models which can be used for both developed and developing countries. The policymaker can use both short-run and long-run elasticities from those models to implicate their country’s FDI inflow strategy.Supplementary InformationThe online version contains supplementary material available at 10.1007/s11356-022-21654-4.

The macroeconomic effects of import tariffs in a model with multinational firms and foreign direct investment

Recent (de-)globalization tendencies and rising protectionist measures has created new interest in studying the effects of unilateral and world-wide tariffs. This paper contributes to this issue by taking into account that international transactions in goods and services increasingly take the form of foreign direct investment. We look at the effects of import tariffs in the context of a two-region DSGE model with both an exporting and an FDI sector. We find that the tariff jumping effect on FDI is largely outweighed by a cost effect if the tariff is imposed on all imports. This holds in the case of both tariffs imposed unilaterally and worldwide import tariffs. Our analysis confirms the aggregate positive welfare effects of a unilateral tariff, but also shows inefficiencies resulting from consumption and production distortions. This leads to lower GDP and real wages through the investment channel. However, governments can generate a tariff jumping effect by exempting imports of multinationals from tariffs. This reduces negative growth effects but also lowers welfare gains since there are less tariff revenues to support consumption. In the case of a world-wide tariff, exempting imports of multinationals reduces negative welfare effects.

Sub-national Involvement in Nigeria's Foreign Relations Law: An Appraisal of the Heterodoxy between Theory and Practice

Nations, in their interaction with the international system, usually have in place a legal regime governing the external exercise of the powers of the state. This regime Curtis Bradley describes as the foreign relations law (FRL) architecture of a state. In a conventional FRL system, plenary powers for the conduct of international relations reside with the central government. For countries operating a federal system of government, the centripetal and centrifugal dynamics inherent in this system of government pose a serious challenge to this orthodoxy. More so, catalysed by globalisation, subnational governments (SNGs) in federal systems are increasingly affecting the reception and operation of international norms and acting as ‘paradiplomatic’ actors in the foreign relations sphere. This emergent trend has led to a growing body of scholarship that considers individual and comparative case studies across different jurisdictions. Focusing on Nigeria as a case study, this article evaluates recent empirical evidence that shows an increase in external interactions by Nigeria's SNGs in the FDI sector since 1999. The article argues that these external interactions by Nigeria's SNGs are a deviation from the conventional constitutional configuration of Nigeria's FRL setup wherein plenary powers for foreign relations have been allocated to the Federal Government (FG).

Foreign direct investment effects on the distribution of regional industrial value-added in China

Following economic reforms, China has become one of the premiere destinations for foreign capital; however, the benefits of this spectacular growth are not evenly distributed. Since the beginning of the 2000s, the Chinese government has designed and implemented policies to encourage foreign investment in central and western provinces to help decrease the significant distributional differences in regional industrial value-added, with limited success. In contrast to previous literature, this paper uses Panel Least Squares method to analyze empirically the impact of industrial sector FDI on Chinese regional inequality in industrial value-added 2003–2013, using three Chinese regions. The lack of prerequisite institutional structure to aid in FDI absorption affects location choices. Despite government policies to support inland regional economic development, foreign firms still prefer to invest in coastal provinces, further illustrating the effects of regional clusters.

Infrastructure and sectoral FDI in China: an empirical analysis

In this paper, for the first time, we investigate the relationship between infrastructure and sectoral distribution of FDI inflow in China. We use the Estimating Autoregressive Distributed Lag (ARDL) bound testing and Vector Error Correction Model (VECM) procedures of estimation. To unmask the shortcomings in the previous literature, we use a composite index of infrastructure with more than 30 indicators. The results show that there is a long-run relationship between sectoral FDI and infrastructure. A bidirectional causal relationship is confirmed by using VECM. However, we find unidirectional causality between the primary sector's FDI and infrastructure, and it is running from infrastructure to primary sector FDI. The inclusion of control variables, e.g., institutional quality, trade openness, and domestic investment, is robust in our analysis. The positive role of infrastructure in the sectoral distribution of FDI inflows is of utmost importance for policymakers and Chinese-government. Several policy implications are given in our study.

The Role of Technology Investment, Business Sector Investment, Government Investment in Public Goods and Consumption in Efforts to Improve Population Welfare in Indonesia

This research is about technology investment, business sector investment, government investment in public goods and consumption in an effort to improve the welfare of the population in Indonesia, which is reflected in the Gross Domestic Product. This study uses secondary data from world banks and processed regression using the moving average autoregression method. We find that government consumption and investment are positively related to gross domestic product, so it can be concluded that government investment in public goods and public consumption is a driving factor for the welfare of the Indonesian people. This shows that the informal business sector which is not touched by business sector investment, either FDI or direct investment or paper asset investment, needs to be strengthened by buying umkm products and informal sector products because the Indonesian economy relies on the informal sector.