Foreign Direct Investment In Asia Research Articles

The Role of Performance Political Stability and Macroeconomic Attracting Foreign Direct Investment in ASEAN

Foreign direct investment (FDI) plays a crucial role in developing nations to raise the standard of living for their citizens and strengthen their economies. This research aims to investigate the effects of macroeconomic factors like GDP, inflation, and female employment in the industry on flows of foreign direct investment as well as factor political stability with a research focus on 5 ASEAN countries (Indonesia, Malaysia, Vietnam, Laos, Cambodia) with research 20 years. The research method used panel data regression with secondary data from the World Bank. The Fixed Effect Model is found to be the best model selection. The results showed that political stability variables as well as all macroeconomic fundamental variables as measured by GDP, Inflation, and Employment Females in Industry partially had a significant and positive effect on the inflow of Foreign direct investment in 5 ASEAN countries and simultaneously had a significant positive effect.

The determinants of China’s outward foreign direct investment in ASEAN: A panel ARDL approach

Research aims: This paper aims to examine factors influencing China's outward foreign direct investment (FDI) in ASEAN economies.Design/Methodology/Approach: The Kao panel cointegration approach and the Panel ARDL model were used in this study to estimate the long-run and short-run relationship between variables. This method is deemed superior to other panel models since it is advantageous when dealing with non-stationary variables at the level or I(1).Research findings: The estimation results provide empirical evidence that in the long run, ASEAN market size, exchange rate, import and export levels between China and ASEAN countries, inflation rate, and institutional factors such as the index of corruption control and political stability are the primary determinants of the flow of outward foreign direct investments from China to ASEAN economies. Theoretical contribution/Originality: This study provides additional evidence regarding the factors influencing direct investment flow from the home country to the host country, known as an outward foreign direct investment (OFDI). Previous studies have robustly proven that OFDI flows are influenced by factors such as the resources and market size of the host country, as predicted by location theory. This study further provides evidence that host country trade policy, the level of competitiveness demonstrated by favorable exchange rates, and institutional factors like corruption control and political stability are other important determinants in the context of China’s OFDI in ASEAN countries.Practitioner/Policy implication: Maintaining open trade policy, a competitive exchange rate and significant improvement in law and order would be suitable policies for ASEAN economies to attract more investment from China and other countries.Research limitation/Implication: This study did not cover other variables, such as investment facilities provided by the host government. In addition, economic packages like tax holidays and import-tariff discounts are common policies ASEAN countries provide. Hence, this variable can be considered in future research.

Determinants of Foreign Direct Investment in ASEAN+3 Countries: The Role of Environmental Degradation.

Foreign direct investment (FDI) can boost economic growth and provide job opportunities. FDI inflows in ASEAN+3 countries have dropped markedly, which may affect economic development in the region. Many previous studies have investigated a multitude of factors that can influence FDI, such as market size, inflation, trade openness, corruption, and inflation. Previous studies did not, however, consider environmental degradation as a potential factor. Besides corruption and inflation, imposing stringent environmental regulations, such as carbon pricing and taxes to reduce environmental degradation, might deter foreign investors from the country. This is due to heightened costs for foreign investors, which may cause FDI inflows to drop. To shed some light on the reality of this situation, this study examines whether environmental degradation can significantly affect foreign direct investment in the region. This study includes environmental degradation as a potential factor and employs the panel ARDL approach to analyse data from 1995 to 2019. Results show that environmental degradation, infrastructure, and corruption can affect the inflow of FDI in the long run. In the short run, inflation can affect FDI. The findings of this study can be utilized by policymakers in formulating the right policies to attract more investors. An increase in infrastructure facilities should be considered to attract more foreign investment. It is also vital for governments to reduce corruption and inflation to attract more FDI inflows. Environmental incentives should also be introduced to ensure that attempts to reduce environmental degradation do not affect FDI inflows.

