Expansion Of Foreign Direct Investment Research Articles

Foreign Direct Investment and Economic Development: An International Perspective

Foreign Direct Investment and Economic Development: An International Perspective

Accelerate or delay? Big step internationalization and the speed of subsequent foreign expansion—evidence from Chinese MNEs

Purpose In recent decades, emerging market multinational enterprises (EMNEs) have predominantly adopted a big step internationalization strategy to expand their business overseas. This study aims to examine the effect of big step internationalization on the speed of subsequent foreign direct investment (FDI) expansion for EMNEs. The authors also investigate the potential boundary conditions. Design/methodology/approach The authors use the random effects generalized least squares (GLS) regression following a hierarchical approach to analyze the panel data set conducted by a sample of publicly listed Chinese firms from 2001 to 2012. Findings The findings indicate that implementing big step internationalization in the initial stages accelerates the speed of subsequent FDI expansion. Notably, the authors find that this effect is more pronounced for firms that opt for acquisitions as the entry mode in their first big step internationalization and possess a board of directors with strong political connections to their home country’s government. In contrast, the board of director’s international experience negatively moderates this effect. Practical implications This study provides insights into our scholarly and practical understanding of EMNEs’ big step internationalization and subsequent FDI expansion speed, which offers important implications for firms’ decision-makers and policymakers. Originality/value This study extends the internationalization theory, broadens the international business literature on the consequences of big step internationalization and deepens the theoretical and practical understanding of foreign expansion strategies in EMNEs.

Determinants of Economic Growth: A Granger Causality Analysis

ABSTRACT: Countries devote a lot of time and effort to develop economically, but they nevertheless struggle to attain that growth consistently. Research into economic growth should have provided some guidance as to which actions these countries should adopt, but multiple studies using different methods and datasets generally have led to an array of outcomes that contradict one another. However, Granger causality analysis can provide better insight into the relationship between some key variables and economic growth to give these countries more direction. Granger causality results establish a stronger connection between variables, even though they do not depict true causation. We therefore use a Vector Auto Regression method with Generalized Method of Moments estimation and then Granger-causality to discover how commonly used variables in the literature individually impact economic growth and in what way for a selection of OECD and non-OECD countries. We choose government expenditure, foreign direct investment (FDI), education (as a proxy for human capital), population growth, urbanization, and trade openness as our variables of interest. We also utilize updated datasets from the World Development Indicators (WDI) ranging from the years 2000-2016, based on the availability of the data. We find that FDI and population growth do Granger-cause economic development for OECD countries but that government expenditures, education, urbanization, and trade openness do not show such Granger causality. However economic growth Granger-causes government expenditures, FDI, and education for these OECD countries. For the non-OECD countries, we find that FDI, population growth, and trade openness Granger-cause growth but Granger causality does not occur from government expenditure, education, and urbanization to economic development. Yet similar to the OECD countries, economic growth does Granger-cause FDI and trade openness for the non-OECD countries as well. The overall results indicate that all countries should encourage the expansion of foreign direct investment to grow their economy, which then in turn can lead to additional investment as well as more resources available for the country as a whole. We also suggest further studies should focus on the economic development of individual countries rather than regions, particularly in terms of how technology can drive growth and impact these other variables.

Research on the Influence of FDI on China’s Economic Innovation Development

Foreign direct investment (FDI) and outward foreign direct investment (OFDI) are the primary methods through which capital moves internationally. They serve as significant conduits for technological spillover, which is vital for the progress of countries and regions. Through the combined impact of the growth in foreign direct investment and the two-way flow of FDI, China may enhance its access to various production resources, including labor, capital, and energy. Additionally, this enables China to improve the distribution of intangible assets such as knowledge and technology. Consequently, there is an urgent need to establish and implement a strategy that prioritizes innovation-driven development.This study utilizes China’s provincial panel data from 2000-2020 to examine the relationship between the expansion of foreign direct investment (FDI) and the level of innovation. The regional innovation index is used as the dependent variable, while the FDI scale is used as the independent variable. Additionally, a model is employed to test the impact of China’s FDI scale expansion on regional innovation capacity. Simultaneously, this study takes into account the disparities in development between the eastern region and the central and western regions, as well as the influence of the Pilot Free Trade Zone policy. Consequently, the sample is further categorized into the eastern region, central region, and western region for a more detailed analysis. Relevant countermeasures are provided based on the results of the empirical analysis mentioned above.

