Foreign Capital Research Articles

Социально-экономическое развитие Аргентины в первой половине XIX в.

This article examines formation of socioeconomic structure of Argenti-na after the War of independence. The author focuses on the main fea-tures of a new social order: land boom, estancia expansion, ranching export, expansion of foreign capital. After the War of Independence, large land ownership, latifundists became dominant in the country. Creole merchants, while maintaining their positions in the export-import trade, began to create large estancias. The high profitability of cattle breeding, in comparison with agriculture, led to the transfor-mation of cattle breeding into the main sphere of capital application. Along with the oligarchy, foreign capital became the most important component of the emerging structure. English capital appeared in Ar-gentina as a trading capital, but began to invest in estancias and saladeros – cattle processing enterprises. Argentine industry – manufactories and craft workshops in Buenos Aires and rural industry in the interior provinces – could not compete with foreign goods. Argentina has become an economic colony: the export of cattle products in exchange for the import of manufactured goods.

Notary’s Liability for the Cancellation of the Deed of Establishment of A Foreign Investment Limited Liability Company due to Violation of the Notary Profession

AbstractThe need for notary services, especially in terms of the preparation of deeds of establishment of limited liability companies is increasing, along with the rapid development of the business world, which is also supported by the development of information technology. The establishment of a limited liability company according to Article 7 paragraph (1) and paragraph (2) of the Limited Liability Company Law, is based on an agreement between 2 (two) or more persons, by obliging each founder to take a share and stated before a Notary in a deed of establishment in Indonesian language containing the company's articles of association. In addition to requiring a deed of establishment, the establishment of a limited liability company also requires capital. The capital can come from domestic or foreign/foreign sources. Therefore, the type of limited liability company based on the type of capital is divided into 2 (two), namely Domestic Capital Limited Liability Company (PMDN) and Foreign Capital Limited Liability Company (PMA). The type of research in this legal research is normative or doctrinal legal research conducted by examining secondary data consisting of primary legal materials, secondary legal materials, and tertiary legal materials. In practice, problems sometimes arise, especially in Limited Liability Foreign Capital Companies (PMA), as in the case decided by the Denpasar District Court Decision Number: 485/Pdt.G/2015/PN.Dps. The Panel of Judges of the Denpasar District Court decided that Deed No. 52 concerning the Establishment of PT Mexicano Asia made before Notary I Putu Chandra, S.H., was declared null and void.Keywords: deed cancellation, notary; limited liability company establishment; foreign investment.

“I’m Sorry, but That’s Bribery”: A Decolonial Perspective From Which to Study Moral Economies in the ‘Chinese Pacific’

“I’m sorry, but that’s bribery,” said reporter Tom Steinfort to Vanuatu Minister of Foreign Affairs Ralph John Regenvanu regarding the supposed support of the island state to China in United Nations resolutions, hypothetically framed as reciprocation for an unprecedented influx of foreign capital. This conceptualization of bribery rests upon recent value negotiations concerning the moral economy of corruption within the context of the ‘China threat’ debate in Oceania. A decolonial methodology is necessary to prevent this superimposition of colonial interests upon indigenous views in journalistic reports, social media outlets, and academic publications. It is, therefore, necessary to interrogate the position from which reporters, journalists, and scholars speak or write about corruption in diplomatic relations in an increasingly Sinicized Pacific. This approach appreciates localized forms of theorizing indigenous ideas about appropriate economic behaviors in the context of new geopolitical relations. In the absence of a decolonial methodology, such ideas might become invisible, along with the intrinsic features of new Sino-Pacific relations.

Factors Influencing International Infrastructure Investment: An Empirical Study from Chinese Investors

International economic cooperation accelerates the flow of capital, technology, labor, and other factors between different countries, which promotes global sustainable development. Building infrastructure construction is an important way to strengthen social development, and absorbing foreign capital is an effective way for developing countries to improve their infrastructure and to promote economic development. This study puts forward the factors that have influenced China’s investment in international engineering projects, and it constructs a panel data regression model for empirical testing. The study shows that, first, international infrastructure investment tends to select countries or regions with good condition of highway infrastructure. Second, international infrastructure investment tends to choose countries or regions with low development level of port and power infrastructure. Third, bilateral diplomatic visits play a significant role in promoting international infrastructure investment. Fourth, international infrastructure investment tends to choose countries or regions with good resource endowment. This study reveals the influencing factors and the mechanisms for the choices of location for China’s investment in international engineering projects, providing a theoretical framework for investors to optimize international infrastructure investment and management, as well as providing the policy references for developing countries to attract international infrastructure investment.

