Foreign Direct Investment Research Articles

A study on the correlation between green economy development and foreign investment based on regression analysis

ABSTRACT This study examined the association between foreign direct investment (FDI) and green economic development using data from 30 Chinese provinces and cities between 2011 and 2020. The green economy development efficiency (GEDE) was measured using the super-slacks-based measure (SBM) model, and a regression model was established. The regression analysis revealed that FDI significantly positively affected GEDE, with statistical significance at the 1% level. Among the control variables, gross domestic product (GDP), IS, and UR had positive effects, but informatisation level (INF) had a negative effect. Even after considering the moderating effect, FDI still demonstrated a significant positive impact on GEDE. The coefficient of the interaction term HCFDI was −0.3356, significant at the 10% level, and the coefficient of GOVFDI was 0.0187, significant at the 5% level.

DECOUPLING ECONOMIC GROWTH FROM ENVIRONMENTAL DEGRADATION: STRATEGIES FOR SUSTAINABLE DEVELOPMENT IN UZBEKISTAN

Achieving sustainable development while maintaining economic growth presents a significant challenge for Uzbekistan, given its reliance on resource-intensive industries and fossil fuels. This paper explores strategies for decoupling economic growth from environmental harm, focusing on key measures such as transitioning to renewable energy, improving energy efficiency, fostering green technology and innovation, and enforcing robust environmental policies. The study highlights the importance of sustainable agricultural practices and international cooperation in facilitating this transition. Uzbekistan's potential for solar, wind, and hydroelectric energy, coupled with modernization of its industrial and agricultural sectors, offers pathways to mitigate environmental impacts. Leveraging global partnerships and foreign direct investment, the country can adopt green technologies and align its development goals with international sustainability standards. This approach ensures a balance between economic prosperity and environmental preservation, contributing to a sustainable future.

Exchange Rates and Economic Stability: The Federal Reserve's Monetary Strategy

This study looks at how the American financial and economic institutions have changed in relation to the broader global economic environment. It centers on a thorough assessment of the Federal Reserve's monetary policy trajectory throughout the previous ten to twenty years, with a focus on the introduction of quantitative easing policies and the development of communication tactics. The study analyzes how these monetary policies have adapted to various economic challenges and assesses their effectiveness. Furthermore, the research delves into the fluctuations of the U.S. dollar exchange rate and its profound implications on the national economy, including its impact on foreign direct investment and other economic indicators. Insightful information on how the Federal Reserve influences the monetary policy landscape in the US is provided by the paper's synthesis of various findings. This information is crucial for investors, financial institutions, and policymakers as they navigate the complex world of currency dynamics and global economic interdependencies.

The Impact of Official Development Assistance on Economic Growth of Lao PDR

This study aims to analyze the impact of Official Development Assistance (ODA) on the economic growth of Lao PDR by using the time series data from 2000–2023 and implied with the OLS robust model where the dependent variable is gross domestic product, the main variable is official development assistance, and the control variable consists of foreign direct investment and inflation. The results of the analysis found that ODA has a positive effect on the economic growth of Lao PDR with a statistical significance level of 0.01. But after adding the control variable, ODA is not statistically significant; only the foreign direct investment variable has a positive effect with a statistical significance level of 0.01. While ODA and inflation are not statistically significant, foreign direct investment affecting economic growth in the same direction means that if other factors are constant, when foreign direct investment increases by 1%, the Lao PDR's economic growth increases by 0.538%, and vice versa, if foreign direct investment decreases by 1%, it will cause the Lao PDR's economic growth to decrease by 0.538%.

