FDI Inflows Research Articles

Transnational Trade and Economic Growth in Nigeria

The study investigated the impact of transnational trade on economic growth in Nigeria. To achieve the purpose of the study, transnational trade was disaggregated into: oil import, oil export, non-oil import, non-oil export, trade openness, foreign direct investment share of real gross domestic product and real effective exchange rate and regressed on economic growth proxied by growth rate of real GDP. Data on the variables above were sourced from the Central Bank of Nigeria statistical Bulletin and the World Bank database. The data were analysed using the Autoregressive and Distributed Lag (ARDL) approach due to the mixed order of stationarity of the variables. The results indicate that in the short run, non-oil export has positive and significant impact on economic growth while oil import and FDI share of real GDP have negative and significant effect on economic growth. The long run result shows that: oil import has direct and insignificant effect on growth while non-oil import, non-oil export, FDI share of real GDP and real effective exchange rate have negative and insignificant impact on economic growth. From the results the study concludes that transnational trade has serious implication on economic growth in the short run and less effect on economic growth in the long run in Nigeria over the period of this study. Based on these findings, the study suggests that policies should be geared toward increase in non-oil export, reduction in oil import, review of FDI inflow policies and trade liberalization as possible ways of improving the productive capacity of the Nigerian economy.

Determinants of FDI Inflow from European Union Countries to Vietnam: A Panel Data Analysis

This paper explores the determinants of FDI inflows from EU nations to Vietnam, employing a set of panel data from 26 member countries of EU that have been investing in Vietnam over the period 2012-2020. With the panel dataset, the study estimates three models, including pooled Ordinary Least Square (OLS), Fixed Effect Model (FEM), and Random Effect Model (REM), and then uses several formal tests to determine which model is best suited for data analysis. Based on the results of the F-test, Breusch - Pagan's Lagrange Multiplier test, and Hausman test, the Random Effect Model is preferred. According to the empirical findings, FDI from EU economies to Vietnam might be positively affected by GDP, corruption perception level, or the cleanliness of Vietnam's public sector, which is consistent with the theoretical basis. The effect of trade openness and economic freedom is negative, contrary to expectations. The coefficients of the real exchange rate, infrastructure, and COVID pandemic on FDI inflows are not statistically significant. Further studies should be carried out for a better understanding of these determinants.

Does financial innovation foster financial inclusion in Arab world? examining the nexus between financial innovation, FDI, remittances, trade openness, and gross capital formation.

The present paper aims to study the impacts of financial innovation on financial inclusion for selected 22 Arab countries from 2004 to 2020. It considers financial inclusion as a dependent variable. It describes ATMs and the number of commercial banks' depositors as proxy variables. In contrast, financial inclusion is considered an independent variable. We used the ratio between broad and narrow money to describe it. We employ several statistical tests such as lm, Pesaran, and shin W-stat, a- tests for cross-section dependence, and unit root and panel granger causality with NARDL and system GMM approaches. The empirical results reveal the significant nexus between these two variables. The outcomes suggest that adaptation and diffusion of financial innovation play catalyst roles in bringing unbanked people into the financial network. In comparison, the inflows of FDI establish mixed positive and negative effects, which vary with model estimation following different econometrical tools. It is also revealed that FDI inflow can augment the financial inclusion process, and trade openness can play a directive role and enhance the financial inclusion process. These findings suggest that financial innovation, trade openness, and institutional quality should continue in the selected countries to enhance financial inclusion and promote capital formation in the selected countries.

FORMS AND INSTRUMENTS OF INTERNALIZATION STRATEGIES FOR EMERGING MARKET MULTINATIONALS: THE CASE OF CHINA

The international presence of multinational companies from emerging countries presents new issues and challenges existing theories. The internationalization of multinationals from emerging countries (ECMNC) has undoubtedly become a real challenge for the existing knowledge of multinational companies. However, studies of ECMNC are be limited to reasoning on the difference by compared to multinationals in developed countries (DCMNC), but rather seek opportunities to develop a more comprehensive theory of internationalization. Among these ECMNCs, those of China seem to be the most active at present in internationalization. Linking the flow of FDI and international management help to understand how Chinese multinationals go international without possessing the necessary resources or at least, conventionally considered necessary with regard to existing theories. The strategic choice plays a vital role in successful development of the internalization of Chinese companies.

