Foreign Investment Flows Research Articles

Debate: Building a U.S. Regulatory Empire in the Chip War with China.

Regulating the circulation of technology is a powerful weapon to exercise global power. In August 2022, U.S. president Joe Biden moved to strangle China's high-end semiconductor industry by imposing a swath of export controls aimed at restricting the country's access to global semiconductor supply chains. While this chip war is usually framed as a bilateral conflict between Washington and Beijing, the success of the U.S. strategy depends on the active cooperation of allied firms and governments. This article fills a critical gap in the standard narrative. It describes how the U.S. government has constructed an empire by regulation, leveraging its global political and economic power to impose extraterritorial export controls on allied trade. By seeking to regulate the flow of technology, knowledge, people, and foreign investment into China, the U.S. risks alienating traditional allies and has triggered China to seek self-sufficiency in the production of advanced semiconductors for civilian and military applications.

Сравнительная картина и проблемы иностранного портфельного инвестирования в реальном секторе экономики / Comparative picture and problems of foreign portfolio investment

The article is devoted to the comparative picture and problems of foreign portfolio investment in the real sector of the economy. The article analyzes the main obstacles that arise in the process of attracting foreign portfolio investments. The factors influencing the increase in the flow of foreign portfolio investments, the possibility of their rapid attraction and effective distribution are considered. Sustainable development of the economy of any country today is impossible without active participation in world economic relations. Along with international trade, international flows of investment capital, carried out on the basis of effective cooperation between countries, are becoming increasingly important. In recent years, the issue of attracting external capital to the Armenian economy has become topical. Foreign investment is one of the most important conditions for stabilization and growth of the country's economy. This is primarily due to the fact that firms’ own financial resources are limited, which is due to a number of reasons in Armenian reality, such as high return on invested capital, high taxes, etc. The movement of global financial capital through the channels of the global financial system occurs in various forms, among which international portfolio investments, including investments in equity and debt securities, occupy a special place. Financial globalization is accelerating the trend towards expanding the market segment of international portfolio investments.

Does Income Tax Competition Remain Relevant In Attracting FDI? The Case of ASEAN Countries

This study evaluates the impact of corporate income tax on foreign direct investment (FDI) in 6 Southeast Asian countries from 1999 to 2022, under the context of the preparation for the Global minimum tax application in many countries in and outside the region. Using classical panel data models (Fixed Effects and Random Effects model), the findings show no significant impact of corporate income tax on FDI inflows to ASEAN nations. Observing the effects of other factors on foreign investments, the study discovers the significant role of infrastructure in attracting FDI for the entire sample. Additionally, we find significant positive impacts of trade openness and significant negative impacts of political stability on FDI inflows for the developing nations in the area. Interestingly, we find positive relationships between economic shocks and FDI and the region's quick recovery of foreign investment flows. Based on the results, we provide several valuable academic and policy suggestions.

Moderating the Role of Trade Openness on Foreign Portfolio Investment and Economic Growth among East Africa Community Countries

Purpose: This study investigates the impact of foreign portfolio investment (FPI) on economic growth in East Africa using panel data for Kenya, Uganda, Tanzania, Rwanda, and Burundi from 1974-2022. Methodology: The analysis employs a panel vector error correction model to estimate the short and long-run effects of FPI on growth. The study relied on secondary data sources for the period 1974-2022 with an annual frequency, implying 49 years of data. Data on foreign investment variables and macroeconomic control variables were sourced from the World Bank database, National Statistical Bureaus, Central Banks, and Stock Exchanges of the respective countries. Findings: The results indicate that FPI significantly positively impacts economic growth in East Africa. A 1% increase in FPI inflows as a share of Gross Domestic Product (GDP) boosts annual real GDP growth by approximately 10.7% in the long run. The findings are robust to the inclusion of moderating variables like trade openness. Unique Contribution to Theory, Practice and Policy: The empirical analysis aimed to validate the Modern Portfolio Theory by examining if greater foreign portfolio investment flows contributed positively to economic growth in the East African region. The results lend support to policy efforts in East Africa to attract greater FPI through capital market reforms, regional integration, and macroeconomic stability. However, further developing financial markets and enhancing absorptive capacity is essential to leverage FPI more effectively for sustainable growth financing.