Economic resilience to the FDI shock during the COVID-19 pandemic: evidence from Asia

PurposeThe purpose of this paper is to study the impact of economic factors on foreign direct investment (FDI) inflows into Asian region before and after the COVID-19 pandemic.Design/methodology/approachThe study used the generalized method of moments (GMM) technique to examine the impact of economic growth, domestic investment and trade openness on FDI in the Asian region, in two periods from 1996 to 2018 and from 2019 to 2020.FindingsIn the pre-COVID-19 period, the estimated result shows that the economic growth, domestic investment, imports and exports positively impact FDI. In the post-COVID-19 period, the FDI is influenced by the strength of the economic characteristics of the region. The main findings indicate that economic growth has a positive and significant effect on FDI inflows into Asia. The findings also show that the economic resilience to attract FDI in Asia is significantly affected by economic growth and positively affected by trade openness and government responses during the pandemic.Originality/valueThe study suggests the Asian governments increasing the domestic investment and improving the quality of trade openness.

Daya Saing dan Foreign Direct Investment

abroad and domestically. Incoming investment is affected by a country's daytime strength. Widespread investment encourages more competition and corrupt practices as many investors want to reduce the bureaucracy they face. However, in the investment market a high level of corruption also makes a country's economy unattractive. This study aims to analyze the effect of a country's competitiveness on the entry of Foreign Direct Investment in ASEAN. The variables used in this study are foreign investment, competitiveness, Corruption Perception Index, and political stability. The analytical method used is the Random Effect Model. This shows that state power is able to encourage direct foreign investment in a positive direction, as well as the Corruption Perception Index where the handling of the level of corruption will encourage the entry of Foreign Direct Investment. Political stability in this study does not have a significant effect, meaning that political shocks do not interfere with the entry of Foreign Direct Investment in ASEAN in the period 2010 to 2020.

Global Crisis and Economic Fundamentals: Its Impact on Foreign Direct Investment in ASEAN Countries

Foreign direct investment has an important role in the running of a country's economy. This study aims to analyze the role of macroeconomic fundamentals consisting of Gross Domestic Product (GDP), interest rates, exchange rates, and exports in influencing Foreign Direct Investment (FDI) in the ASEAN 6 region (Indonesia, Malaysia, Singapore, Thailand, the Philippines, and Vietnamese). The data used are from 1990-2019 sourced from the World Bank and UNCTAD. The method used is panel data regression and time series with the best model selection, namely the Random Effect Model. The results of panel data analysis show that GDP, interest rates, exchange rates, and exports are the determinants of FDI in ASEAN 6 with a significant probability value. The positive direction coefficient is indicated by the GDP and exchange rate variables, while interest rates and exports indicate a negative direction coefficient. The results of the time-series data confirm that each country has similar results in the panel data analysis, but interest rates in Malaysia have the largest negative effect on FDI in Malaysia. Meanwhile, the exchange rate and exports contributed positively with the largest coefficient for Indonesia. The 1998 and 2008 economic crises were also found to have a negative impact on FDI but not significantly in some countries.

Global Crisis and Economic Fundamentals: Its Impact on Foreign Direct Investment in ASEAN Countries

Foreign direct investment has an important role in the running of a country's economy. This study aims to analyze the role of macroeconomic fundamentals consisting of Gross Domestic Product (GDP), interest rates, exchange rates, and exports in influencing Foreign Direct Investment (FDI) in the ASEAN 6 region (Indonesia, Malaysia, Singapore, Thailand, the Philippines, and Vietnamese). The data used are from 1990-2019 sourced from the World Bank and UNCTAD. The method used is panel data regression and time series with the best model selection, namely the Random Effect Model. The results of panel data analysis show that GDP, interest rates, exchange rates, and exports are the determinants of FDI in ASEAN 6 with a significant probability value. The positive direction coefficient is indicated by the GDP and exchange rate variables, while interest rates and exports indicate a negative direction coefficient. The results of the time-series data confirm that each country has similar results in the panel data analysis, but interest rates in Malaysia have the largest negative effect on FDI in Malaysia. Meanwhile, the exchange rate and exports contributed positively with the largest coefficient for Indonesia. The 1998 and 2008 economic crises were also found to have a negative impact on FDI but not significantly in some countries.