Research on the Relationship Between Provincial OFDI And Carbon Emissions Under Dual Carbon Targets

With the development of economic globalization and China's continuous high-quality development, China's global status continues to rise, driving more and more companies to "go out" to conduct foreign direct investment overseas in order to seek a larger market, in the face of the two major tasks of "economic development" and "achieving dual carbon goals", studying the impact of foreign direct investment on my country's carbon dioxide emissions has a very important reality for whether our country can achieve economic transformation and fulfill its emission reduction commitments. and guiding significance. Therefore, this article based on the panel data of energy consumption in 30 provinces and regions in China from 2004 to 2019 . At the same time, per capita GDP, technological level, industrial structure, etc. were selected as control variables, a fixed effect model was established, and an empirical analysis was conducted on the carbon emission effects of my country's foreign direct investment by region and time period. Empirical analysis results show that: The increase in the scale of OFDI will promote the increase of carbon dioxide emissions in China, but there are significant differences in the carbon emission effects of various regions. The carbon emission effect of foreign direct investment in the eastern and western regions is significantly higher than that in the central region. Over time, the expansion of foreign direct investment will reduce the increase in carbon dioxide emissions it brings. In addition, the improvement of per capita GDP and industrial structure will increase carbon dioxide emissions, while the improvement of technological level will significantly reduce carbon dioxide emissions. Finally, reasonable policy suggestions are given based on the results of empirical analysis and the current situation of foreign direct investment and domestic carbon dioxide emissions.

The Effect of Foreign Direct Investment on Improving the Life Expectancy Index in Iran

Background: The health care sector is a key sector of every country. In the process of economic development, this sector is considered infrastructure since economic development directly affects the productivity of the labor force and, as a result, the increase in production and economic growth. Therefore, the quality of the health care system may be an important factor in attracting foreign direct investment (FDI), accompanied by infrastructure such as labor, education, and research and development costs. As the level of health care increases in a society, the average life expectancy increases as well. Therefore, the life expectancy index (LEI) is an indicator for measuring the progress or backwardness of countries, and thus, it is necessary to examine the factors affecting it.
 Objectives: This study examined the effect of FDI on the LEI in Iran. Methods: The autoregressive distributed lags (ARDL) method was applied from 1981 to 2020, given the time series nature of the data and to test the research hypotheses. The method shows a capacity to be applied to I(0) and I(1) data simultaneously. the following regression model estimation was utilized to investigate the effect of FDI on LEI in Iran: HIt = c0 + c1 gross domestic product (GDP)t + c2 FDIt + c3 literacy rate (LR)t + c4 human immunodeficiency virus (HIV)t + c5 Urbent + c6 real exchange rate (EXR)t + c7 inflation rate (INF)t + c8 interest rate (IR)t + et.
 Results: The outcomes indicated that FDI has favorable and substantial impacts on the health expenditure variable in Iran over short and extended periods. As a result, it can be anticipated that investing in the health care industry should influence society’s economic advancement. Consequently, FDI becomes a significant macroeconomic factor in health care, acting as an extra investment source. With proper strategies, it holds the potential to serve as a crucial tool for the country’s progress, especially in enhancing the health care sector. The results demonstrated that FDI has constructive and notable effects on enhancing the LEI in Iran, both in the immediate and prolonged durations.
 Conclusions: Generally, the effects of FDI on health care can be described by direct and indirect channels. From the direct channel, FDI may affect health care outputs directly and indirectly, e.g., by providing a wider range of medical supplies and services (such as drugs and medical equipment), the expansion of FDI in the health care sector, and the presence of foreign firms producing medical or health care products that makes the supplies and services available at lower prices and consequently improves health care. From the indirect channel, FDI may influence the health care status of individuals in society indirectly by affecting other variables. Overall, based on the findings, life expectancy is likely to be improved in Iran by attracting more foreign investments in the health care sector.

The Growth of Service Sectors, Institutional Environment and Quality Development in China’s Manufacturing

The path of exploring the high-quality development of the manufacturing industry has become one of the focus issues in China. In terms of experience, the impact of service sector growth on the quality of China’s manufacturing industry is unclear. Therefore, institutional environment is incorporated in the research frame, and the Sys-GMM is used to estimate the relationship between them based on China’s provincial panel data from 2010 to 2020. The main results showed that: (1) Both the service sector growth and institutional environment can improve the quality of manufacturing development, and they have a significant interaction. (2) The impact of service sector growth on the quality of manufacturing industry decreases in the eastern, central and western regions of China. The expansion of foreign direct investment in services cannot significantly improve the quality development in China’s manufacturing, and there is no obvious interaction between SFDI and the institutional environment. However, the domestically funded service sector is the opposite. The main contribution of this paper is to empirically verify the impact of service sector growth on the quality of manufacturing development in China, and consider the differences in the impact of regional development of service sectors and the heterogeneity of investment subjects. In addition, from the perspective of system development, this article considers the influence of the institutional environment, so as to analyze the former’s impact on the latter in more detail.