Outward FDI Strategies from Indonesian Multinational Enterprises

This study explores the Foreign Direct Investment (FDI) strategies of three leading Indonesian multinational enterprises (MNEs)—Indofood, Adaro, and Kalbe—from the food and beverage, mining, and pharmaceutical industries. Using a thematic analysis, the research identifies three key themes shaping their internationalization strategies: Strategic Global Expansion, Operational Integration and Synergy, and Institutional and External Market Dynamics. The findings highlight how these firms leverage global expansion to diversify markets and enhance competitiveness, employ operational integration to achieve synergies and control, and adapt to institutional and regulatory challenges to mitigate risks and maintain resilience. Classical theories such as the OLI Paradigm, Internalization Theory, and Resource-Based View (RBV) provide a foundation for understanding these strategies, while contemporary frameworks like the Linkage-Leverage-Learning (LLL) Framework and Springboard Theory offer nuanced insights into the unique dynamics of emerging market multinationals (EMNEs). This study underscores the critical role of institutional alignment, regulatory compliance, and market adaptability in ensuring successful FDI outcomes. It contributes to the literature by advancing theoretical frameworks to better capture the complexities of FDI from emerging economies and offers practical recommendations for policymakers and practitioners aiming to enhance the global competitiveness of EMNEs.

Macroeconomic determinants of European outward foreign direct investment

The global expansion of trade and capital flows, largely driven by globalization, has significantly impacted the dynamics of foreign direct investment (FDI). This paper examines how country-specific characteristics such as real income, exchange rates, economic openness, and European monetary integration influence the outward FDI (OFDI) from European Union (EU) countries. Utilizing econometric models on data spanning from 1980 to 2020, the study confirms that these macroeconomic factors are critical in shaping FDI trends. Particularly, real income and economic openness are found to be the most influential determinants. These findings underscore the nuanced role of national economic traits in FDI outflows and suggest implications for the economic policies of EU countries. This research contributes to the literature on international investment and economic globalization (Dunning, 1993; Buckley & Casson, 1985), providing a refined understanding of the macroeconomic underpinnings of OFDI.

Geopolitical Risk and Foreign Direct Investment Inflows: The Moderating Role of Water and Energy Risks

ABSTRACTUsing a panel of 43 economies between 1985 and 2022, this article establishes a link between foreign direct investment (FDI) inflows and geopolitical risk. We distinguish the idiosyncratic component of geopolitical risk from the global geopolitical risk index provided by Caldara and Iacoviello (2022. American Economic Review, 112, 1194–1225.). We then incorporate both global and idiosyncratic risks into a static FDI regression model, controlling for other economic and institutional determinants. Our findings suggest that both global and idiosyncratic geopolitical risks pose significant obstacles to FDI inflows. Additionally, we investigate whether water and energy risks, when interacting with geopolitical risk, influence the behaviour of international investors. To test this hypothesis, we estimate the interaction effect of water stress and energy intensity as proxies for water and energy risks, respectively. Our findings imply that foreign investors perceive high energy intensity and water stress as moderating factors that could motivate host country policymakers to avoid involvement in geopolitical confrontations, thereby supporting peacebuilding to prevent or resolute conflicts.

Environmental Degradation in Gulf Cooperation Council: Role of ICT Development, Trade, FDI, and Energy Use

Environmental degradation is a pressing issue, particularly in resource-dependent regions like the Gulf Cooperation Council (GCC) countries. While significant research has explored the environmental impacts of economic growth and resource use globally, limited attention has been given to the unique dynamics in the GCC, including the role of ICT development, trade openness, and FDI inflows. This research examines how information and communication technology (ICT) development, economic growth, trade openness, foreign direct investment (FDI) inflows, and electricity consumption influenced environmental degradation in GCC countries from 1990 to 2022. Using panel data analysis, the study finds that ICT expansion and increased electricity consumption significantly contribute to higher CO2 emissions, exacerbating environmental degradation. Economic growth follows the Environmental Kuznets Curve (EKC) pattern, where environmental harm initially increases with growth but can decline as economies diversify and adopt cleaner technologies. Trade openness and FDI inflows, particularly in resource-intensive industries, also contribute to environmental degradation, supporting the pollution haven hypothesis. However, these factors present opportunities for sustainable development if paired with stricter environmental regulations and cleaner technology adoption. The study highlights the need for GCC policymakers to prioritize renewable energy investments, enforce stronger environmental policies, and promote energy efficiency to balance economic growth with environmental sustainability. Recommendations for future research include exploring other environmental factors and assessing the role of technological innovations in reducing emissions.

