Capita Foreign Direct Investment Research Articles

Foreign direct investment, development strategy, and green innovation

In developing countries, foreign direct investment (FDI) plays a significant role in industrial catch-up concerning knowledge acquisition and technological innovation. The Chinese government's development strategy is vital in attracting FDI and green innovation (GI). This article investigates the moderating role of development strategy in the causal relationship between FDI and GI from the perspective of new structural economics. We find a U-shaped association between FDI and GI. Specifically, FDI inhibits GI at its low level, and FDI promotes GI with the accumulation of FDI capital. Therefore, cities with moderate catch-up strategies can maximize the impact of FDI on GI. Development strategies can also hinder the effects of FDI-driven GI in cities with a perfect market system while promoting them in cities with relatively backward, cleaner production technology. The development strategy not only has an impact on the FDI-driven GI effects in the region but also on the FDI-driven GI effects in the surrounding regions through the spatial spillover effect. These findings provide references on what type of FDI the government should introduce and how to guide the market to bring the GI effect of FDI into play.

The role of FDI in Vietnam's economic development

Since Vietnam joined the World Trade Organization (WTO) in 2007, foreign direct investment (FDI) into Vietnam has increased sharply and has become one of the important sources of capital for the economic development of the country. However, apart from the positive aspects that FDI brought, there were also many negative aspects affecting the economic, political, social, and environmental fields. By analyzing the current situation, role, and limitations of FDI in Vietnam's economic development, the study shows that FDI inflows into Vietnam had positive changes in the period 2010 - 2020. During the research, the analytical data was collected from secondary data from the yearbook of the General Statistics Office and the reports of the Foreign Investment Department - Ministry of Planning and Investment, using the descriptive statistics, synthesis, and analysis to analyze data to describe the effects and qualitative relationship between FDI and economic development in Vietnam. The research results show that in the period 2010-2020, FDI capital continuously increased in total registered capital and realized capital; the proportion of FDI contribution to GDP also increased gradually over the years, however, there was an imbalance between registered capital and realized capital, and the contribution of FDI to GDP was still limited. At the same time, the results also show that the capital of FDI invested in Vietnam and many economic sectors primarily stems from Asian countries while the number of investors in developed countries such as Europe and the Americas is yet inconsiderable, and FDI mainly focuses on processing and manufacturing industries. Based on the research results of the article, a number of solutions are proposed to help Vietnam attract more foreign-invested projects, contributing to promoting Vietnam's economic development in the coming time.

VỐN ĐẦU TƯ TRỰC TIẾP NƯỚC NGOÀI (FDI) VÀO PHÁT TRIỂN CÔNG NGHIỆP Ở TỈNH THÁI NGUYÊN GIAI ĐOẠN 2010-2018

VỐN ĐẦU TƯ TRỰC TIẾP NƯỚC NGOÀI (FDI) VÀO PHÁT TRIỂN CÔNG NGHIỆP Ở TỈNH THÁI NGUYÊN GIAI ĐOẠN 2010-2018

Linkages Between Employment and Net FDI Inflow: Insights from Individual as Well as Panel Data for Emerging South Asian Labour Market

In emerging labour market, particularly, the direct and indirect association between employment level and foreign direct investment (FDI) in a dynamic economy is non-deniable. Like private and public investments, FDI promotes employment generating agenda and at the same time, sound employment scenario of an economy attracts FDI to inflow. Under this backdrop, the present study attempts to examine whether employment and net FDI inflow have long-run associations and short-run dynamics in South Asian economies for the period 1991–2016. Applying cointegration and Granger causality tests for individual country level and panel cointegration, vector error correction and Wald test on the two standardized variables—employment–population ratio and per capita net FDI inflow—reveal that the two indicators have cointegrating relations for Bangladesh and Nepal and FDI makes a cause to employment generation in Bangladesh only. Further, the panel data exercise shows the existence of long-run or equilibrium relations linking the two indicators without significant error correction results. The Wald test results show that there is short-run causality working from employment ratio to per capita FDI and vice versa. The study, thus, prescribes for ensuring quality environment in the concerned domestic economies of the region so that employment opportunities invite FDI inflow to their territories.