Examining the impact of financial development on load capacity factor (LCF): System GMM analysis for Asian economies

Contingent upon the empirical work done, the current study seeks to investigate the environmental load capacity factor (LCF) consequences of financial development in three different ways for 48 Asian economies. We used the two-step system generalized method of moments (GMM) technique to analyze the data from 1996 to 2020. Initially, we investigated the environmental consequences of financial development by considering six dimensions of financial development. Then, we modified the original environmental Kuznets curve (EKC) into the financial market-based EKC (FM-EKC) to compare short- and long-run environmental consequences of financial development. Ultimately, the study explores the intersecting marginal effects of financial development and institutional quality on environmental quality. Our results show that foreign direct investment (FDI), financial development, economic growth, and environmental quality (LCF) exhibit statistically significant long-run co-integrating relationships in the studied economies. This study demonstrated how FDI, financial development, and economic expansion contribute to environmental deterioration in 48 Asian countries. The nexus between finance and sustainability is moderated by the institutional quality and the regulatory environment, resulting in the FM-EKC idea. The key findings of system GMM analysis confirmed that Asian countries have an inverted U-shaped FM-EKC, which we attempt to explain with three different justifications. This study showed that the strong institutional structure in an economy guarantees the favorable environmental consequences of financial development in the long run. It also suggested that a healthier education structure of an economy can help improve the environmental quality of an economy.

Analysis of the Impact of FDI on Economic Growth Based on Cobb-Douglas Production Function

Since the reform and opening up, the scale of foreign direct investment (FDI) in China has been expanding, and along with the expansion of FDI, China's economic growth has become more and more favorable. In order to explore the effect of FDI on China's economic growth, this paper uses the time series data from 2000-2021, through ADF smoothness test, co-integration test, and also based on Cobb-Douglas production function to establish a regression model to analyze the effect of economic growth brought by FDI, and add other factors affecting economic growth, comprehensive analysis of foreign direct investment on economic growth. Then, we analyze the causal relationship between economic growth and FDI through Granger causality test. Finally, based on the empirical results, suggestions are given on how to make FDI better promote economic growth.

Spatially uneven pace of deindustrialisation within a country

AbstractThe declining share of manufacturing value‐added, often referred to as ‘deindustrialisation’, is fast becoming a major concern for policymakers and academic researchers, especially in high‐income countries. When compared with country‐level analysis, however, regional‐level analyses of deindustrialisation within a country are limited. This paper empirically examines how and why the patterns of deindustrialisation are uneven across regions within a country. The analysis builds upon the neoclassical trade model and uses regional‐level data in Japan where both detailed output and input data are available at the regional and industry levels for both manufacturing and non‐manufacturing industries over the last four decades. One of the major findings is that the large variation in deindustrialisation within a country is attributable to differences in productivity and price changes across regions. In contrast, the effect of the slowdown in capital accumulation, partly from the expansion of foreign direct investment or offshoring, commonly appears not in specific regions but across regions. The effect of spatial interdependence is also not only statistically significant but also nonnegligible in terms of its magnitude.

Does Local Government’s Competitive Behavior to Attract Foreign Investment Affect Ecological Welfare Performance? Evidence from China

Ecological welfare performance (EWP) is an essential indicator of sustainable socioeconomic development. In China, the government-led economic development paradigm mandates that the competitive behavior of local governments is a major influencing factor on EWP. This research explores how the government’s competitive behavior to attract foreign investment affects ecological welfare performance. Based on the super-efficiency slacks-based measure (SBM) model to assess the level of EWP in China, this paper utilizes a two-way fixed-effects model to determine the impact of local governments’ foreign investment competition on EWP. The results indicate the following. (1) Although introducing foreign investment may promote regional EWP, local governments’ vicious competition in introducing foreign investment is detrimental to its improvement. (2) The effect of local governments’ foreign investment competition on EWP exhibits various heterogeneous characteristics that depend on the differences in the regional distribution and intensity of competition for fiscal revenue and expenditures. (3) Resource factor mobility has a significant moderating effect on the impact of local governments’ competition for foreign investment on EWP. Capital mobility weakens the inhibitory effect of governments’ competition for foreign investment on the enhancement of EWP, while technological mobility and labor mobility have the opposite moderating effect. These findings may clarify the impact of governments’ competition for foreign investment on EWP and provide policy guidelines and implications for other countries pursuing the expansion of foreign direct investment (FDI).