DAMPAK PELAKSANAAN ACFTA (ASEAN-CHINA FREE TRADE AGREEMENT) PADA FDI EKTRA-REGIONAL DI INDONESIA

The era of globalization encourages countries to integrate with other countries to fulfil domestic needs at lower prices and encourages the export of domestic products. When the countries conclude the Economic integration, besides of effect of the increment in international trade, there is also the effect of increasing FDI inflows which are called investment creation, which is the increment of FDI from extra-regional countries. Since Indonesia ratified ACFTA and the tariff between Indonesia and China became 0 tariffs in 2010, it raises questions about whether Indonesia had the investment creation from economic integration with China and what factors have influenced FDI flows in Indonesia since the ACFTA. This study attempts to answer this question using descriptive analysis and an econometric approach. The econometric approach in this study uses the gravity method by including panel data from 91 countries over a period of 13 years. The econometric approach gives the result that extra-regional countries have a significant negative effect on FDI inflows in Indonesia which makes Indonesia still needs to implement policies to attract FDI inflows from extra-regional.

The global value chain: Challenges faced by ASEAN least developed countries

We identify seven global value chain (GVC)-related challenges faced by the least developed countries (LDCs) of the Association of Southeast Asian Nations (ASEAN) region. The LDCs face some of the most rudimentary challenges related to trade participation and competitiveness. The challenges identified in the paper have been empirically validated using Fuzzy AHP modelling to decipher the priority weights. The findings reveal that ‘infrastructural and logistical constraints’ is the most imperative challenge followed by ‘limited FDI inflows’ and ‘inadequate development of SME clusters. The remaining challenges include: inadequate aid-for-trade, dismal LDC participation through the RTA/FTA route, lack of robust industrial policy, constraints in value chain upgradation, limited FDI. The study is beneficial for industry and provides useful inputs for policy-making. It helps in ascertaining optimal resource allocation for the purpose of enhancing trade competitiveness and economic development.

Foreign direct investments from the european union in the economy of Ukraine: current state and trends of involvement

Methods. The theoretical and methodological basis of the research is the work of domestic scientists, data from government agencies, in particular the Ministry of Finance of Ukraine, the State Statistics Service of Ukraine, the National Bank of Ukraine. Information from the International Monetary Fund, the EU website, and the European Business Association was also used. The results were obtained using a range of methods: the method of logical analysis made it possible to develop the logic of the research; structural and statistical analysis of dynamics was used to evaluate private foreign investments in Ukraine by EU countries and types of economic activity; graphic method – for visualization of the obtained research results; grouping methods, tabular – for selection, generalization of data and presentation of calculation results; deduction – to highlight certain factors affecting the investment attractiveness of Ukraine and others. Results. The article is devoted to the analysis of trends in foreign direct investment inflows to Ukraine, in particular from EU member states. The essence of direct foreign investments is considered. The volume of FDI in the economy of Ukraine, FDI inflows (operations and balances under instruments) by EU investor countries were studied. It was revealed what events influenced the excess of FDI outflows over inflows in the national economy. The dynamics of the volume of FDI (share capital) in the domestic economy, in particular from EU countries, FDI (residues on instruments) in Ukraine by types of economic activity were also considered and analyzed. The investment attractiveness is characterized and the main negative factors influencing the investment climate of Ukraine are identified. Novelty. An assessment of the current state of direct foreign investment in the economy of Ukraine by EU countries is provided. The general trends of FDI attraction in the economy of Ukraine are substantiated. Prospects for the further development of Ukraine's investment relations with EU countries have been determined. Practical value. The analysis of the dynamics of the volume of private foreign investments in Ukraine makes it possible to predict the trends of future inflows, in particular from the EU countries. It is also possible to identify EU member states that invest the most and the least in our country and, as a result, develop measures to increase Ukraine's attractiveness for FDI from EU countries, since they are economically and innovatively developed.

Low carbon city and FDI inflows: evidence from China.