Delta-shaped openness: Visualizing the foreign capital in mainland China

Opening to the world is considered to be an important reason for China's rapid rise in recent decades. Due to China's unique geographical pattern, the eastern coastal areas have always been the window of China's interaction with the world. Although China's east-west openness gap has been widely recognized, mapping the huge gap is valuable in terms of recognizing mainland China. Foreign direct investment (FDI) reflects the long-term cooperative relationship between China and overseas, and FDI is deemed to show a high level of openness to the outside world. Based on the actual utilized amount of FDI capital of the prefecture-level cities in mainland China in 2016, this study developed an equal FDI capital map. The Yangtze River Delta (YRD) and the Pearl River Delta (PRD) are transformed into two much larger deltas, while non-delta-shaped regional units, including Beijing–Tianjin–Hebei (BTH), Fujian, Shandong, and Liaoning are also transformed into deltas of different scales. In addition, the distribution of FDI growth rates indicates that delta-shaped openness is being further strengthened in mainland China.

Recent Political Change in Myanmar and Its Impact on her Economic Growth

The present study estimates the causal effect of a process of political change, namely, a recent constitutional referendum, on economic growth in Myanmar. To analyze the impact of this process, this study compares the trajectories of actual and counterfactual GDP per capita after the referendum using the synthetic control method. We calculate the counterfactual GDP per capita using country‐level panel data from 2002 to 2013, with Myanmar as the treated country and a set of developing countries in East and South Asia, the Pacific and sub‐Saharan Africa as the control group. The results of the synthetic analysis suggest that the recent process of political change in Myanmar had a positive and significant effect on GDP per capita but not on per capita foreign direct investment or trade.

Sub-National Location Determinants of Inward Foreign Direct Investment: A Statistical Appraisal Across Regions in India

There is a general proposition that availability of infrastructure facilities largely determines the locations of investment projects and also that Foreign Direct Investment (FDI) can be Resource seeking, Efficiency seeking and clusters in a region where there is already existing FDI. I employed a panel dataset consisting of 16 groups of Indian states over the period from 2001-02 to 2016-17, with the aim to identify the infrastructure, resource, market, and agglomeration specific factors that contribute to the wide-scale heterogeneity in the per capita FDI inflows across the Indian States. My results suggest that the availability of roads, ports and telecommunication infrastructure predominantly influenced the variations in the FDI inflows across states than any other infrastructure specific determinant. The findings indicate that the efficiency of labor was the highest motivation among resource specific factors for investors. Moreover, higher tax disincentive, the presence of the SEZs, and agglomeration economies are found to be statistically significant. Lastly, the per capita FDI is not found to be market seeking in nature.

On the convergence in China's provincial per capita energy consumption: New evidence from a spatial econometric analysis

The rapid increase in per capita energy consumption is likely to be an important factor affecting the sustainable development of China's economy. In this study, the convergence of per capita energy consumption, which is an important inherent characteristic of China's energy consumption, is investigated using panel data for the period 1994–2014 for 30 Chinese provinces. To control for the potential spatial dependence in energy consumption per capita and introduce dynamics, appropriate spatial dynamic econometric models are employed. The empirical results indicate that there are both absolute and conditional β-convergences in per capita energy consumption across provinces. In addition, there is also evidence for an inverted U-shaped relationship between per capita energy consumption and per capita GDP. Therefore, per capita energy consumption would increase when economic development is relatively low. However, per capita energy consumption may decrease after a threshold level of economic development is reached. Among the factors that potential influence provincial energy consumption, the ratio of secondary industry value-added to GDP and the spatial correlation of energy consumptions in neighboring provinces are positively related to energy consumption per capita, while population density and per capita foreign direct investment do not affect energy consumption per capita significantly.