SOCIAL DILEMMAS OF THE SWEDISH ECONOMIC MODEL IN THE POST-WAR PERIOD

The article analyzes the stages development of the Swedish economic model from the mid-nineteenth century to the crisis in period 20082010. Sweden is the richest Scandinavian country and one of the most industrialized countries in the world. Sweden is an economically highly developed and efficiently organized country. For the last few years, the economy has been in a phase of economic growth. In the period 20182021, the gross domestic product (GDP) grew at a rate of almost 2.0% in the conditions of low inflation (approx. 3% annually) and a relatively high unemployment rate (7.0% in 2019 and 8.8% in 2021). The economic results achieved by Sweden are not accidental. This is the result of the harmonized economic policy pursued continuously by the Swedish government, which actively affects the material course of economic growth processes in this country. The development of economic policy in Sweden can be divided into two periods: the first (1970s and 1980s) was characterized by the decline of traditionally understood industrialization. The change in the political arena in the period 1976-1982, which resulted in the removal of the Social Democrats from power, did not stop the subsequent fiscalism and the increase in public and social spending. The rate of economic growth in the long-term horizon was declining. Between 1961 and 1970, the average annual growth of Swedish GDP was 8.9%, 5.6% in the 1970s and 6.9% in the 1980s, respectively.The process of internationalization of Swedish enterprises, liberal approaches to economic cooperation with foreign countries and the recovery of public finances, whose dynamic development took place in the 1990s, are the second characteristic period in Swedens economic policy. For more than two decades, Swedish governments have maintained strong fiscal discipline. After theeconomic reset in the early 1990s, the general downward trend in the share of public spending in Swedish GDP seems to have come to a halt. In the last 3 years (20192021), public spending did not exceed 50% of GDP. Moreover, Sweden has maintained a low level of public debt for years. The ratio of public debt to GDP decreased from 78% (1994) to 35.2% (2019), 39.6% in 2020 and in 2021 36.7%. One of the important factors enabling the rapid economic growth of Sweden was high expenditure on research and development (R&D). For several years, Sweden has been at the forefront of countries investing the most in the development of new technologies. An important factor in Swedens economic growth has also been the high level of foreign investment. According to UN statistics, Sweden is one of the most attractive places to invest foreign capital. The impulse of the Swedish economy over many years was the development of exports, which in 2021 reached the level of approx. PLN 176 billion. Euro, which puts Sweden at the forefront of the world. The share of exports in creating the Swedish GDP in 2021 was as much as 45.5%.The EU membership also had a positive impact on Swedens economic development.Swedens social and economic success has also been achieved on the basis of the lessons learned from the financial crisis of the early 1990s. The unchanging strategy and economic policy, together with competitiveness, innovation and a flexible approach to trade, have made Sweden today a highly competitive country with an economy that achieves measurable successes.

Analyzing the Impact of Foreign Capital Inflows and Political Economy on Economic Growth: An Application of Regime Switching Model

The goal of this study is to use the Markov Regime Model (MSM) to evaluate the impact of three important FCIs and the political economy on Pakistan’s economic growth. The current research used quarterly data from 2000 to 2020. The empirical results demonstrate that dictatorship contributes favorably to the high and low growth regime of the economy, while election time contributes positively to the expansion period and adversely in recession times of the economy. Results confirmed that external debt has a strong negative influence on economic growth in both the high and low-growth regimes. Remittances, FDI, and growth, on the other hand, have a positive and substantial link with economic growth. This research suggested that effective fiscal and monetary policies, as well as a suitable political environment, should be provided so that foreign investors would be enticed to invest in Pakistan.