RETRACTED: Is the interaction of commercial regulation with foreign direct investment a source of Heaven or EKC hypothesis? An empirical investigation of the BRICS region

It is generally agreed that the quality of institutions, the amount of energy consumed, and foreign direct investment are among the essential factors in sustainable development. On the other hand, these aspects are just as critical as the others when determining what causes environmental deterioration and how the climate changes globally. This research used the dataset of the BRICS countries, which are classified as emerging nations, intending to determine the nature of the relationship between foreign direct investment and institutional quality in terms of an interaction term, in addition to other independent variables and environmental quality. The objective of this study was to determine whether or not a Pollution Heaven or Environmental Kuznets curve (EKC) exists in the BRICS countries. To accomplish this objective, the Pooled Mean Group (PMG) technique of econometrics was utilized to estimate a 21-year dataset between 2000 and 2020. The Pollution Heaven theory was shown to be true after empirical research was conducted on the BRICS economies. In these economies, this finding verified the expansion of foreign direct investment and the proliferation of business rules were sources of environmental degradation. In addition, no evidence was discovered to support the presence of the EKC theory in any of the BRICS countries or areas. Based on these empirical outcomes, this research suggested that the introduction of appropriate commercial laws is required to translate the benefits of foreign direct investment into environmentally sustainable development.

The effects of ICT and FDI on CO2 emissions in China.

With the rapid development of information and communication technology (ICT) and counter-cyclical expansion of foreign direct investment (FDI), most foreign-invested companies in China are highly polluting. Meanwhile, new research shows that the impact of ICT on the environment is uncertain. This study is an effort in dividing ICT into hardware and software, aiming to explore its effects on carbon (CO2) emissions from 2003 to 2017 in 31 provinces, autonomous regions, and municipalities in China and further explore the impacts of its application to foreign-invested enterprises on environmental quality. The findings show that ICT software has a significant negative effect on CO2 emissions, but ICT hardware and FDI have significant positive effects on CO2 emissions. However, when ICT software and hardware are applied to foreign-invested enterprises, they can significantly improve the environmental quality. Moreover, the durative innovation of ICT software ensures environmental sustainability. A set of government measures are published to help stimulate the positive effect of ICT software on CO2 emissions, such as taxes and fees cuts, and no-interest loans. This could provide guidelines for other countries.

A STUDY ON FDI TRENDS IN INDIA SINCE 2000

Since the liberalization of trade regulations, Foreign Direct Investment (FDI) has played a crucial role in the expansion of Indian economy, both at the macro and sector levels. The connection between FDI and economic expansion is a debatable subject worldwide. The volume of inflow varies due to a variety of regional, national, and global factors that affect investment choices. Critical policy changes and proactive decision-making demonstrated the government's exceptional resilience, which even helped to mitigate the pandemic's harm. The potential impact of FDI on important macroeconomic indicators is examined in this research paper. In order to analyze the trend of the economic route of future, the study shows the sectoral division of FDI influx. Understanding the divides and patterns helped to provide insight on how the economy was evolving. Changes to regimes are still being made by policymakers in an effort to attract FDI.

Comparison of the labor market between the countries of the Western Balkans

The improvement of the labor market, the management, the expansion of foreign direct investment, etc., all play a key role in the economic development of the Western Balkans. The main purpose of this study is to analyze and compare trends in employment, unemployment, gross domestic product (GDP), foreign direct investment (FDI), labor market management and to study the effects of foreign direct investment on employment in the Western Balkans (Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro, and Serbia) between 2015 and 2019. However, evidence for FDI’s impact is mixed (Navaretti & Venables, 2004). In terms of methodology, comparative and empirical analyses of the strength of the correlation between the dependent variable of employment and the independent variable of FDI for the countries of the Western Balkans have been conducted. Based on analyses, the employment rate in the six Western Balkan countries in 2019 has improved when compared to 2018, except in Montenegro, where it has declined. This study will contribute to enhance understanding of the labor market and the impact of FDI on employment in the Western Balkan countries

FDI expansion speed of state-owned enterprises and the moderating role of market capitalism: Evidence from China

Drawing on an institutional logics perspective and isomorphism viewpoint, we posit that the negative impact of state ownership on the speed of foreign direct investment (FDI) expansion is attributed to the state socialism logic, which is inconsistent with market-oriented mechanisms that underpin rapid international expansion. We further argue that firms associated with the market capitalism logic shape an institutional context in which state-owned enterprises (SOEs) may adjust their behaviors by adopting market-oriented practices to expand quickly in the global market. Using outward FDI project information from Chinese listed firms over a fourteen-year period, we find evidence that confirms our theoretical predictions. Our analysis shows that, despite the negative relationship between state ownership and the speed of an SOE’s FDI expansion, both the non-state economy in the firm’s subnational region and privately owned enterprises in its industry sector positively moderate this relationship. This study enriches our understanding of institutional complexity in emerging markets and internationalization of emerging-market firms.