Research on the Impact of the Business Environment on Attracting Foreign Direct Investment in Hai Duong

In recent years, Hai Duong province has created favorable conditions for investors to inject capital into the region. However, compared to its potential, the amount of foreign direct investment (FDI) flowing into the province remains below expectations. Through research on the current situation of attracting foreign direct investment in Hai Duong, the research team has compiled data on the countries investing directly in the province, categorized by sectors and the total capital for each specific industry. Based on this, the authors propose several solutions to enhance the attraction of foreign direct investment to Hai Duong.

External Financing, Governance, and Infrastructure Development: Evidence From Sub-Saharan Africa

Infrastructure development in Sub-Saharan Africa (SSA) requires diversified financing strategies to address a significant funding shortfall that cannot be met by domestic resources alone. This research evaluates the contributions of external financing—namely Official Development Assistance (ODA), Foreign Direct Investment (FDI), and Private Participation in Infrastructure (PPI)—in complementing domestic efforts to advance infrastructure in SSA. It examines their influence, alongside governance, on the development of physical and social infrastructure components. Employing methodologies such as Panel-Corrected Standard Errors (PCSE) and System Generalized Method of Moments (SGMM) across 43 SSA economies from 2000 to 2022, the analysis reveals that FDI substantially enhances physical infrastructure development but does not significantly impact social infrastructure. In contrast, ODA is shown to have a negative direct effect on overall infrastructure development, whereas PPI shows no significant direct influence. However, when considering indirect effects mediated by governance, all external financing sources positively affect both types of infrastructure, except for PPI’s influence on social infrastructure. Theoretically, this study reinforces the critical roles of economic growth, institutional quality, and external financing in supporting infrastructure development, as suggested by related theories. The study recommends that SSA authorities should focus on attracting more foreign investment, particularly in physical infrastructure projects, and encourage a broader diversification of external financing sources beyond FDI alone. Moreover, enhancing governance practices is essential for effective resource allocation and utilization. The study also advocates for improved public spending efficiency through enhanced project prioritization and governance reforms to foster sustainable infrastructure development in the region.

Economic Globalisation and the Islands of the Indian Ocean: An Econometric Analysis

This study investigates economic globalisation’s impact on Indian Ocean islands from 1980 to 2020, focusing on the influence of trade, foreign direct investment (FDI), population, and financial aid on economic growth. Using a robust co-integration and causality approach, the study reveals that trade openness negatively impacts economic growth, whereas FDI and population exert a positive influence. Conversely, financial aid is found to have no significant effect on development. Detailed case studies of Comoros, Madagascar, Maldives, Mauritius, Seychelles and Sri Lanka indicate distinct policy interventions tailored to each nation’s unique challenges and opportunities. This research significantly contributes to the limited literature on globalisation’s effect on island economies and provides actionable recommendations for policymakers to foster sustainable economic performance and resilience in the Indian Ocean region.

Uloga korespondirajuće korekcije dobiti u međunarodnom i u srpskom poreskom pravu

The role of corresponding adjustment in international tax law is to eliminate economic double taxation, so the aim of the research is to identify its regulation in international and in Serbian law, as well as to propose solutions to identified issues. A comparative method was used to analyze international regulations (OECD and UN Model conventions, EU regulation, BEPS initiative), with a focus on application issues and its relationship with current changes. Special attention was given to the relationship between corresponding adjustment and the Income Inclusion Rule contained in Pillar Two. The position of Serbia was also reconsidered, considering foreign direct investments in the context of applying the corresponding adjustment clause in tax treaties, concluding its favorable position, as well as an assessment of Serbian legislation in relation to Pillar Two, where proposal was made to focus on implementing Qualified Domestic Minimum Top-up Tax. The results highlighted disadvantages in the adopted solutions, especially in the mutual agreement procedure, and in the recently adopted solutions, for which there is no consensus in the literature.

