Foreign Direct Investment In Industry Research Articles

The impact of population aging on FDI: A panel data analysis based on 27 segments in China's manufacturing industry.

Foreign Direct Investment (FDI) is an important part of China's new "double-cycle" development pattern. Among the many factors affecting FDI, will the aging population have an impact on manufacturing, the key industry for FDI? This paper examines the direct and indirect effects of an aging population on FDI using panel data from 27 manufacturing sub-industries in China between 2005 and 2020. It is found that (1) the deepening of the population's aging negatively affects FDI inflows and this result continues to hold after a series of robustness tests. (2) Using labor quantity and labor cost as mediating variables, it is found that the population's aging indirectly affects FDI by reducing labor quantity and increasing labor cost. (3) The heterogeneity analysis study finds that the deepening of the population's aging significantly inhibits FDI in labor-intensive and capital-intensive industries among manufacturing sub-industries, and the inhibitory effect on FDI in technology-intensive industries is not significant. This study provides meso-evidence to support the findings of existing studies and provides suggestions and insights for the government to formulate relevant policies to actively cope with aging.

Research on the impact of public environmental participation on foreign direct investment: evidence from China

Since the reform and opening up, the scale of foreign direct investment (FDI) inflows into China has been continuously expanding, but the imperfect environmental governance mechanism has led to increasingly severe environmental problems in China. This paper studies the impact and mechanism of public environmental participation (PEP) on FDI. The results show that PEP has a significant negative impact on the FDI inflow of enterprises. Hindrance effect of PEP on enterprise FDI is more obvious in economically developed eastern regions, coastal cities and first-tier cities. PEP has a greater impact on FDI in high-tech industries. The economic growth target has a restraining effect on China’s environmental protection, weakening public supervision of FDI. The constraint of economic growth targets increases the pressure to develop the economy, and weakens the inhibitory effect of PEP on corporate FDI. This study provides important empirical evidence for improving China’s environmental governance system and high-quality utilization of foreign investment.

Financial spillovers of foreign direct investment: Evidence from China

We study the financial spillovers of Foreign Direct Investment (FDI) to local suppliers through a trade credit channel and a bank loan channel. Using rich Chinese firm-level data, we provide robust evidence that a high concentration of FDI in downstream industries substantially reduces domestic suppliers' trade credit provision and improves their access to bank loans, especially unsecured loans. A variety of empirical strategies suggest that the effects are causal. Furthermore, the beneficial bank loan effect is more pronounced for local suppliers facing more severe information frictions. We also use supplier-customer links to provide additional evidence for FDI's financial spillovers.

Research on Employment Effect of FDI in Service Industry in Jiangsu Province

In recent years, the global foreign direct investment (FDI) has shown a “service-oriented” trend, and the labor force has gradually begun to flow to the service industry. Introducing FDI into service industry can not only absorb part of employment with its job-creation effect, but also promote the improvement of employment quality. Under the guidance of market demand and the government, the proportion of FDI in China's service sector has gradually increased, and the service sector and service trade have become a new driving force for China's economic growth. The development of service industry in Jiangsu province has always been in a leading position in China. Meanwhile, Jiangsu province is also one of the main provinces where labor force gathers. Therefore, it is of theoretical and practical significance to study the employment effect of FDI in service industry in Jiangsu Province for relieving employment pressure and promoting the efficient use of FDI. This study firstly combs the relevant literature at home and abroad, which is divided into two aspects of employment quantity and employment quality. On this basis, the paper analyzes the mechanism of service FDI's influence on employment from these two levels and constructs the theoretical basis of this study. Secondly, this study analyzes the current situation of FDI and employment in service industry in Jiangsu Province. Then, empirical analysis is made on the data of Jiangsu province from 2007 to 2020, and the conclusion is drawn that FDI in service industry in Jiangsu Province can not only promote the increase of employment quantity in service industry, but also promote the improvement of employment quality in service industry. Based on the above analysis, this study puts forward relevant suggestions on how to make more efficient use of FDI to drive employment effect in Jiangsu province.

