FDI Inflows Research Articles

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.

Exploring asymmetric influence of R&D expenditures on CO2 emissions in China: evidence from nonlinear ARDL model.

R&D spending upsurges technological advancement and innovation which results in lowering energy consumption and environmental degradation. The current study investigates the asymmetrical impact of R&D spending on CO2 emissions in China via employing annual data from 1980 to 2021 and the NARDL model for empirical analysis. The estimated results of the NARDL model confirmed that there are asymmetries in positive and negative coefficients of R&D spending in China. The results depict that the positive shock in R&D spending exerts a negative and statistically significant impact on CO2 emissions in both runs implying that an increase in R&D spending lowers CO2 emissions. However, the negative coefficient of R&D spending yields a positive and statistically significant impact on CO2 emissions revealing the fact that a negative shock in R&D spending results in the upsurge of CO2 emissions in China. According to these findings, the impact of positive and negative shocks in R&D spending on CO2 emissions is asymmetric. The findings also show that the impact of a negative shock in R&D spending is greater than the impact of a positive shock on CO2 emissions. In addition to the negative shock in R&D spending, increases in energy consumption, economic growth, and FDI inflows also contribute to an upsurge in CO2 emissions in China. The robustness of the estimated results is assessed using standard fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) models. The FMOLS and DOLS results have been confirmed to be sound and consistent with the results of the NARDL model. The study suggests that the economic strategies should aim at investing in R&D spending to foster environment-friendly technological innovations and to lower environmental degradation in China.

Determinan Investasi Asing Langsung di Negara Berkembang-8

The flow of foreign capital (FDI) into a country can be beneficial to the host country and for multinational companies as a form of external financing for the host country. This study aims to analyze and explain the factors that influence the foreign direct investment inflow of Developing-8 countries from 2012 to 2021 using a panel data regression model through fixed-effect approaches. This study found that the size of markets and trade openness have a significant positive impact on FDI in developing eight countries. Meanwhile, the availability of natural resources has significantly negative effects, but inflation and infrastructure have no significant impact on the flow of FDI into developing eight countries. To boost the inflow of FDI, it is also important for governments to be able to make appropriate and profitable policies for countries and companies that are beneficial to countries and domestic firms.

Emerging market multinationals and international investment agreements

This study investigates the effects of international investment agreements (IIAs) on the internationalization decisions of emerging market multinationals (EMNEs). Drawing on the POLI advantage framework, we argue that bilateral investment treaties (BITs) add to the political and institutional capabilities of EMNEs, enhancing their OLI advantages in host countries. We identify two mechanisms through which BITs facilitate EMNEs’ internationalization: by offsetting political risk and by mitigating the informational asymmetries and transaction costs associated with investing in unfamiliar destinations. We probe the plausibility of our claims with data from an original survey of firms in four emerging economies and a larger sample of bilateral FDI flows from UNCTAD’s FDI/MNEs database. Our findings show a positive association between BITs and FDI from the South, especially in politically unstable and unfamiliar contexts. Apart from adding to the International Business literature on EMNEs, this study contributes to International Political Economy scholarship on FDI by highlighting the growing relevance of South-South IIAs.

Illuminating the contributions of fintech, mineral resources, and foreign direct investment in alleviating environmental issues: An empirical analysis

The present study uncovers the complex relationship of financial technology (Fintech), mineral resources, and foreign direct investment with carbon mitigation by considering twenty economies in the Middle Eastern and North African region. Employing the CS-ARDL model, we meticulously account for time-invariant characteristics and distill the net impact of these key factors on carbon emissions. Our analysis spans the two-decade period from 2000 to 2020 and the robust empirical findings illuminate a promising way forward to mitigate environmental challenges for the region under consideration. Notably, according to the results, mineral resources emerge as a linchpin in promoting clean energy adoption across the selected economies and ultimately helping to control carbon emissions. Furthermore, fintech and FDI both are significant sources of increased funds availability for environmentally friendly projects and those emerging as catalysts for accelerating clean energy adoption and achieving carbon mitigation targets in the region. In short, our study underscores the pivotal role played by fintech, mineral resources, and FDI inflow in shaping the energy landscape for a clean environment. The study suggests that improvement in fintech promotes access to capital, promotes sustainable development, fosters knowledge and wise use of mineral resources, and ultimately helps to improve environment quality. In conclusion, this study offers valuable policy recommendations to empower policymakers in charting the sustainable use of mineral resources and advancing the fintech future for a healthy natural environment for the MENA region.