아세안 해외직접투자 유입 동기유인에 관한 연구: 정태 및 동태적 분석

We examined the motives for inward FDI(Foreign Direct Investment) in ASEAN using static and dynamic analyses. For static analyses, fixed-effect panel analysis and random-effect panel analysis were used through the Hausman test, and for dynamic analyses, System GMM, which uses the lag variable of the differential variable of the FDI as the instruments, was used. In ASEAN 8 developing countries except for Brunei and Singapore which are high-income countries, all of the market-seeking, resource-seeking, efficiency-seeking, and strategic asset-seeking motives have a positive relationship with inward FDI significantly. In dynamic model, two variables which are first lag variable of FDI and market size have a positive relationship with inward FDI significantly. However, resource-seeking and efficiency-seeking variables show a negatively significant relationship with inward FDI. The positive coefficient of two variables in the static analysis were changed to the negative coefficient in the dynamic analysis. Considering time in dynamic models, resource-seeking and efficiency-seeking variables showed different results over time. Unlike previous studies, our study not only used ICT export ratio as a proxy variable for the strategic self-seeking motive, but also conducted both the static analyses and the dynamic analyses on motives of inward FDI in ASEAN.

Governance, Real Output and Foreign Direct Investment in Asia: A Panel Data Analysis

This study intends to analyze the impact of governance (such as political, economic and institutional governance) on real output (GDP) and foreign direct investment (FDI) in 26 Asian countries during 1996 – 2019. Results of panel ARDL show the positive impact of capital, labor and trade openness on GDP and FDI. Institutional governance affects GDP and as well as FDI negatively and validates the notion that corruption greases the wheel of growth but when institutional governance is used with other indicators of governance in the model, it affects the FDI positively. Other dimensions of governance such as political and economic governance have a positive and significant impact on GDP and FDI in all model specifications. The results of the panel causality test that there is bi-directional causality from governance to GDP but evidence of bi-directional causality among governance indicators have also been found. The study emphasized on the policy making to improve the level of governance in Asian countries.

The role of institutions at the nexus of logistic performance and foreign direct investment in Asia

Foreign Direct Investment (FDI) plays an important part in the economic growth of developing Asia and logistics capability is a crucial factor in FDI location choice. Till today, research investigating Logistics Performance (LP) and FDI in Asia are still lacking and rather inconclusive and not standardised. Using a total of 31 Asian countries covering 2007 through 2017, the study critically investigates the impact of LP on FDI using static panel regression method. The results demonstrate that while LP significantly impact FDI, there is a threshold effect of institutional quality in the LP-FDI relationship. Specifically, this paper found that the impact of LP on FDI varies across the perceived level of institutional quality i.e., the effect is positive only before certain threshold level of institutional quality, after which the effect of LP on FDI is reversed. This finding suggests that the LP-FDI nexus is contingent on the perceived level of institutional quality, thus supporting the idea that innovations (i.e., creativity and flexibility embedded within a sound institutional framework) is potent in delivering long-run LP-FDI development in Asia.