Asymmetric Effect of External Debt and Foreign Capital Flows on Economic Growth: New Evidence from Nigeria

This research examines the asymmetric nexus between external debt and foreign capital flows on economic growth in Nigeria. The paper employed the non-linear autoregressive distributed lag (NARDL) methodology to investigate the asymmetrical effect of external debt on real Gross Domestic Product (GDP) growth in Nigeria. The estimated long-run parameters for positive and negative shocks of external debt are -1.08 and 3.09, respectively. The outcome indicated that a percentage increase in external debt will result in a 1.08 decrease in real GDP growth and that a one percent decrease in external debt will result in a 3.08 increase in economic growth. This illustrates that the receptiveness of real GDP growth to positive values of external debt is different to that of negative values of external debt. The reaction of real GDP growth to negative values of external debt is larger than to positive value of external debt. This suggests that it is imperative for Nigeria to have manageable external debt and fiscal sustainability as this would bolster its real economic growth as well as urge the fiscal authority to make concerted effort towards curbing corruption and reducing inefficiency to the barest minimum, as these will enhance growth. Keywords: Nigeria, external debt, economic growth, asymmetry, foreign capital inflows JEL Classification: C22, E62, F43, O11

Do Foreign Grants and Capital Formation Indeed Impact Economic Growth? An Empirical Evidence from Bangladesh

The paper examined how the growth of the foreign grants and the growth of gross fixed capital formation impact the growth of GDP in Bangladesh. We studied the relationships between those variables for a period spanning between 1983 and 2017. The Johansen cointegration test indicated that there is a long-run relationship between the variables. Therefore, by employing a vector error correction model (VECM), we found that previous year’s divergence between the variables adjusted by 69% in the following year. The study also found that both foreign grants, and the gross fixed capital formation had a positive impact on GDP growth in Bangladesh.

FDI Quality, Green Technology Innovation and Urban Carbon Emissions: Empirical Evidence from China

High-quality introduction and utilization of foreign investment is a new engine for China’s further opening up and plays a significant role in urban carbon emission reduction in the context of carbon peaking and carbon neutrality strategies. By constructing a comprehensive assessment index of Foreign Direct Investment (FDI) quality and using panel data from 283 Chinese cities from 2006 to 2019, this paper systematically examines the impact of FDI quality on urban carbon emissions and identifies the mechanism of green technology innovation in order to clarify the correlation among the three. The results show that FDI quality upgrading can significantly reduce urban carbon emissions, which is mainly manifested by FDI management and FDI export capacity to suppress total carbon emissions. The above effect of FDI quality is more significant in cities with a low rationalization degree of industrial structure, high investment in science and technology, strong environmental regulation and high dependence on foreign capital. Green technology innovation is an intermediary mechanism for FDI quality to have a carbon emission reduction effect. Looking at different areas, foreign companies in the eastern regions can promote carbon emission reduction through independent innovation, while the central and western regions essentially rely on imitative innovation; however, there is a delay in the role of innovation quality. Further study suggests that the carbon emission reduction effect of FDI quality has an obvious characteristic of threshold, which will be slightly weakened with the increase in the quantity of imitative innovation but strengthened with the improvement of the quantity of independent innovation and the quality of innovation. The conclusion aims to provide policy implications for China to explore a sustainable pathway that combines promoted opening with carbon reduction targets.

Foreign Institutional Ownership and Firm Value: Evidence of “Locust Foreign Capital” in Brazil

ABSTRACT In this paper, we investigate the role of institutional investors on firm value in Brazil. Given this purpose, we construct a longitudinal dataset of Brazilian companies in which 2,019 distinct institutional investors from 47 countries had equity holdings from 2009 to 2018. In contrast with previous studies, panel data regressions indicate that foreign institutional ownership decreases corporate value, even when we mitigate for endogeneity concerns through the generalized method of moments estimator. Additionally, the negative effect of foreign institutional ownership on firm value is greater during times of high political uncertainty. Our findings suggest that foreign institutional investors may induce family-controlling shareholders to adopt short-term strategies that destroy company value, which is consistent with the “locust foreign capital” view.