Achieving the goals of "carbon peaking" and "carbon neutrality" becomes one of the important elements of the ecological civilization strategy in China. Based on the strong balanced panel data of 281 prefecture-level cities in China from 2006 to 2019, we investigate the impact of Low-carbon city pilot policy (LCCP policy) on FDI inflows by using the multi-period DID model and intermediary model. After that, we discuss the heterogenous impact in terms of both policy tools and geographic locations. Furthermore, we investigate the spillover effects of the LCCP policy on the FDI inflows of surrounding cities using the Spatial Dubin DID model. The results show that (1) the LCCP policy can significantly attract FDI through reducing compliance costs and promoting technological innovation, and the Bacon decomposition and the placebo test show that the estimation error is small and the regression result is relatively stable; (2) command-mandatory tools have negative effects on FDI, while market-oriented tools can effectively attract FDI in pilot cities, but voluntary tools have no significant effect on FDI in pilot cities; (3) the LCCP policy can significantly promote the inflows of FDI in the eastern and western regions, but it does not significantly promote the FDI in central regions; (4) there is a positive spillover effect on FDI inflows to surrounding cities.

Impact of Foreign Direct Investment on Economic Growth in the Gambia: Evidence from Time Series Analysis

This paper aims to assess the impact of foreign direct investment on The Gambian economy using time series data from 1980-2018. Estimations were made using the Ordinary Least Square (OLS) together with various other econometric and statistical methods to analyze the nexus between FDI flows and economic growth in The Gambia. The results show a positive link between foreign direct investment and economic growth in The Gambia. This finding suggests that an increase in foreign direct investment will positively impact the economic growth of the country. Based on this finding, the paper recommends that policymakers in the Gambia develop business-friendly environment policies and a quality educational system and ensure political stability to attract foreign investors, which in turn could enhance the country's economic growth prospects.

Do economic freedom, innovation, and technology enhance Chinese FDI? A cross-country panel data analysis

This study evaluates the determinants of Economic freedom, innovation and technology concerning Chinese foreign direct investment. The aim of the study is to explore, that how these determinants influence Outward Foreign Direct Investment (OFDI) from China toward different regional economies. The study will enrich the existing literature by providing useful policies to the concerned economies to influence more Chinese FDI to host economies. The panel data set includes 27 (African, European, and Asian) Countries data over the period of 2003 to 2018. Moreover, the study employed panel data analysis and the result reveals that property rights, patents residents (pantentAR), Research & Development (R&D), Inflation, official exchange rate (OER), and Tax Burden (TaxB) have a strong positive and significant impact on Chinese OFDI in the selected sample countries, While Government Expenditures (GovE) has positive, but insignificant impact on Chinese OFDI. On the other hand, Chinese OFDI is negatively and statistically significant association with Business Freedom (BusF). This study will put forth considerable policies to the concerned to induce further inflows of Chinese FDI into the host countries. The policymakers should build policies that provide a comfortable environment for business activities and mostly focus on value-added production i.e., expenditures on R&D to enhance high-technology exports because they efficiently attract FDI into host countries. Another key factor is Tax Burden (TaxB), which significantly influences Chinese FDI along with other factors.

"Application of ARDL modelling in global structural shocks and their dynamic impact on FDI "

In general, sustainable economic growth is highly dependent on technological progress, managerial knowledge, and money supply in the economy. Globally, the COVID-19 pandemic has caused structural shocks to economic systems by increasing high economic uncertainty. For this reason, policymakers are exploring alternative measures to stimulate economic growth. And among these alternative measures we also find foreign direct investment, which represents an instrument widely used worldwide. There is a trend among foreign investors that they increasingly focus on the quality of institutions, especially on FDI policies in domestic countries. For this reason, governments of developing countries are increasingly adopting soft policies to attract FDI. Generally, the policies provide substantial taxation provisions. Thus, by stimulating foreign direct investment in global economic operations, short- and long-term growth is achieved. The beneficial effects of FDI are given by their unprecedented impact on achieving sustainability worldwide. The motivation of this study is to scale the effects of environmental quality and good governance on FDI inflows in European Union member countries for the period 2002-2021. We used the estimation of autoregressive distributed lag and error correction models to investigate the association and elasticity of explanatory variables on FDI inflows in EU member countries. Thus, as independent variables we use CO2 emissions from solid fuel consumption and the sum of exports and imports of goods and services. Environmental degradation comes from the depletion of resources by human activity, and ultimately this leads to increased costs and depletion of capital. As a result, environmental quality is crucial to the health of both people and businesses. In the recent economic booms, international trade needs serious attention to form new policies to invite more foreign investors. And as control variables we introduce Government effectiveness index and Gross capital formation. We introduce these variables because it is believed that weak institutional capacity can have a negative impact on economies. The study results suggest that government efficiency and a less regulated environmentally concerned economy drive capital transfer decisions.