Foreign Direct Investment Spillover Effect on China’s Sustainable Development

Abstract The unbalanced growth of FDI in China has seriously affected the coordinated development of China’s regional economies. Therefore, to achieve comprehensive, coordinated and sustainable development, China’s main strategic task is determining how to adopt positive and effective FDI policies to reduce this regional imbalance in FDI. The purpose of this paper is to explore and study the spillover effects of foreign direct investment (FDI) on China’s sustainable development. In this paper, based on the new political economics theory and overflow effects, comparative research and statistical research methods are adopted that combine static and dynamic analysis. Empirical research methods are combined with normative research to analyse the spillover effects of FDI on China’s sustainable development, particularly under the new situation of global crisis and the accompanying difficulties, to determine how to promote China’s FDI and the development of China’s sustainable progress strategy. The study found that in 2018, FDI in China reached a value of 13.466 billion US $, and the year-on-year growth in FDI in recent years has been basically stable at approximately 4 %. Asia is the main source of FDI in China. In 2018, the amount of FDI in Asia reached $109.1938.7 billion, accounting for 83.33 % of the total investment. Hong Kong, with its unique advantages, accounted for 72.12 % of FDI in China. FDI inflows are mainly directed to primary industry and the service sector, and the growth rate of foreign investment in 2016 in these sectors was 68.52 and 170.77 %, respectively, compared with 2007. FDI also mainly flows to the eastern region of China. By the end of 2018, the amount of foreign capital utilized in the eastern region reached $1,622.9 billion, representing 85.4 % of the aggregate FDI in China. The effect of FDI on China mainly focuses on three areas: economic growth, social development and environmental protection. FDI has brought positive spillover effects to China’s sustainable evolution, but with China’s continuous development, especially the change in its economic development mode, it has been consistently exposed to negative spillover effects.

Determinants of foreign direct investment from Europe to Asia

AbstractThis study examines the determinants of foreign direct investment (FDI) from Europe to Asia based on the knowledge‐capital model. The data include 38 European countries and 24 host Asian countries over the period 1995–2013. Empirical evidence from Poisson‐pseudo maximum likelihood estimation method is in line with hypothesised predictions derived from the knowledge‐capital model. In particular, the total income and the similarity in market size between two countries encourage horizontal FDI. We also find empirical support to vertical FDI in Asia where the difference in skilled labour endowments between European source and Asia host countries has a positive impact on FDI from Europe to Asia. Meanwhile, investment costs in Asian countries, trade costs to both source and host countries, and exchange rate volatility are negatively correlated to FDI. By contrast, sharing a common language, a bilateral investment treaty and a historical colonial relationship encourage FDI from Europe to Asia. In addition, heterogeneities in host countries’ geographical regions, exchange rate regimes, and governance system, and source countries’ Eurozone membership lead to differences in empirical findings. The results also signal some future trends and the roles of governments in both source and host countries in facilitating FDI.

Employee Relations at Asian Subsidiaries in Hungary

Asian foreign direct investment is substantial in Hungary in regional comparison. Multinationals from China, India, Japan, and Korea are important investors in the Hungarian economy. The main aim of this article is to describe how home and host country institutions and business and management culture influence the operation of the companies in question, first of all in the various areas of human resource management. In the analysis, we rely mainly on the Varieties-of-Capitalism approach, given its emphasis on the organizational and related cultural differences that result in different types of capitalisms in the world economy. The article is based on company interviews conducted with the representatives of seven Asian subsidiaries in Hungary (1–10 interviews per company) that are operational in the automotive and/or electronics industry. Our conclusion is that management and labor relations in these companies evolve under the influence and through the interaction of related home and host country business culture, thus they contain elements of both. However, we found the clear dominance of host country impacts, which has become more pronounced over time.

Impact of Capital Controls on Foreign Direct Investment in Asia: A Panel Analysis

This paper investigates the impact of restrictive capital policy on foreign direct investment. During twentieth century and onwards most of the developing countries and commonly the Asian countries had at least one or more capital control policy in place. Thus, a thorough analysis of the impact of such restrictions bears significant importance, especially in the determination of foreign capital flow. The main objective of this paper is to identify the impact that these capital control policies have on the foreign capital flow in the Asian countries. The analysis is pursued with the data from 16 developing countries of Asia for the period 2000-2017. Quantitative results are obtained using a fixed-effect regression with the inclusion of several economic indicators. The results suggest that, during this period, freeing restrictions from export proceeds, liberalisation of personal capital account transactions and removal of control on the liquidation of foreign capital significantly increased the flow of foreign direct investment into these Asian countries.