On the Nexus of Foreign Capital Inflow, Volatility, Financial Development and Economic Growth in Sub-Saharan Africa: A Sectoral Approach

There is increasing concern among policymakers over the effect of capital inflows and volatility on economic growth. The empirical literature on the foreign capital - growth nexus in subSaharan Africa has, however, focused on aggregate growth overlooking sector-specific dynamics that might lead to varying responses. This study, therefore, examines whether the impacts of capital inflows and volatility in the region vary across different sectors, namely service, industry, and agriculture over the period 1990 to 2017. It also assesses the role of financial development. The study employed the dynamic panel ordinary least square technique due to its ability to correct for serial correlation and endogeneity. The results reveal that capital flows and volatility have varying effects on the three sectors. In the service sector, only aid exerted a significant negative effect while FDI and cross-border bank lending volatilities showed a depressing effect. Regarding the agricultural sector, only FDI had a negative impact, with the rest showing significant positive relationships. Concerning industrial growth, FDI and remittances had the potential to drive growth, while aid exhibited negative impacts. The findings thus have some policy implications. Policymakers in sub-Saharan Africa could target FDI and remittances to develop the industrial sector while aid and remittances could be channeled into the agricultural sector.

Analyzing the Impact of Foreign Capital Inflows on the Current Account Balance in Developing Economies: A Panel Data Approach

This research has explored the effects of foreign capital inflows on the current account deficit in developing countries from 1995 to 2020. The study considers various factors such as import demand, export demand, foreign direct investment, foreign debt, economic growth, foreign remittances, and foreign reserves as independent variables. The analysis utilizes the panel autoregressive distributed lag approach to examine both the long-run and short-run relationships between the dependent and independent variables. Moreover, the study employs the Panel Granger causality test to evaluate the causal connections among the selected variables. The results indicate that import demand, foreign debt, and remittance inflows positively affect the current account deficit in developing countries. Conversely, export demand, foreign direct investment, economic growth, and foreign reserves have a negative impact on the current account deficit. Consequently, it is recommended that developing countries prioritize the augmentation of stable and substantial foreign reserves as a strategy to alleviate the level of the current account deficit.”

Macroeconomic Policies and Foreign Capital Inflows in Nigeria

Abstract The growth of manufacturing sector output in Nigeria is currently sluggish, if not stagnant, despite massive inflows of Foreign Direct Investment (FDI) as well as macroeconomic policies initiated by successive Nigerian governments. The study investigated how macroeconomic policies and FDI inflows have impacted on the manufacturing sector in Nigeria. The Augmented Dickey Fuller (ADF) unit root test was adopted to determine the stationary properties of the data, and the order of integration of the variables was tested using the Johansen cointegration test. The impact and interactions of macroeconomic policies on the manufacturing sector are less understood and shallow in the extant literature. The government’s macroeconomic policies encourage FDI in the communications and oil sector with a negative impact on the manufacturing sector. This is implicated in inadequate capital investments and technological diffusion. Nonetheless, the study shifts the paradigm in popular arguments that FDI is imperialistic, hence universally exploitative, to a new hypothesis that the failure of the manufacturing sector to tap into FDI and yield desirable growth output is linked to less viable globally competitive macroeconomic policy frameworks in Nigeria. The study therefore recommends that the Nigerian government should review its macroeconomic policies, particularly the monetary and exchange rate, and draw up proactive human capital development plans that can directly contribute to the development of the productive capacity of the country’s population.

Anaysis of Interest Rate Spread, Financial Development and Foreign Capital Inflow Nexus in Nigeria