Is Foreign Direct Investment Resilient Post the COVID-19 Pandemic? The Case of a Subnational Economy

The disruption brought about by the COVID-19 pandemic has been unprecedented in its global reach and unique impacts. While the literature has addressed the disruption effect on FDI at the country level, we provide a unique dive into the presence and development of FDI at a subnational location. We use detailed data on spatial and industrial distributions of FDI in the U.S. state of New Hampshire and find support for all our hypotheses related to post-disruption recovery and resilience. Given the varied impact of the pandemic on FDI across locations, and the heterogeneity in local conditions, we contend that the subnational recovery depends on the impact of the disruption and happens at varying levels and timelines. While the literature documented that foreign businesses choose to embed in their local host environments, few studies have considered empirically how the level of local integration affects FDI recovery after disruption. We propose that subnational locations with a high level of integration maintain relative strength in FDI post-disruption. The COVID-19 pandemic disruption presents an opportunity to evaluate FDI resilience. We postulate that existing FDI and spatial agglomerations of FDI-related activities impact the post-disruption resilience of FDI at a subnational location. The analysis concludes on actionable insights for researchers and practitioners regarding how to navigate the FDI inflows and activities at their specific location.

Positive aspects of Romania’s investment environment.French stakeholders’ perspective

ABSTRACT Foreign direct investments play a crucial role in supporting the development of national economies. The inflow of FDI depends to a great extent on the investment attractiveness of host countries, being also influenced by global economic conditions. In recent years, Romania has become one of the most attractive destinations, especially for French capital. This article aims to explain why the Romanian environment is attractive to the stakeholders involved in French capital management. The qualitative analysis covers the period after the fall of communism and is realized by applying semi-structured interviews conducted with several representatives of private and state actors.

Effect of Foreign Direct Investment on Economic Growth: The Role of Natural Resources and Trade Openness in Ghana.

This study examined the determinants of foreign direct investment in Ghana over the period 1980 – 2017 to highlight the need for FDI to reduce our growing debt levels by reducing replacing public loans. To estimate the empirical model, the study controlled for exchange rate and inflation rate as measures of macroeconomic instability, as well as the growth rate of citizen’s income. The study employed time series analysis considering the nature the variables be annual series. Using the Augmented Dickey-Fuller (ADF) approach, the study tested for the presence of unit root adopted the Johansen Cointegration test for long run associations among the variables. The VAR and VECM models were finally estimated to achieve the objective of the study. Outcome indicated a positive relationship between natural resource availability and FDI inflows in the short-run and long-run in Ghana. Trade openness was also revealed to have a positive impact on FDI inflows in the country in both time periods. Measures of macroeconomic uncertainties such as exchange rate and inflation rate exert negative impacts on FDI inflows. Results of the study holds several policy implications including the need to achieve a sustainable economic outlook thus achieving and sustaining lower levels of inflation that will less deterrence to foreign investors. Also, the exchange rate needs to be managed in order to achieve an appreciation of the Ghana-Cedi against the US-dollar to encourage foreign direct investment and trade amongst Ghana’s trade partners. Again, further trade restrictions that are deemed unproductive can be reviewed to allow free trade, especially the Africa Continental Free Trade Area (AfCFTA).