Terrorist Events and Foreign Direct Investment: Outcomes Unveiled by Robust Statistical Models in the Example of Greece

This study examines whether the terrorist attacks impact foreign direct investments to Greece, with as much up-to-date data as possible. In this framework, hypotheses are tested within the framework of relational models through the data between 1970 and 2020. The results show a medium correlation between terrorist attacks and foreign direct investment, which is statistically significant. There is also a slightly higher correlation between terrorist attacks and foreign direct investment as a parameter of gross domestic product, which is statistically significant. Moreover, as the robust regression analysis shows, there is a bidirectional causal relationship between the variables. However, with complete data, there appears to be a causality tendency between variables by increasing foreign direct investment in the short term. At the same time, the results reveal causality from foreign direct investment to terrorist attacks.

Correction: Innovation, foreign direct investment (FDI), and the energy–pollution–growth nexus in OECD region: a simultaneous equation modeling approach

Correction: Innovation, foreign direct investment (FDI), and the energy–pollution–growth nexus in OECD region: a simultaneous equation modeling approach

The Impact of Foreign Direct Investment and R&D Expenditures on Climate Change: The Case Of BRICS-T and Selected OECD Member Countries

Climate change, one of the most urgent problems of today's world, is an important issue emphasized by researchers and policymakers. Climate change, which has become a global problem, has negative consequences on the environment and people. Therefore, the main objective of this study is to investigate the impact of FDI and R&D expenditures on climate change in BRICS-T (Brazil, Russia, India, China, South Africa, Turkey) and selected OECD (United Kingdom, Italy, Canada, Spain, Portugal, Denmark, Norway, Austria, Spain, Portugal, Denmark, Norway, Australia) member countries for the period 2000-2020 using panel data analysis method. OECD and BRICS-T country groups are analyzed separately. According to the results of the analysis, it is found that there is no causality relationship between climate change and research and development variables, while there is a bidirectional causality relationship between research and development and foreign direct investment variables. When the causality relationship is analyzed for countries and variables, it is found that there is a bidirectional causality relationship between research and development and FDI variables for Russia and India, and a unidirectional causality relationship from research and development variable to FDI variable for China, South Africa and Turkey.

Evaluating the causal link between FDI inflows and domestic interest rate in Nigeria

Investigating the relationship between domestic interest rate and inflows from foreign direct investment (FDI) in a country is paramount for policy formulation. While a preponderance of extant literature has evaluated the impact of interest rate on the penetration of FDI owing to existing theories that support such link, studies that focus on the role of FDI inflows in influencing domestic interest rate is scanty. Dearth of studies in this area limits an understanding of the actual link between the two variables. This study therefore adds to the existing literature by verifying both theoretical and conceptual views concerning how FDI inflows and domestic interest rate are related in Nigeria. In addressing the identified gap in knowledge, the study used the vector error correction model (VECM)Granger causality with annual series which covered the period from 1981 to 2022. Finding indicates a bi-directional causality existing between domestic interest rate and FDI inflows. The paper thus concludes that much as domestic interest rate influenced FDI inflows (supporting the theoretical postulations), a reverse causality running from FDI inflows to domestic interest rate was equally revealed to exist. The study thus recommends that instead of manipulating the monetary policy instruments to attract FDI and as well handle the consequences accompanying its massive penetration, efforts should be directed at providing institutional reforms and upgrading the infrastructure in the country.

A Comparative Analysis of the Diffusion of Mobile Technologies in the Visegrad Four Using an ECM Model