Revealing long- and short-run empirical interactions among foreign direct investment, renewable power generation, and CO2 emissions in China.

This work systematically examines the empirical interactions among foreign direct investment (FDI), renewable power generation (RPG), hydropower generation (HPG), non-hydropower generation (NHPG), and CO2 emissions in the long run and short run. To test the existence of long-run equilibrium association among those variables, Bayer-Hanck combined cointegration and autoregressive distributed lag (ARDL) model have been employed on time series of China for the period 1991-2017. The vector error correction model-based short-run impacts among the variables of interest are also estimated. Besides, Toda-Yamamoto causality and Granger causality are employed to confirm the direction of causal links. The existence of a long-run equilibrium relationship is revealed in case of all types of specification. The expansion of both FDI and CO2 emissions boosted RPG, HPG, and NHPG in the short run and long run, with greater intensity of impacts in the long run. To reflect comparisons, it is found that the renewables generation driving the impact of CO2 emissions and FDI on NHPG is greater than RPG, which further exceeds HPG. In turn, the RPG, HPG, and NHPG mitigated CO2 emissions both in the long run and short run, with stronger impacts in the long run. Moreover, the CO2 emissions inhibition impact of HPG dominated NHPG, which further exceeded that of RPG. The FDI boosted CO2 emissions in a way that the long-run pollution haven impact is revealed to be powerful than that of the short run. A unidirectional causality has been observed running from FDI to CO2 emissions, RPG, HPG, and NHPG. A bidirectional causality is found operative between CO2 emissions and RPG/HPG/NHPG. Interestingly, the long-run and short-run impacts remained homogeneous in terms of directionality. Nevertheless, strict heterogeneity is observed in terms of the degree of impacts. Based on empirics, both long-term and short-term policies on FDI, renewables generation, and CO2 emissions are vital for decision-makers in China. Graphical abstract.

Impact of top management team sociodemographic faultlines on speed of foreign direct investment expansion: An emerging market perspective

AbstractIn an emerging market context, the strength of sociodemographic faultlines of the top management team (TMT) might negatively impact the speed of firm's foreign direct investment (FDI) expansion. Building on upper echelon perspectives, the study proposes testable propositions on the role of sociodemographic faultlines (based on age, caste, and language) of the TMT on the speed of firm's FDI expansion. The role of decision‐making in TMT is crucial for embarking upon such strategic actions and analyzing those that are pertinent for the international business scholarship. Furthermore, we propose that the degree of inward foreign competition faced by the firms and the prior international experience of the TMT will moderate this relationship.

Ethnic Diversity and Economic Performance in China: The Role of Education, FDI, and Trade

ABSTRACT This article analyzes the effect of ethnic diversity on China’s economic performance. We claim that the conventional ethnic diversity indices may not be adequate for appropriately estimating the effect of ethnic diversity on economic performance in China, so we develop revised ethnic diversity indices. Consistent with the existing literature, we find that ethnic diversity alone worsens economic performance. However, dummies for ethnic diversity education and foreign direct investment (FDI) have a positive effect on economic performance. The marginal impact of education raises economic performance because it improves communication ability across diverse ethnic groups. At the same time, the expansion of FDI can create a proper context for ethnic groups to work together in order to improve economic performance. However, the ethnic diversity trade dummy does not significantly affect economic performance.

Spatiotemporal analysis of land development in transitional China

This study investigates three types of land development in China, land for cities and towns, stand-alone industrial sites, and space devoted to transportation. Relying on shift-share analysis, spatial filtering and geographically weighted regressions, we find that the spatial patterns and underlying determinants of China's construction boom vary across subcategories and periods. City and town land development follows the administrative hierarchy, as it is especially pronounced in provincial capitals and centrally administrated municipalities, and is largely dependent on urbanization, passenger transport, and fixed assets investment. The proliferation of stand-alone industrial areas is mainly driven by the expansion of foreign direct investment, industrial adjustment, and the capacity of freight transport. Transportation land development is determined by the development of railway and highway systems as well as local economic development. Temporally, our results suggest that land development and its agglomeration accelerated from 1998 to 2002 to 2003–2008. Also, globalization had more influence during 1998–2002, whereas the role of decentralization and marketization became more significant in the period of 2003–2008.