Do bilateral investment treaties help post-coup countries attract foreign investment?

Studies of international investment treaties have debated whether these agreements independently increase foreign investment flows. This article contributes to the debate by contextualizing the impact of bilateral investment treaties on post-coup domestic political environments. We argue that these treaties enable capital-receiving countries to live up to their commitments of investment protection and promote foreign investment when signatories’ capacity for investor protection has been compromised by the political turmoil of coup events. Using a sample that covers 81 countries between 1970 and 2017, we find that bilateral investment treaties are positively associated with foreign investment in post-coup countries, and that this association is strongest in the immediate years following the coup and attenuates gradually over time. This finding potentially lends support to theorizations of bilateral investment treaties as substitutes, rather than complements, to domestic institutions in fostering investment activities.

Modeling the influence of mineral rents and low‐carbon energy on environmental quality: New insights from a sustainability perspective

AbstractIn recent decades, the detrimental impacts of climate change have been increasingly felt worldwide. This is due to the extreme consumption of natural resources to fuel economic activity. Confronting a widening ecological deficit, humanity must urgently accelerate its journey toward sustainable development goals (SDGs). This demands active efforts to curb environmental pollution and protect natural resources, safeguarding the planet for future generations. Since Brazil has high biocapacity and ecological areas, the impact of energy resources on ecological sustainability policies cannot be excluded. Moreover, Brazil holds a vital position in the world for global foreign direct investment flows. In this regard, this paper considers the asymmetric impact of mineral rents and foreign direct investments when investigating Brazil's environmental sustainability. In addition, it evaluates elements like economic growth and low‐carbon energy consumption from 1970 to 2021. To this end, the research applies the Fourier nonlinear autoregressive distributed lag model and draws three significant conclusions. First, resource extraction undermines environmental sustainability. Second, the inflow of foreign direct investment reduces the load capacity factor, implying that the pollution haven hypothesis holds for Brazil. Third, low‐carbon energy consumption contributes to environmental sustainability. Our findings highlight the critical role of regulating mineral resource rents in achieving SDGs in Brazil. Moreover, increasing investment in clean energy sources and transitioning toward low‐carbon energy can promote sustainable development in Brazil. The Brazilian government should abandon mineral extraction, focus on low‐carbon energy consumption, and prevent companies from destroying nature by introducing strict environmental regulations for foreign investment flows.

THE CHALLENGES OF INVESTMENT ARBITRATION: SUCCESS OR FAILURE? A COMPARATIVE ANALYSIS OF INVESTMENT ARBITRATION IN NORTH MACEDONIA AND KOSOVO

Background: In today's modern business and technological landscape, businesses are increasingly inclined to seek alternative methods for resolving disputes rather than rely solely on traditional court procedures. Businesses are also increasingly aware of the significance of resolving conflicts through alternative means and taking proactive measures to avoid litigation. In recent decades, investment arbitration has gained widespread acceptance and has emerged as a preferred mechanism for resolving disputes involving international investors in Western Balkan countries. Some countries demonstrate a favourable inclination towards employing arbitration as a dispute resolution mechanism by enacting legislation that grants investors the right to initiate arbitration proceedings against the state in case of failure. This scientific research objective will be achieved through the reflection of the legislative framework in the matter of investment arbitration as well as the reflection of the flow of foreign investments, analysing and not limited to the treatment of concrete cases of arbitration disputes. Through this approach, we will answer the central question of how much arbitration as an alternative dispute resolution mechanism is a stimulating factor for attracting foreign direct investment or whether multinational companies only use the legislative and incentive favours offered by the Republic of Kosovo and North Macedonia. Methods: The article was conceived based on a modern methodological framework. Within the general methodological framework of scientific research, logical methods play a crucial role in the scientific processing of the research data, drawing conclusions and determining facts through which the truth of the thesis of the work is reached scientifically. In the context of this paper, the method of analysis through which the impact of arbitration as an alternative dispute resolution mechanism in relation to the flow of investments will be analysed is noteworthy. Additionally, methods of abstraction and concretisation will also be used. Abstraction is the basis of analysis, which sometimes represents the separation of parts from the whole subject. Moreover, the comparative method will highlight the diverse normative solutions in national legislation and international legal sources. Results and conclusions: In the article, the authors propose considering the effectiveness of existing provisions and determining whether adjustments or alternative approaches are needed to maximise the benefits of foreign investment while minimising potential risks and uncertainties associated with dispute resolution processes.