ABSTRACT: The world has gone through various economic crises in the past century, and their effects have had varying implications on the economies of countries all over the world. In a bid to help stabilise economies all over the world, various measures have been put in place. Some of these measures include regulations and policies by the Bretton Woods institutions (World Bank and International Monetary Fund) and their agencies. The idea behind these measures is to ensure sustainable growth and development among member states and other countries of the world. Some of these policies include the privatization and liberalization policies of the Bretton Woods institutions as well as other policies bordering on such economic and social benefits for people all over the world. The Nigerian economy in our contemporary time can be described as passing through a rather 'volatile' phase with respect to interest rate, financial development and foreign capital inflow. Thus, this study investigated the impact of interest rate spread and financial development on foreign capital inflow in Nigeria. Several studies have been carried out using different methodologies, such as; co-integration equation, multivariate vector auto regressive (VAR) model and vector error correction technique. Each methodology used was in line with the objective of the research in question. However, to achieve its objective, this paper adopted the Classical Linear Regression Model. The results of the study showed that financial development has a positive impact on foreign capital inflow, while interest rate spread on the other hand, was also found to have a positive impact on foreign capital inflow. Other control variables such as market capitalization and treasury bills rate were also found to positively affect foreign capital inflow, while the all share index had a negative impact on foreign capital inflow. Some economists have opined that the Nigerian economy is currently going through a phase of recession. In order for large scale investments to be made within the country, there is a need for foreign participants to be attracted to the Nigerian economy and pull their resources, both financial and non-financial into the country (but, not without regulation). However, for these investors to have confidence to make investments in the Nigerian economy, there has to be a high degree of economic stability in the country. This can be supported by enacting and implementing policies that can enhance the quality of interest rates spread and financial development within the country. The policy implication here involves enhancing financial development through sound policies and adopting competitive interest rates, could increase the rate of foreign inflow into the economy. In view of this, it is also recommended that government policies should target interest rate competitiveness, financial and economic development as well as sustainability.

Legislative framework for public–private partnerships in the Sultanate of Oman

An effective regulatory framework is essential to attract international investment in infrastructure development and public services through public–private partnerships (PPPs). A transparent and predictable regulatory environment makes PPPs work in the long term, as this enables private sector participants to manage long-term risks in the most effective and efficient way. The legal framework for PPPs in Oman consists of four key pieces of legislation. The Foreign Capital Investment Law (Royal Decree 50/2019) outlines the procedures for application of an investment project licence and provides for investment incentives and guarantees to international investors. The Law of Privatization (Royal Decree 51/2019) provides a transparent framework for awarding of privatisation contracts. The Public Private Partnership Law (Royal Decree 52/2019) outlines the procedures for tendering and award of PPP projects and the essential elements of PPP contracts. The Bankruptcy Law in Oman (Royal Decree 53/2019) updates the law on corporate distress and introduces the concepts of corporate restructuring, preventative composition and bankruptcy-filing procedures. These four royal decrees are evaluated in this paper. The royal decrees promulgated in succession by the Sultanate of Oman bring privatisation and PPP policy in line with international best practice and constitute a central component of the nation’s strategy and supply side reforms to diversify the economy.

Capital flow and environmental quality at crossroads: designing a sustainable policy framework for the newly industrialized countries.

It is extremely difficult for emerging economies to achieve the Sustainable Development Goals (SDGs), and in order to close this policy gap, a comprehensive policy framework is needed. The purpose of this research is to determine the proportional impacts of domestic and foreign capital to environmental degradation in newly industrialized nations (NICs). For this reason, panel data methodology is used to evaluate, for the years 1991 to 2018, how the ecological footprint is affected by stock market capitalization, foreign direct investment, economic growth, urbanization, and energy intensity. Using the squared terms of stock market capitalization and foreign direct investment, respectively, it is also looked at whether domestic and foreign capital may have non-linear effects on the environment. According to the empirical findings, whereas local capital growth worsens the environment, increasing international capital prevents environmental degradation. There is an inverted U-shaped link between domestic capital and environmental degradation in the event of non-linearity, but foreign capital has a monotonically declining effect on environmental degradation. The study outcomes are utilized to design a policy framework to address the objectives of SDG 7, SDG 11, and SDG 13.