Objective: The aim of the paper is to assess the size and rate of diffusion of mobile technologies in the processing industry, and to determine the nature and strength of the impact of investment specialisation (investment attractiveness) and industry export specialisation on this phenomenon in the four Visegrad Group countries. Research Design & Methods: The occurrence of innovation diffusion and its dynamics were examined using an econometric model of the Gompertz function. To study the impact of specialisation according to foreign direct investments (FDI) located in V4 countries and their export specialisation on the process of innovation diffusion, an error correction model (ECM) estimated for selected industrial processing sectors was used. It was based on data for 2010–2021 from Eurostat, UNCTAD and the national statistical offices of individual V4 countries. Findings: The phase of rapid increase in innovation diffusion calculated on the basis of the Gompertz function was significantly longer in high- and medium-high technology enterprises than in low- and medium-low technology enterprises. In the short term, the determinants of mobile technology diffusion in all V4 countries in industries with low and medium-low technology are both export specialisation and investment attractiveness. Implications / Recommendations: The results lead to the conclusion that the diffusion of mobile technologies takes place in various industries in the V4, but its pace varies depending on the individual industry’s technological development. The results indicate the need to develop industries with high technologies and sectors with high intensity of knowledge. Contribution: A comparative analysis of the pace of diffusion of mobile technology innovations in the V4 was performed for the first time in this article. The combination of the Gompertz model with the ECM model can also be considered a pioneering solution in the analysis of innovation diffusion.

An Autoregressive Distributed Lag and Environmental Kuznets Curve Approach: Linking CO2 Emissions and Electricity Access in India

This study evaluates the impact of foreign direct investment (FDI), per capita GDP, renewable energy consumption, and urbanization on India’s CO2 emissions over the period 1990–2023. In the context of rapid economic growth and urbanization, India faces major challenges related to environmental sustainability. Using the ARDL (Autoregressive Distributed Lag) model and the Environmental Kuznets Curve (EKC), this research analyzes the complex relationships between these factors and CO2 emissions. The results highlight the existence of an N-shaped EKC curve with two inflection points at GDP values. This study highlights the essential role of renewable energy consumption in reducing emissions and improving access to electricity in promoting sustainable development. The findings provide valuable insights into economic and energy policies, highlighting the need to balance economic growth with environmental protection.

Greening the Gulf: A Deep-Dive into the Synergy Between Natural Resources, Institutional Quality, Foreign Direct Investment, and Pathways to Environmental Sustainability

Environmental quality is a global concern, especially in Gulf Cooperation Council (GCC) countries where abundant mineral resources, economic growth, and globalization have strained the environment through urbanization and resource exploitation. This study examines the impact of globalization (GLOL), urbanization (URBN), natural resource extraction (NRER), institutional quality (INSQ), and foreign direct investment (FDI) on environmental quality in GCC countries from 1999 to 2021. Cross-sectional dependence (CSD) was assessed using the Lagrange Multiplier (LM) and cross-dependence (CD) techniques, and stationarity was confirmed with the Levin–Lin–Chu test. The Augmented Dickey–Fuller (ADF) co-integration test verified long-term relationships, and Pooled Mean Group Autoregressive Distributed Lag (PMG-ARDL) methodology assessed short- and long-term effects. Our findings show that FDI, GLOL, and INSQ have negative long-term impacts on environmental quality, while NRER and URBN are beneficial. In the short term, FDI and INSQ improve green quality, while GLOL, URBN, and NRER have detrimental effects. Policy recommendations include discouraging FDI in non-renewable projects, promoting sustainable FDI, addressing income inequality to improve environmental quality, and investing in urban development to reduce ecological footprints (ECFTs) and enhance environmental quality in GCC countries.

Exploring the Linkage between Financial Development and Ecological Footprint in Egypt: Evidence from AVECM Analysis

This study examines the dynamic relationship between financial development and environmental sustainability in Egypt using a Vector Error Correction Model (VECM) and Granger causality tests. The research focuses on key indicators of financial development, namely Domestic Credit to the Private Sector (DCPS) and Foreign Direct Investment (FDI), and their impact on CO2 emissions. The VECM results highlight a long-term equilibrium relationship, where both FDI and DCPS have significant impacts on CO2 emissions, reflecting the environmental implications of financial growth. Specifically, FDI is associated with increased environmental degradation, while the effect of DCPS is positive but less pronounced. The Granger causality test reveals a bidirectional causal relationship between DCPS and CO2 emissions, indicating interdependence between financial development and environmental degradation. Furthermore, there is evidence of unidirectional causality from CO2 emissions to FDI, suggesting that environmental conditions may influence foreign investment decisions. These findings underscore the importance of implementing sustainable financial policies to mitigate the environmental impact of financial development in Egypt.