CHINA'S ROLE IN MODERN WORLD POLITICS

The article examines the role of China in modern world politics. China's share in the world economy in 2022 is analyzed. The key factors that contributed to the country's growth are identified. The dynamics of China's GDP growth in 2010-2022 is studied. China's place in the global competitiveness ranking for 2021-2022 is substantiated. The inflow of FDI is analyzed, which is cyclical in nature, since investments are a direct indicator of crises. It is noted that China's economic expansion is expanding and its influence in the world is increasing due to the formation of dependence on China as both an exporter and an importer. The data of the Global Innovation Index report, where China is among the 20 most innovative countries in the world, are substantiated. The foreign policy of the People's Republic of China is studied and its basic principles are determined. It is substantiated that China has a strong economy and a strong competitive position in the world economy, which allows China to position itself as one of the world leaders in the international arena. The economic power of China is determined. Xi Jinping's foreign policy is substantiated. It is revealed that over the years, China has made significant progress in transforming into a dynamic, knowledge-based economy and has managed to introduce new rules to cope with the governance challenges posed by the onset of the currency crisis, pandemic and the 2022 crisis. It is investigated that China currently accounts for almost a third of world exports and imports. The role of China in world politics is studied on the example of its position on the war in Ukraine and relations with Russia. China's place in the world ranking of countries according to the Innovation Index for 2020-2022 is studied. It is noted that in its foreign policy, China adheres to five basic principles, in particular: mutual respect for territorial integrity and sovereignty, non-aggression, non-interference in the internal affairs of another country, equality and mutual benefit, and peaceful coexistence. The dynamics of Russian exports to China is analyzed.

НОВЫЕ ТЕНДЕНЦИИ В ГЛОБАЛЬНЫХ ПОТОКАХ ТРАНСГРАНИЧНЫХ ПРЯМЫХ ИНВЕСТИЦИЙ

The article examines measures, that took place in the regulation of foreign direct investment and their impact on the configuration of investment flows. It is noted that for some countries and economic unions in current geopolitical situation, FDI policy is becoming a part of the national strategy for economic security and technological sovereignty. The dynamics of the introduction of FDI restrictive and regulatory measures indicates an increase in protectionism, which leads, in particular, to a reconfiguration of global capital flows. The changes in the FDI inflows /outflows volumes and in their distribution by different regions and countries allow us to conclude that, on the one hand, the localization of a part of FDI within geopolitically close states is taking place, while on the other hand, in order to reduce political and economic risks the diversification of investment partners is going on

Impact of Communication Infrastructure on FDI Inflows in Pakistan: Moderating Effect of Country Level Governance

Impact of Communication Infrastructure on FDI Inflows in Pakistan: Moderating Effect of Country Level Governance

The FDI Inflows in Low-Income and Lower-Middle-Income Countries: The Moderating Role of Military Expenditure

The FDI Inflows in Low-Income and Lower-Middle-Income Countries: The Moderating Role of Military Expenditure

Macroeconomic, Institutional, and Energy Consumption on Economic Growth APEC Members

Economic growth is a shared goal pursued by every country across various regions worldwide, including the member nations within the APEC organization. However, APEC member countries still encounter several economic challenges to achieve optimal economic growth. First, macroeconomic issues such as regulatory barriers limit both FDI inflows and trade. Furthermore, unemployment remains an unresolved issue. Second, based on the World Bank's average estimates, most APEC countries exhibit low institutional quality. This is due to corruption, weak law enforcement, and lack of government transparency. Third, there is the issue of limited energy supply and increased carbon emissions due to non-renewable energy consumption. This research aims to determine the influence of macroeconomics, institutional quality, and renewable energy consumption on the economic growth of APEC member countries. The analysis method for this research is PVECM regression. The data used is panel data from 2005-2019. The research results show that the variables FDI, Trade, Labor, REC, and IQ have long and short-term influences on the economic growth of APEC countries. Suggestions that can be given are to improve the quality of APEC country institutions because, as seen from the average indicator estimates by the World Bank, Most APEC countries have low institutional quality. This improvement is needed to make policies more effective and efficient. Each country is also expected to increase the amount of renewable energy consumption.