Analysis of the evolution of trends in exchange rates and interest rates in the Iraqi economy for the period )2004-2020(

Every economy in the world is characterized by its adoption of a specific interest rate, as well as its own exchange rate, according to its capabilities and degree of development. Therefore, these two variables are the tool for linking the value of goods, assets, and wages in the local markets, and their counterparts in foreign markets, and through them many relationships arise. International, the most important of which is the possibility of directing and transferring capital to one country and not another, as these two variables (interest rate, exchange rate) have a direct role in international transactions. Through the interaction of the interest rate and the exchange rate, we have an economic relationship that has a direct impact on the flow of foreign investments between countries. Therefore, these concepts and their relationship to the overall economy and what are the most prominent factors affecting them will be discussed. The study sought to demonstrate the impact of these two variables on the Iraqi economy through the research objective. The research aims to describe and analyze the paths of interest rates and exchange rates during the period (2004 - 2020) in order to determine their behavior during the research period. The most prominent conclusions reached by the research were that the exchange rate is considered a measure of international competitiveness, which exerts a major influence on the local economy, as does the interest rate, as it reflects the economic position in general, and commercial position in particular, because it represents the linking tool through which prices are determined. The relative proportion of local goods to foreign goods. That is, it is the linking tool through which the purchasing power of the local currency is determined against other foreign currencies, as the local currency is considered a commodity, and the foreign currency is its monetary price. The research concluded with a set of recommendations, the most important of which was in order to encourage investment instead of the Iraqi investor’s tendency to invest in foreign currencies, work must be done to activate the interest rate in Iraq

Targeted Liberalization: China's foreign investment regulation reform and its post‐WTO‐accession export surge

AbstractTo gain membership in the World Trade Organization (WTO) in 2001, China substantially modified its regulation of foreign direct investment. These reforms coincided with rapid changes in the composition of capital inflows, as the dominant entry mode shifted from joint venture to wholly foreign owned affiliate. Foreign‐invested enterprises contributed a rising share of China's rapidly growing exports. We investigate how much China's foreign ownership liberalization contributed to these observed trends in foreign investment flows and Chinese exports. Accounting for both the set of activities from which it removed foreign equity caps and those into which it newly encouraged investment, we estimate the impact of China's reforms on firm entry and exports using a difference‐in‐differences estimator. To eliminate bias resulting from heterogeneous and dynamic treatment effects, we also apply novel dynamic difference‐in‐differences estimators. We find that removal of foreign equity caps induced entry of wholly foreign owned firms, while having no significant effect on entry of new joint ventures. Concurrently, the designation of new activities for investment incentives induced foreign entry, particularly in the form of joint ventures. Reduced‐form calculations imply that FDI policy changes explain almost 9% of the increase in exports from foreign‐invested firms over the decade studied. The effect was larger in sectors identified as “high‐tech industries” by the Chinese government, as they contribute most of the estimated policy‐driven export growth from foreign‐invested firms. Thus, China's FDI regulation reform following WTO entry was targeted liberalization: elimination of equity share limits induced new foreign entry, while investment incentives encouraged formation of joint ventures.