EFFECTS OF DIRECT FOREIGN INVESTMENTS ON THE ECONOMY OF THE REPUBLIC OF CROATIA

The aim of the paper is to investigate and provide an argumentative explanation of the effects that direct foreign investments have on selected macroeconomic indicators in the Republic of Croatia in the period from 2000 to 2020. This paper analyses the effects that direct foreign investments have had and are having on selected macroeconomic indicators of the Republic of Croatia over a 20-year time series. Most often, advocates of a greater inflow of FDI argue their positions with GDP growth, higher employment, price stability, increased exports of goods and services, and a generally better standard of living for Croatian citizens. The very entry into the Union created numerous advantages for Croatian companies, facilitated the exchange of goods with the members, but did not bring the expected influx of investments. Of the desired numerous greenfield and brownfield investments and mergers and acquisitions of companies, the realization was below expectations due to the stated objective, but also numerous subjective reasons. More precisely, investments have arrived in tourism and trade, but have been absent in basic industry and agriculture. The developments that have been observed in recent years will certainly, in addition to attracting foreign capital, contribute to the Croatian economy, especially in the IT field and green technologies. Investment experience so far shows that in the Republic of Croatia, most foreign investments have been reduced to the purchase of majority ownership in domestic vital companies, which has resulted in job reductions, disincentives for exports, and impairment of national competitiveness. In the sense of the above, the starting hypothesis of the work is: based on the knowledge of the theoretical characteristics of foreign direct investments and the functioning of the movement of international capital and technology transfer, the importance of foreign direct investments for the economy of the Republic of Croatia can be presented. In the analytical part of the paper, statistical methods of linear regression and correlation were used to analyse the influence of direct foreign investments on GDP, employment, long-term interest rate and current account of the balance of payments. The basic research results show that there is a clear and moderate connection between FDI and GDP. The conclusion of the research in the paper emphasizes how the beneficial effect of the inflow of FDI on the gross domestic product indirectly or directly positively affects employment, long-term interest rates and the balance of payments of the Republic of Croatia. Based on the analysis carried out, it can be stated that foreign direct investments can bring improvement to the national economy only when; if they target more advanced industries so the potential technological spillovers are greater, if they establish strong ties with domestic companies that can absorb spillovers in such a way, if part of the production is exported which has a positive effect on the balance of payments and if they motivate domestic companies to follow them.

Be my guest: the effect of foreign policy visits to the USA on FDI

We examine whether a country leader’s diplomatic visit to the USA affects the Foreign Direct Investment inflow. The literature so far has found inconclusive results regarding diplomatic relations' effect on international flows. We use a dynamic Inverse Probability Weighting Regression Adjustment framework to examine this relationship and estimate the causal effect of foreign visits. Our results indicate that a visit to the US increases the country’s total FDI inflows by up to one percentage point per annum, with a cumulative effect reaching 2.5 percentage points six years after the visit. However, this is a short-run effect as it disappears in the subsequent years. Furthermore, our first-stage results shed light on the profile of the leaders that visit the US. Our findings are consistent with the view that foreign visits act as signals to investors regarding the country’s political risk.

The environmental cost of FDI and spatial implications of CO2 emissions in Sub-Saharan Africa.