Economic Elite Competition and FDI Inflows in Nondemocratic States

Economic Elite Competition and FDI Inflows in Nondemocratic States

Foreign Investment Flows and Stock Market Performance in Nigeria

This study looks at how foreign investment flows affected Nigeria’s stock market performance from 1994 to 2023. The paper utilised an ex-post facto research approach, and the Central Bank of Nigeria (CBN) bulletin, 2023, offered the data for analysis. Market capitalisation (MCAP) was the dependent variable in the study, and the independent variables used to measure foreign investment flows were foreign direct investment inflows (FDINF), outflows (FDIOUF), inflows from foreign portfolio investments (FPINF), and outflows from foreign portfolio investments (FPIOUT). The study tested the proposed hypotheses using the Ordinary Least Squares estimation approach. In order to determine the dependent variable, market capitalisation, the research examined the effects of four independent variables: FPI inflow, FDI inflows, and FPI outflows. The results show that the influx of FDI has little effect on market capitalisation. Outflows of FDI have a big effect on market capitalisation. Inflows of foreign portfolio investments have little effect on market capitalisation. Outflows from foreign portfolio investments dramatically increase the capitalisation of the stock market. As per the r2, changes in foreign investment variables in Nigeria may account for around 59% of the variations in stock market performance within the Nigerian economy. According to the study’s findings, foreign investment flows significantly affect Nigeria’s market capitalisation. Suggestions include promoting foreign direct investment inflows continuously, encouraging domestic companies to invest overseas, improving market transparency to draw in foreign portfolio investment inflows, and cautiously promoting outward investments to avoid excessive capital outflows.

Macro tax burden, FDI, and national innovation efficiency: A study on the impact of macro tax burden on national innovation efficiency.

Based on a panel dataset of 54 countries from 2008 to 2019, this article uses the mediation effect model to examine the relationship between macro tax burden, FDI and innovation efficiency. We find that:(i) the macro tax burden is positively correlated with the innovation efficiency; (ii) there is a non-linear effect of FDI on innovation efficiency conditional on macro tax rate. When the macro tax burden is greater than the critical value (25.28%), it indirectly limits innovation efficiency by hindering FDI inflows. This means that in order to promote innovation efficiency at the national level, the macro tax rate should be maintained at a reasonable level, because that can make the government raise more money to invest in and subsidy the innovation activities.

Implications of Foreign Direct Investment on SME Growth in Zimbabwe: A Case Study of Bulawayo Province

SMEs in Zimbabwe have withstood the test of time amidst economic decay experienced by the Zimbabwean economy for the past two decades. Since the adoption of progrowth policies in Zimbabwe FDI inflows have significantly increased overtime towards SMEs due because of their nurture to drive growth and economic competitiveness as well as navigating difficult economic landscapes. Therefore the paper investigates the implications of foreign direct investment on SME growth in Bulawayo. A qualitative research approach aligned with interpretivism research philosophy was adopted in this paper. The research subjects were selected using a convenient sampling technique. A total of 20 interviews were conducted with the managers and business owners of SMEs. The related challenges faced by SMEs in the Bulawayo metropolitan are increased competition, access to capital difficulties, skill and technology gaps, and regulatory and bureaucratic hurdles. The findings revealed that FDI plays a multifaceted role in shaping the SME landscape in Bulawayo metropolitan. The positive effects included opportunities for technology transfer, market expansion, improved infrastructure, capacity building, and training opportunities, and inclusion of the small and medium enterprises in supply chain integration. The study recommends a broader discussion with policymakers, business leaders, and other stakeholders to maximise the benefits of foreign direct investment on small to medium enerprises while mitigating its adverse effects.