Does Foreign Direct Investment Accelerate the Vietnamese Economic Growth?: A Simultaneous Equations Approach

The main purpose of this paper is to investigate the impact of foreign direct investment (FDI) on economic growth in Vietnam over the five-year post-crisis period of 2010-2014. In addition, it also provides a comparative analysis with the pre-crisis period to yield greater insight into how the FDI-growth nexus evolved over time and under different economic conditions. Our empirical work is based on a panel data set containing 63 provinces in Vietnam. We start our analytical section by examining the FDI-growth relationship using two simple ordinary-least-square (OLS) models, where FDI and economic growth are the dependent variables and are regressed on a number of other factors that seemingly influence FDI and growth. With an awareness of the possible endogeneity bias, we re-estimate our model using the simultaneous equation approach, employing the two-step system generalized method of moment (GMM) estimator. We complement our study by re-estimating the model on the pre-crisis sample during the period 1999-2006. Then, we re-run our regressions on the full-sample setting and take into account the possible effect of the 2007/2008 crisis by incorporating the crisis dummy variables (D2007 and D2008) to shed more light on the impact of the crisis on FDI and economic growth. Overall, we find some evidence of the simultaneous relationship: increased inward FDI promotes economic growth, while at the same time, greater growth could help the country to attract additional FDI capital. However, this bi-directional relationship only existed in the post-crisis period, and not in the pre-crisis time. During the pre-crisis period, growth does not exhibit a significant impact on FDI, while FDI is found to be an important driver of growth. In our full-sample setting, we find a robust positive significant influence of FDI on economic growth. However, economic growth, again, does not exhibit a significant positive impact on FDI. Some other factors, including domestic investment, market size, exports, level of trade openness and infrastructure development, either promote economic growth or inward investment. We also find some evidence suggesting that Vietnam should invest more in human capital to obtain a sufficient absorptive capability in order to benefit from advanced technologies and knowledge transfers that accompany inward FDI. In the end, our empirical findings suggest that the country should implement a more ‘open door’ policy to exploit further benefits from additional FDI inflows.

Trade and investment liberalization, food systems change and highly processed food consumption: a natural experiment contrasting the soft-drink markets of Peru and Bolivia.

BackgroundFree trade agreements (FTAs) can affect food environments and non-communicable disease risks through altering the availability of highly-processed foods. Few studies have quantified such effects. Using a natural experiment this paper quantifies changes in Peru’s soft-drink market before/after entry into the US-Peru FTA, compared with Bolivia, a county with no such agreement.MethodsDifference-in-difference models were used to test for between country differences in the rate of per capita foreign direct investment (FDI) inflows, soft-drink imports, the volumes of various soft-drinks sold, and the volumes of sugar from soft-drinks before/after FTA ratification (2006) and enforcement (2009).ResultsIn Peru average per capita FDI-inflows rose from US$103.11 in the pre-ratification period to US$269.79 post-ratification, with little change in Bolivia. This corresponded with a 122 % increase in Peruvian soft-drink production. There was a significant between-country difference in FDI-inflows pre-/post-ratification (DID:1.07, 95 % CI:0.19–1.96; p = 0.01). Despite little difference in total per capita soft-drink sales volumes there was a significant between-country difference in per capita sugar from soft-drinks pre-/post enforcement (DID:-0.99, 95 % CI: −1.91–0.06; p = 0.03) with stagnated growth in Peru and continued growth in Bolivia. This resulted from stagnated sugar sweetened carbonates growth and increased bottled water, juice and sports & energy drinks growth in Peru, with continued carbonates growth in Bolivia. There was a significant between-country difference in per capita carbonates (DID: −1.44, 95 % CI: −2.52–0.36, p = 0.01) and bottled water (DID:0.63; 95 % CI: −0.01–1.26; p = 0.04) sales volumes.ConclusionsThe FTA may have resulted in increased FDI-inflows and soft-drink production and also contributed to the diversification of soft drinks produced and sold in Peru with some positive (stagnated carbonates and increased bottled water) and some negative (increased juice and sports & energy drinks) implications for nutrition. These changes were not evident in Bolivia. These results should be interpreted cautiously given the study design limitations.

Foreign direct investment and China's regional income inequality

China's widening regional income inequality coupled with its pronounced regional disparity in foreign direct investment stock since 1990 has claimed the attention of many scholars. While some researchers confirm regional disparity in China's foreign direct investment, others attribute the widening regional income inequality to this regional disparity. This paper thus assesses the impacts of China's stock of foreign direct investment on its regional income inequality using simultaneous equation model and the Shapley value regression-based decomposition approach. Our results suggest that China's stock of foreign direct investment has accounted for merely 2% of its regional income inequality. Furthermore, the contribution ratio of per capita foreign direct investment stock to China's regional income inequality has relatively been on a steady decline since 2002. The decomposition results also reveal that provincial per capita physical assets account for over 50% of the nation's income inequality and 65% of the increases in income inequality since 1990. The other two important determinants of regional income inequality are province location and educational level. However, educational level is found to have a decreasing effect on regional income inequality.