Reassessing Saudi Arabia’s foreign investment laws: from protectionism to liberalization

PurposeThis paper aims to examine the extent to which these reforms address the limitations of Saudi Arabia’s previous investment framework. Long viewed as a hostile environment in which to do business, the Saudi Government has enacted a broad sweep of measures aimed at restoring investor confidence in central aspects of the country’s evolving private law framework.Design/methodology/approachThis paper offers a timely assessment of the raft of foreign investment reforms, both legislative and regulatory, that have been introduced in Saudi Arabia over the last decade.FindingsThe paper will proceed by outlining the perceived failings of the old investment regime before going on to reforms.Originality/valueIt will consider the remaining obstacles to the flow of foreign investment in Saudi Arabia in the context of the dual forces that have historically defined the Kingdom’s ambivalent investment law regime.

Analisis Pengaruh Investasi Singapura terhadap Pertumbuhan Ekonomi Indonesia

Singapore's foreign investment has an important role in economics development in Indonesia's. In the era of increasing globalization and economic integration, the flow of foreign investment has become a key factor in improving the welfare of the Indonesian people. Singapore, as Indonesia's largest trading partner, has made significant investments in various sectors in Indonesia, with quite a large impact on the economy and society. This research uses a qualitative approach to analyze the impact of Singapore investment on Indonesia's economic growth. The research results show that foreign investment brings capital, technology and management that increase the productivity and competitiveness of Indonesian industry. This investment plays a role in developing infrastructure that supports long-term economic growth. This research has global relevance because Singapore is one of the largest financial and trade centers in the world, and Indonesian can be a role model for other countries. It is hoped that the results of this research will provide valuable insights for the development of economic policy in Indonesia and strengthen economic relations between Indonesia and Singapore.

Digital transformation and corporate restructuring: does corporate governance matter?

PurposeAdopting digital transformation is changing the methods through which companies' function, generating novel possibilities and difficulties that force firms to adjust to remain competitive in the digital era. It is critical for firms to embrace this change and utilize technology to develop a more flexible, proactive and effective approach as digital transformation continues to advance at an accelerating pace. Vietnam has been placed at the forefront of these changes in attracting investments and becoming a hub of international trade. As a result, Vietnamese firms have been implementing restructuring and adopting digital transformation to remain competitive with the flow of foreign investment. This paper aims to examine the effects of digital transformation on corporate restructuring in Vietnam. The authors then investigate the moderating role of corporate governance in the digital transformation – corporate restructuring nexus.Design/methodology/approachThe authors employ content analysis to extract information from the annual reports of 747 Vietnamese listed companies, where the authors focus on specific phrases, such as “digitalization”, “big data”, “cloud computing”, “blockchain” and “information technology” over a period of 11 years, from 2011 to 2021. The frequency count of these keywords is calculated to represent the level of digital transformation for the Vietnamese listed firms. A final sample of 118 Vietnamese listed firms with sufficient data is selected for the analysis using the generalized method of moments (GMM) approach.FindingsThe results indicate that digital transformation and corporate governance negatively impact corporate restructuring when their effect on corporate restructuring is examined independently. However, corporate governance strengthens the effect of digital transformation on corporate restructuring.Originality/valueThis paper is one of the first to investigate the moderating role of corporate governance on the effect of digital transformation on corporate restructuring in Vietnam. The findings inspire listed firms in Vietnam to implement digital transformation during their corporate restructuring to enhance performance.

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.