Chinese capital, regulatory strength and the BRI: A tale of ‘fractured development’ in Cambodia

The scholarly debate on how developing countries can effectively manage Chinese-sponsored infrastructure and investment (particularly since the launch of the Belt and Road Initiative,BRI) has largely focused on cross-country variations. Less attention has been devoted to within-country variations: why can certain sectors within a country better align Chinese corporate activities with their domestic development objectives than others? This study examines within-country variations by comparing Sino-Cambodian infrastructure cooperation at the national level and Chinese investment in the gambling industry in Sihanoukville. It argues that the host country’s regulatory strength in combination with different varieties of capital determines the effectiveness of the government's attempts at achieving their development objectives. Using a case study approach based on primary interviews conducted in Phnom Penh and Sihanoukville, this article finds dramatically different outcomes in the two sectors under analysis. In the infrastructure sector, we find that the high regulatory strength deployed by the line ministry in conjunction with Chinese state capital achieves the government’s infrastructure development goals. On the contrary, in the gambling industry in Sihanoukville, limited regulatory strength of the local government coupled with profit-driven short-term capital create a ‘Chinese silo’ that yields limited (or even negative) developmental outcomes. Our analysis shows that regulatory strength can shape and affect the outcomes of foreign capital. These results are supported by the analysis of two shadow cases in manufacturing and real estate. We define this state of affairs as ‘fractured development’.

A Foot in Two Camps? South Sudan’s Relations with China in a Historical Perspective

Relations between South Sudan and China are not a new phenomenon. However, since 2011 they have been steadily growing in terms of trade and investments, cultural exchanges, development and humanitarian aid. The breakout of the civil war in December 2013 has contributed to this trend. Amidst the disenchantment of traditional Western partners of South Sudan, massive shifts of aid flows from development to humanitarian response, and the flight of foreign capitals scared by the war, not only did China keep its presence in the country, it also took a more active stance by sending its first combat troops ever in the framework of the UN Mission, and engaging in the peace negotiations. What consequences has China’s growing presence had on South Sudan’s capacity of determining its own political agenda? This article argues that it has provided an opportunity of expanding the space for agency of the South Sudanese governing elite to make choices in opposition to the requests of traditional donors. At the same time, since relations with China are bound to pragmatic considerations from both sides, there is evidence that China’s will to partner with the country is only as strong as the potential benefits accruing from this partnership.

FEATURES, ANALYSIS AND RESULTS OF METHODS OF ATTRACTING FINANCIAL RESOURCES FROM THE INTERNATIONAL FINANCIAL MARKET

This article examines and analyzes the essence and specific aspects of various methods of attracting capital from the international financial market, the processes related to the organization of effective capital attraction and efficient use through the international financial market, IPO practice. In addition, various research methods were used to analyze the optimal use of cheap and long-term financial resources through the use of various methods of attracting capital through the international financial market. Also, the essence, development trends of the international financial market, main aspects of international financial assets, characteristics of IPO practice were analyzed. Scientific conclusions and suggestions on further development of Uzbekistan's participation in the international financial market and attracting and using foreign capital are given.

After 1980 the Increase of Foreign Capital Banks in the Turkish Banking System by Ownership Structure and Its Effects on the Financial Performance of the Sector

In the climate of rapid transformation in the Turkish economy and integration with global economies, new players have emerged in many sectors. For the last decades, the general economic outlook has begun to diversify and become an economy in which not only domestic companies but also foreign capital companies operate. Especially after 1980, policies involving financial liberalization have increased foreign capital inflows into the banking sector of Turkish economy over time. In this context, the ownership status of most of the national private banks has changed by mergers and acquisitions. Also, there is a rapid increase in the number of new foreign banks which were established and started to operate across the sector. The aim of this study is to search the effects of foreign capital inflow into Turkish banking sector for the last decades. For this reason in the first place, a general information has been given about the economic policies and the change in the financial system in Turkey since 1980. After that, a variety of performance measurements have been examined in this study. Namely, apart from the public banks, state-owned commercial banks, privately-owned commercial banks and the banks owned by foreign capital in Turkey have been taken in to consideration and the selected ratios/indicators of the relevant banks have been compared with the sector averages. The observations and comparisons have been made mainly on a period of last ten years, between 2009-2019. While the reasons that attract multinational companies and foreign capital banks to the Turkish economy and the effects of the increase in the number of foreign capital banks in the sector are discussed, the financial performances of foreign banks are examined by comparing them with the performances of other public and private banks