The determinants of foreign direct investment in ASEAN: New evidence from financial integration factor

The determinants of foreign direct investment in ASEAN: New evidence from financial integration factor

Determinants of China’s outward foreign direct investment in Asia: a panel data analysis

This paper is an attempt to examine the trends and significant determinants of China’s outward foreign direct investment (OFDI) in Asia. In order to find out the important determinants of China’s OFDI in Asia, this study applies the panel data regression technique. The time period from 2006 to 2015 is taken into consideration. Econometric analysis has been done based on three data sets: the first includes 27 Asian countries/regions which attract Chinese OFDI. While Chinese Hong Kong is excluded from the sample, the second data set consists of 26 countries the same as those in data set one. The third data set comprises China’s top 12 destination countries of OFDI in Asia. The findings show that China’s OFDI has risen rapidly and secured the second rank globally, only behind the United States and surpassing Japan. For the first time, the flow of Chinese OFDI exceeded the level of inward foreign direct investment (IFDI), and Asia attracted a 74.4% share out of China’s total OFDI in 2015. The results reveal that inflation rate, export, import, corruption, infrastructure and geographic distance are the significant determinants of China’s investment in Asia. This paper provides new evidence on the determinants of China’s OFDI in Asia. By using currently available data of 27 Asian host countries, this paper offers a new insight into significant determinants of China’s OFDI in the region.

Analysis of foreign direct investment as a comparison of macroeconomic factors in seven countries Asean 5, China and Japan during period 1996-2015

The purpose of this research is to analyse the Determination of Foreign Direct Investment (FDI) As a Comparison of Macroeconomic Factors in Asean 5, China and Japan. Besides, this research also analyses the influence of macroeconomic factors due to the strength of the influence of macroeconomic factors to the shock.This research uses the secondary data during the period of 1996-2015 by using the Panel Data model. The variabel which is used here is the macroeconomic factor (Broad Money, Economic Development, labor force, exchange rate, industry, transport service) that has an affect on Foreign Direct Investment in Asean 5, China and Japan.The gap of this research is to connect the macroeconomic factor (Broad Money, Economic Development, labor force, exchange rate, industry, transport service) that has an affect on Foreign Direct Investment. The result of the research shows that the macroeconomic factors have positive effect in ASEAN 5 countries, China and Japan as Home Country, as well as Host Country. Meanwhile, the FDI has a negative impact from one of the macroeconomic factors that is ‘exchange rate’. The policy implication of this research is to suggest the monetary authority, government or private, to supervise the direct investment flow that enters the host countries.

Tax Competition for Foreign Direct Investment in ASEAN: Is Corporate Income Tax Harmonization the Solution?

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Impact of Telecommunication Infrastructure, Market Size, Trade Openness and Labor Force on Foreign Direct Investment in ASEAN

AbstractForeign Direct Investment (FDI) in recent years has created a positive impact for ASEAN countries. FDI give spillover effects that directly contribute capital improvements, technological developments, and global market access, also skills and managerial transfers. In order to attract FDI inflow into country, ASEAN member countries need to know what factors which attract investment related to the needs of infrastructure types and other factors. The purpose of this study is examine the determinant of FDI in ASEAN countries. This research method used is panel data regression period 2005-2015 from 10 countries in ASEAN. The results showed simultaneously and partially telecommunication infrastructure, market size, trade openness, and labor force variable have significant relationship with FDI inflows in ASEAN countries.Keywords: panel data regression, telecommunication infrastructure, market size, trade openness, labor force, FDI.ReferencesAppleyard, DR. 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The Analysis of Corporate Tax Rates, Interest Rate Spread (IRS), and Economic Growth on Foreign Direct Investment in Asean 6 During 1998–2013

This aim of this study was to analyze the influence of corporate tax, Interest Rate Spread (IRS), and the economic growth of the Foreign Direct Investment (FDI) in ASEAN 6 in 1998–2013. This study applied multiple regression analysis. The result showed that the variables of the corporate tax rate, the Interest Rate Spread (IRS), and the economic growth have a significant effect on the growth of the FDI in ASEAN 6. Partially, the corporate tax rates have a negative and significant impact on the development of the FDI in ASEAN 6. The Interest Rate Spread (IRS) and the economic growth have a positive effect but not significant to the growth of the FDI.