Tech Tides: Analyzing Foreign Investment Flows and Volatility in the Information Technology Sector

Tech Tides: Analyzing Foreign Investment Flows and Volatility in the Information Technology Sector

Political and security instability and its effects on foreign investment: with reference to Iraq's experience after 2003

The research deals with the conceptual framework of political and security stability and foreign investment, the theoretical framework for the impact of political and security stability on foreign investment, and the practical aspect that affected political and security stability on foreign investment in Iraq for the period 2003-2021. The research aims to explain the reasons for the modest levels of foreign investment in Iraq and the fluctuation of its flows. Since 2003 and studying the causes of this imbalance, and among these reasons the security and political instability for the period under study, the Iraqi society was chosen as a sample for the research, and simple statistical tools were used in the analysis. The measurement method (SPSS) and linear programming were excluded because the results obtained are negative and do not explain Scientific explanation of the relationship between the two variables. Therefore, the method of direct analysis was resorted to through the tables obtained related to the index of political and security instability, and the results were positive and depended on solid scientific facts.
 On the outside world and then lift the economic sanctions imposed on Iraq, and the issuance of the investment law for the year 2006 had a great impact in encouraging the flow of foreign investment to Iraq. Although these flows are still modest and weak, and most of them are in the oil sector, and what indicates the obstacles to foreign investment are the security and political instability and cases of administrative and financial corruption were among the reasons that prevented the provision of an appropriate investment climate capable of attracting foreign investments. And the research recommended that Political stability is an attractive factor for foreign investors to invest their money inside the country because stability is one of the important elements for the investor and the economy of Iraq must be developed because Iraq’s economy is a one-sided renter economy that depends on oil and the development of the rest of the sectors to advance the economic reality and build a strong state. The instability index is considered one of the dangerous and important indicators, and due to the fluctuations of government systems and their unstable policies in recent times, this has led to a deterioration in conditions and a decrease in the demand for invest.

FDI, FDI’s Impact on Economic Growth and the Investment Environment in Georgia

Georgia, with its open policy towards foreign investment flows, was one of the first countries in the Post-Soviet space. From the day of gaining independence, FDI has become the most important indicator of the country, and the assessment of the volume of foreign investment flows carried out in the country, statically or dynamically, has not lost its relevance to this day. Present article explores the volume of foreign direct investments made in Georgia, in dynamic; From the total indicators, in terms of geography, the largest investor countries are identified; In the period 2013-2022, the structure of FDI is expanded according to components and the percentage distribution of share capital, reinvestments and debt obligations from the total indicators is highlighted; The impact of FDI on economic growth indicators has been determined using correlation-regression analysis. The article also provides global figures for foreign direct investment, including countries receiving the largest FDI flows; In order to assess the investment environment, in dynamics, the sovereign credit ratings of Georgia evaluated by the leading rating companies are presented. Statistical observation, collection-grouping and analysis techniques and methods are used in the research process.

Chinese monetary policy spillovers on its international portfolio investment flows

This paper examines Chinese monetary policy spillovers on its international portfolio investment flows with a factor-augmented vector autoregression (FAVAR) model. The paper extracts a FPI factor from certain time series to measure monthly foreign portfolio investment flows (FPI). Four Chinese monetary policies are considered: central-bank target policy rate; required reserve ratio; M2; banks' loans. The robust and significant results show that interest rates and banks' loans have significant impact on Chinese international portfolio investment flows, while changes in reserve requirements are not effective. It reveals the increasingly important effects of Chinese monetary policies on its cross-border portfolio investment flows following decades' capital account openness and the reform of interest rate liberalization in China, which indicates that Chinese monetary policy is approaching to a market-based framework.