This study endeavors to investigate the environmental cost of FDI inflows in the Sub-Saharan African (SSA) region over the period of 2006 to 2020. There are two opposing theories about how FDI impacts the environment, namely, the pollution halo hypothesis (PHH) and the pollution haven hypothesis (PH). Given the SSA region's poor environmental performance and potential spatial spillover effects on neighboring nations, the study underlines the necessity to look into the pollution hypotheses in theregion. The examination is carried out through non-spatial and spatial panel data econometric approaches. The empirical findings provide evidence that an increase in FDI inflow by 1% in SSA is positively associated with increasing levels of CO2 emissions by 0.03% on average, thus validating the notion of a pollution haven in the region. Furthermore, the study reveals that the environmental spillovers of CO2 emissions are not confined to the host country alone, but also extend to neighboring nations. Other key determinants of CO2 emissions, including GDP, population, and urbanization, were also found to be positively linked to CO2 emissions, whereas the use of renewable energy resources was found to have a mitigating effect. The empirical findings offer valuable insights for policymakers and stakeholders in the SSA region. These insights highlight the importance of the adoption of renewable energy sources and enacting regulatory measures to monitor the environmental cost of FDI, with the aim of mitigating the deleterious consequences of CO2 emissions, not only in the host nation but also in the neighboring nations.

Foreign investment sensitivity to employment regulation: reassessing what really matters

PurposeDrawing on the international business and IHRM literature, this study investigated the effects that employment regulation and its nature of enforcement have on foreign investment in emerging markets.Design/methodology/approachPanel regressions with time fixed effects were conducted for the period 2002–2017 using regulatory, human capital, and economic data for 34 developing nations. Robustness checks also were performed by varying the measures for key predictors along with the modes of analysis (i.e., Pooled OLS with clustered standard errors, generalized estimating equations (GEE), and instrumental variable (IV) regression with the generalized method of moments (GMM) approach).FindingsAlthough the totality of restrictions did not have an impact, FDI inflows were negatively related to the process strength of enforcement. This suggests investors place greater emphasis on de facto exposure than on de jure enactments, favoring nations less willing or able to push for compliance. In addition, while GDP growth had a positive impact on inward investment, the opposite was found for licensing restrictions and labor productivity. The remaining controls failed to display consistent relationships with foreign investment.Research limitations/implicationsData constraints precluded the inclusion of additional economies and years before 2001. It also was not possible to directly evaluate the influence of labor costs without a standardized measure for developing nations. This entered at best indirectly in GDP per capita, which was tested.Practical implicationsThese findings have important implications for social responsibility, suggesting more aggressive monitoring is needed of investment criteria and government relations. At a minimum, social auditing and reporting should better document overt commitments to rights-adherence and compliance-partnering. CSR stakeholders can work in tandem, tracking enforcement more closely and lobbying governments to discourage policies of lax enforcement.Originality/valueThis is the first study to assess how legal stock and its manner of enforcement influence FDI inflows. Improving on earlier studies, employment law was measured with a broad legal scale that was annually adjusted. Enforcement was evaluated in two different forms, both as process strength and administrative capacity – the former drawing investors' attention.

Inflow of Foreign Direct Investment to the region of South Asia, determinants of the FDI inflows in the regions and its impact on economies of the Region

Inflow of Foreign Direct Investment to the region of South Asia, determinants of the FDI inflows in the regions and its impact on economies of the Region

Role of environmentally related technologies and revenue taxes in environmental degradation in OECD countries.

The purpose of this study is to validate the impact of foreign direct investment inflows (FDI inflows), trade openness (TO), environmentally related technologies (ERTs), environmentally related tax revenues (ERTRs), and economic growth (EG) on carbon dioxide (CO2) emissions by employing a PMG (pooled mean group) estimator with a dataset of 36 OECD countries spanning from 1990 to 2020. Im-Pesaran-Shin, Fisher-type, and cross-sectional augmented Dicky-Fuller tests indicate that study variables are stationary at I (0) and I (I). Kao and Pedroni cointegration test results show that cointegration exists across regressors and regressands throughout the sample of OECD countries. The results of the Hausman test confirm that the PMG panel ARDL method can be employed. Empirical results of PMG demonstrate that ERTRs help to reduce CO2 emissions, while FDI inflows, TO, ERTs, and EG are significant and positively related to environmental degradation. This study is an effort to fill the gap by exploring the role of ERTs and ERTRs in environmental degradation in selected OECD countries. The study findings support the relationship between CO2 emissions, ERTs, and ERTRs. It has been determined that environmental technologies and revenue taxes are also drivers of environmental sustainability. The study provides policymakers with pertinent implications for promoting the development and adoption of green technologies. The findings suggest that imposing environmental taxes expedites the development of environmentally related technologies for reducing CO2 emissions and promoting sustainable development in OECD countries, with potential applications in a wide range of countries, particularly as a basis for emerging countries to boost their energy transition timelines.