МІЖНАРОДНІ ФІНАНСОВІ ПОТОКИ В КРАЇНИ ЦЕНТРАЛЬНОЇ ТА СХІДНОЇ ЄВРОПИ ПІСЛЯ ГЛОБАЛЬНОЇ ФІНАНСОВОЇ КРИЗИ 2008 РОКУ: СТРУКТУРНІ ОСОБЛИВОСТІ

In our study, we will focus on determining the dynamics and structural changes in the flows of foreign capital to the countries of Central and Eastern Europe after the global financial crisis of 2008. For the analysis, we selected a group of Central and Eastern European countries that joined the European Union: Bulgaria, Romania, Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Estonia, Lithuania, Latvia, as well as the post-Soviet European countries - Ukraine, Belarus, Russia and Moldova. We chose three periods for the study: the first period from the beginning of liberal reforms to the present (1991-2021); the second period from macroeconomic stabilization to the global financial crisis (1994-2008); the third period covers the post-crisis period before the start of the Russian-Ukrainian war (2009-2021). The article examines the structure of the inflow of foreign capital to the countries of Central and Eastern Europe before the global financial crisis of 2008 and in the period after it. It was determined that the share of direct and portfolio foreign investments in the structure of foreign capital increased significantly in the post-crisis period. In the post-crisis period of 2009-2021, there was a significant increase in the average value of the stock of foreign direct investment to 41.2% of GDP and a more than two-fold decrease in the volatility of FDI inflows, which amounted to 5.2, as well as a 1.5-fold increase in portfolio foreign investments and a drastic reduction in the volatility of this type of foreign capital to 2.69. As for other investments, they remained at the pre-crisis level, but volatility decreased by a quarter. An econometric study of the influence of the stock of foreign direct investment and foreign debt per worker on the level of economic well-being in the CEE countries was conducted, which proved the strengthening of the role of foreign direct investment after the global financial crisis and the lack of influence of foreign debt. In our opinion, the governments of the CEE countries have focused on the economic policy of slowing down foreign capital flows and avoiding financial risks associated with foreign debt flows. Today's geopolitical tensions, the Russian-Ukrainian war will contribute to the deepening of these processes, increasing the influence of states on limiting international financial flows.

Asymmetric Effect of External Debt on Foreign Direct Investment (Fdi): Empirical Study from Nigeria

The paper examines the effect of external debt on FDI inflow in Nigeria between 1983 and 2021. Stationarity tests such Augmented Dickey Fuller (ADF), Phillips Perron (PP) as well as Guris (GUR) non-linearity unit root tests were employed to check the properties of the series. Non-linear Autoregressive Distributed Lag (NARDL) model was adapted to explore the relationship between the variables after confirming the mixed order of integration across the three testes. The Bound Test reveals the existence of a long-run relationship between the variables. According to the NARDL results; in the short-run a unit positive change in external debt would lead to decrease in FDI inflow by (1.165) while a unit negative change in external would lead to increase in FDI inflow by (1.360) and both are significance at 5% level of significance in short-run. The long-run results indicates that, the positive and negative change in external debt exhibit positive effect on net FDI inflow but only negative change is statistically significance at 5% level of significance. It is recommended that government should take steps in redemption of existing external debt and refrain from taking on any unnecessary new debt as these actions will not help the country's short run net FDI inflow and consequently, its overall economic growth.

The Impact of Macroeconomic Factors on Foreign Direct Investment in Indonesia from 2007 To 2022: A Vector Error Correction Model (VECM) Approach

This study will examine the impact of macroeconomic factors on FDI. The gap in this study lies in the significant changes in economic conditions and investment policies in Indonesia since 2007, which previous studies have not fully explained. The possibility of new factors affecting FDI flows requires more sophisticated analyses. In addition, the relevance of internalized investment theory in the current context of economic globalization has not been widely explored in FDI research in Indonesia. This study uses Secondary time series data and quantitative research techniques. Quarterly data from 2007 to 2022 is the data set used. The research employs the Vector Error Correction Model data analysis technique, with a significance level of 5%. The findings indicate that the exchange rate has an insignificantly negative short-term impact on FDI and a significant negative long-term impact. Then, inflation has a short-term positive and insignificant impact on FDI but a significant negative in the long term. Meanwhile, the interest rate has a significant positive effect on FDI in the long term, but in the short term, it has a negative and insignificant effect.