ТРАНСФОРМАЦІЯ СВІТОВОЇ ФІНАНСОВОЇ АРХІТЕКТУРИ ПІД ВПЛИВОМ ФІНАНСОВОЇ ГЛОБАЛІЗАЦІЇ

At the current stage of the evolution of the global economy, there is an intensive increase in the pace of financial globalization (FG), which leads to qualitative and quantitative changes in its institutional environment. In parallel, the interaction and interdependence of all components of theglobal financial system is being restructured. Thus, the purpose of the article is to analyze the transformational dynamics of the world financial architecture (WFA) under the influence of financial globalization and to develop a scientific and practical mechanism for regulating WFA transformations in the context of financial integration. To achieve this goal, the author generalizes and expands the scope of study of financial globalization (its positive and negative effects) as a key factor influencing the transformation of the WFA. In this context, the average daily cash flow on the Forex market, general flows (inflows and outflows) of direct foreign investments, export-import operations on international markets, and the pace of development of financial technological innovations (FinTech) were investigated. To make the study more thorough, the author analyzed the transformational processes of WFA after the global economic and financial crisis of 2007-2009, which led to a number of structural shifts and led to the emergence of alternative stabilization mechanisms and sources of international liquidity. In addition, modern trends in the development of the world financial architecture in the conditions of the FG were revealed. Thus, the COVID-19 pandemic highlighted the interconnectedness of financial markets and the vulnerability of economies to external shocks and caused a sharp decline in stock market indices, significant fluctuations in exchange rates and general economic instability. Even more devastating consequences are threatened by a full-scale invasion of russia into Ukraine, which caused a significant slowdown in the economic growth of many countries due to a large-scale break in international production and trade ties, changes in the direction of FDI flows, aggravation of crises on international markets, in particular food and energy, and an increase in labor migration, world inflation. The result of the conducted research was the development of a mechanism for the transformation of the world financial architecture in the conditions of financial globalization. Thus, it was proposed to single out seven main vectors of the transformation of the world financial architecture, including: strengthening of global economic governance; improving the financial safety net; improvement of the political and regulatory framework of the financial system; easing the debt burden and reducing the cost of government borrowing; strengthening regulation and supervision of banking and non-banking financial institutions; restructuring of the global tax system, increasing international public development.

The nature of economic transformations in the transitioning countries ... Poland as a model

After the end of World War II, Poland fell into the Soviet sphere of influence, the Communists took power, and Poland became known as the People's Republic of Poland. The new regime at that time did not take into account Polish interests, so the Poles resisted this regime and wanted to change it. Several years witnessed widespread protests that ended without radical solutions, except During this stage, Poland was able to establish independent social and political organizations that formed a current opposing the authority in popular Poland, and it had a major role in changing its fate in a peaceful way later, as power in popular Poland was forced after the changes that took place in the Soviet Union at the end of the eighties of the last century and The turmoil was renewed at the time and pressure escalated to negotiate with the opposition. These negotiations resulted in the victory of the opposition and the formation of the first non-communist Polish government led by Mazowiecki, and the name of the country was changed from the People's Republic of Poland to the Republic of Poland. After the political and economic separation from the communist bloc, Poland quickly began implementing an unprecedented reform plan known as the Economic Transformation Program. The aim of this program was to achieve economic stability, promote structural reforms, and put the country on the right path to transformation. Poland was able to implement its reform program in stages, and during the first stage it was able to achieve positive results that enabled it to join the European Union and benefit from the advantages offered by the Union to the countries joining it. The implementation of the economic transformation program had a major role in improving economic performance indicators in Poland, where high growth rates, increased foreign trade, the flow of foreign investments towards it, and reduced inflation and unemployment rates, as well as the privatization of public projects led to an increase in the contribution of the private sector to nearly two-thirds of the GDP Overall, the improvement of these economic indicators confirms the success of the economic transformation experience in Poland.

Impacts of FDI and Environmental Pollution in ASEAN Countries: The Role of Institutions

The study aims to examine the role of institutions in the relationship between foreign direct investment and environmental pollution in ASEAN countries from 2000 to 2019. With the General Moment method, the results show that foreign direct investment impacts increasing environmental pollution. At the same time, aspects of institutional quality such as the rule of law, government efficiency, political stability, quality regulations, and voice and accountability reduce environmental pollution. Furthermore, the study shows that institutional quality is essential in reducing the negative impact of foreign capital inflows on environmental pollution in ASEAN countries. From these results, the study recommends that ASEAN countries implement environmental protection plans when attracting foreign investment flows.