Determinants of foreign direct investment and volatility in South East Asian economies

The objective of this paper is to identify and examine the determinants of barriers to foreign direct investment (FDI) in South East Asian economies. Based on our theoretical groundings, we identify potential barriers under four categories, namely macroeconomic policy factors, political factors, institutional factors and socioeconomic factors. Using cross-sectional time-series data for 17 South East Asian economies from 1996 to 2005, we test these set of barriers against per capita FDI inflows and volatility in FDI inflows using fixed effects pooled regression analysis. In the process, we also check as to how fragile our results are to the small but important changes, which we bring in the conditioning information set using robustness check. Our empirical evidence suggests that all the possible set of barriers identified have significant negative effect on per capita FDI and positive impact on volatility in FDI inflows. We therefore suggest that there is an urgent need to find the solutions to break these barriers that are acting as stumbling blocks in attracting FDI of their actual potential.

Autocracy, Democracy, and FDI Inflows to the Developing Countries

This paper investigates the relationship between political regimes and Foreign Direct Investment (FDI) inflows to the developing countries for a sample of 134 countries over the 1983–2002 period. Using two categorical measures of regime type and three different measures of FDI, this study finds that, regardless of the measures of regime type, democracies are not significantly associated with either FDI in level or FDI as a ratio to GDP; democracy is positively related to a higher level of per capita FDI, but this result is not robust to alternative measures of political regime. Taken as a whole, there is no evidence of a systematic relationship between democracy and FDI inflows. This result suggests that being a democracy does not help attract higher levels of FDI.

Estimation of Uneven Development of Lithuanian Regions

The researchers have aimed to analyse the processes of divergent development of Lithuanian regions by estimating the basic parameters of the process of interregional stratification. We have carried out an estimation of the process of differentiation using three parameters: per capita gross regional product (further GRP), per worker GRP and per capita foreign direct investment (further FDI) in a separate region. Using these indicators and the economic classical con vergence-divergence approaches of analysis, the principal dimensions of the unequal development of territorial units in Lithuania have been assessed.

Multinational enterprise strategy, foreign direct investment and economic development: the case of the Hungarian banking industry

This paper examines foreign direct investment (FDI) in the Hungarian economy in the period of post-Communist transition since 1989. Hungary took a quite aggressive approach in welcoming foreign investment during this period and as a result had the highest per capita FDI in the region as of 2001. We discuss the impact of FDI in terms of strategic intent, i.e., market serving and resource seeking FDI. The effect of these two kinds of FDI is contrasted by examining the impact of resource seeking FDI in manufacturing sectors and market serving FDI in service industries. In the case of transition economies, we argue that due to the strategic intent, resource seeking FDI can imply a short-term impact on economic development whereas market serving FDI strategically implies a long-term presence with increased benefits for the economic development of a transition economy. Our focus is that of market serving FDI in the Hungarian banking sector, which has brought improved service and products to multinational and Hungarian firms. This has been accompanied by the introduction of innovative financial products to the Hungarian consumer, in particular consumer credit including mortgage financing. However, the latter remains an underserved segment with much growth potential. For public policy in Hungary and other transition economies, we conclude that policymakers should consider the strategic intent of FDI in order to maximize its benefits in their economies.

GROWTH OF TERTIARY SECTOR IN CHINA'S LARGE CITIES

This study interprets the fast-growing tertiary sector in China, especially in 84 large cities, as a result of sectoral labor transition. Large cities in China mostly relied on the tertiary sector for urban job growth during the period from 1990 to 1997 and are ahead of the country in the sectoral labor transition. The tertiary labor share in a large city is not only associated with the per capita income, but also with the urbanization level within the city limit, the per capita foreign direct investment, and the history and size of the city. Compared with other parts of the world, China is more similar to developed countries (with a time lag) than to developing countries in the path of the sectoral labor transition. Yet, the sectoral labor transition (and the growth of the tertiary sector specifically) in China has been strongly influenced by government policies.