Impact of FDI inflows on green TFP based on carbon emissions transmission mechanism

Economic globalization and green development have become the consensus of all countries in the world. The importance of FDI, carbon emissions and green total factor productivity is self-evident. This study analyses the impact of FDI inflows on green TFP and the role of carbon emissions in FDI inflows and green TFP. The empirical analysis employed kernel density estimation, OLS, mediation effect model, and panel quantile regression methods using China’s provincial panel data spanning over 2001–2019. The facts show that China’s carbon emissions have been reduced because of environmental regulations and green TFP is still rising in fluctuation. The results from OLS and mediation effect model indicate that the impact of FDI inflows on green TFP present an asymmetric inverted U-shape and FDI influences green TFP by changing carbon emissions. The panel quantile regression results also show that FDI has a stronger impact on green TFP in less developed regions. This paper believes that the introduction of FDI should be appropriate and should be accompanied by corresponding environmental regulations, in order to promote green TFP in countries around the world.

How do economic growth, financial sector development and environmental regulation impact FDI inflows in the MENA countries?

This paper asks lots of questions about the hit of economic growth, environmental regulation and financial sector development on FDI inflows, using both the static and dynamic panel data approaches for a panel of 17 MENA countries for the 1990-2015 period. Our results pointed out that a higher level of growth attracts FDI inflows. They also point out that laxer environmental regulation decreases FDI inflows. On the other hand, our findings proved that FDI inflows in react positively to the financial development sector. This implies that foreign direct investment aims to invest in a country that has a higher developed financial sector to facilitate the transaction with their original country. However, more policy implications are concluded of our study can be presented as follows. First, based on the impacts of economic growth and financial development on the FDI inflows for the MENA countries, policymakers showed develop economic and financial policies concerning the FDI inflows. This suggests that policy makers in these countries consider that more prudent policies might involve eliminating barriers that prevent local firms from establishing adequate linkages, improving local firms' access to inputs, technology, and financing, and streamlining the procedures associated with selling input. Second, policymakers in the MENA region implement more environmental regulation policies in order to control carbon emissions and prevent FDI capital flights.

Транснационализация экономики: теоретико-методологический аспект

The purpose of this article is to study theoretical and methodological foundations of the economy’s transnationalism. The study of the transnationalism of the world economy is carried out at different levels in order to combine micro, macro, and global levels of analysis. The article examines the methodological foundations of transnationalism; identifies theoretical approaches to the study of the process of transnationalism; systematizes the results of research by domestic and foreign scientists devoted to approaches to the definition of the concept, principles, factors of transnationalism. Theories of international capital movement are systematized, the classification of theories of international production and FDI is presented. A large number of factors contribute to the appearance of transnationalism theories. The main obstacle to the consolidation of scientific views is the dynamic change in the way of transnationalism and comprehensive nature of the activities of TNCs (presence in most sectors of the economy). In 2021, global FDI flows recovered to pre-pandemic levels and reached $1.6 trillion US dollars. Cross-border transactions and international project finance were particularly active because of free financing terms. In 2022, however, the global environment for international business and crossborder investment changed radically. The global environment for international investment changed dramatically with the launch of a special military operation in Ukraine, which began at a time when the world was still recovering from the pandemic effects. The direct impact of special military operation on investment flows in the Russian Federation is the suspension of existing investment projects, the outflow of funds from the Russian Federation, the spread of asset value, losses and sanctions. These facts make the study of theoretical and methodological foundations of the transnationalism of economy relevant.