Does carbon trading mechanism improve the efficiency of green innovation? Evidence from China

Although the innovation effects of carbon trading mechanism (CTM) have attracted considerable concern, there is still a lack of empirical research on how the CTM promotes the efficiency of green innovation in China. Therefore, this paper purposes to investigate how CTM affects the efficiency of green innovation and revels its potential paths, including industrial structure, energy structure, technological innovation, human capital, and foreign direct investment (FDI), based on panel data of 30 provinces and cities in China spanning from 2008 to 2020. SBM-DEA model is employed to calculate the efficiency of green innovation in 30 provinces and cities. We then employ the synthetic control method (SCM) to investigate the influence of the CTM on the efficiency of green innovation, and the results show that the CTM can improve the efficiency of green innovation. By using the Hausman model, several conclusions are obtained. First, the CTM has a positive effect on improving the efficiency of green innovation. Second, from 2008 to 2020, the efficiency of green innovation in China is continuously improving, although it is still imbalanced across regions. Third, the CTM can influence the efficiency of green innovation by affecting the industrial structure, energy structure, human capital, and FDI.

Competitive Advantage Between Indonesia and Thailand on Electric Vehicle Manufacturing

Indonesia and Thailand engage in the competition of Foreign Direct Investment (FDI) for Electric Vehicle (EV) industry. This study aims to identify determinant factor of FDI in EV industry, analyse the strategy to attract FDI, and see the competitiveness between Indonesia and Thailand in EV manufacturing. Qualitative method used by comparing Indonesia and Thailand through Porter Diamond Model. The model consists of four parts such as factor of conditions; demand conditions; related and supporting business; firm strategy, structure, and rivalry. There are 14 variables inside the four parts to analyse both countries competitiveness through comparing them in every variable. Results indicate that Indonesia has 5 out of 14 variables better Thailand while Thailand has 9 out of 14 variables that is better than Indonesia. Indonesia has the advantage on consumer side due to the possible lower price of EV while Thailand has the advantage on production activities

The share of FDI in the value added of innovative and other industries in Poland

PurposeThis study aims to examine the share of foreign direct investment (FDI) in creating the value added (VA) of innovative and other industries in Poland in 2004–2020.Design/methodology/approachIn terms of the empirical analysis of FDI stocks, their locations were divided into innovative and other industries. The differences in the creation of VA are presented by domestic and foreign enterprises. The impact of FDI stocks in individual industries on gross domestic product (GDP) changes was assessed using the vector error correction model (VECM).FindingsFDI from innovative industries generated approx. 7% VA of the Polish economy in the years 2004–2020. In 2009–2018, the share of VA of foreign enterprises in innovative industries in Poland showed a faster growth (by 5 pp) than in other industries. The results of decomposition confirm that the level of explanation of GDP by FDI in innovative industries is higher than in other industries.Research limitations/implicationsChanges in the classification of activities reduce the time series period available.Practical implicationsThis study explains the participation of foreign and domestic enterprises in creating VA. The results are useful to pursuing the national investment policy.Social implicationsThe economic results of domestic and foreign enterprises in the host country affect the economic growth and development and ultimately the socio-economic conditions of life.Originality/valueThis work provides some additional explanations for the inconclusive results of international research into the impact of FDI on GDP or the spillovers effects. Its usefulness concerns the detailed impact of FDI by industrial structures on GDP.

EFFECTS OF FOREIGN DIRECT INVESTMENT ON THE ECONOMY AND ENVIRONMENT

Classical theories linking increased CO2 emissions to a country's economic development supported by foreign direct investment in industrial plants, coking plants, ironworks, shipbuilding, and other heavy industries marked the 20th century, with large MNCs seeking refuge in underdeveloped economic development. The second millennium of Croatia began with deindustrialization, both due to the extinction of large state-owned industrial losers and due to transformation and privatization, where the interest of capital was in the financial and tourism sectors. This does not mean that FDI was not present, but the expected greenfield investments were missing, especially after joining the EU. To what extent FDI has influenced the increase in carbon emissions is the subject of research in this paper.

On the allocation puzzle and capital flows: Evidence from foreign direct investment and real sector growth in Africa

AbstractThis paper takes a new dimension on the foreign direct investment (FDI)–growth nexus through the lens of the allocation puzzle. We examine how the influx of FDI affects the broader economy through its impact on real economic sectors in a panel of 42 Sub‐Saharan African (SSA) countries over 1980–2017. Using a dynamic panel model and decomposing the real sector into its parts, we test for the possibility of a two‐way bi‐directional relationship between growth in agriculture, manufacturing, industry and service value additions, and FDI. There is no evidence of an allocation puzzle at the level of the real sector and the components parts, which suggests that SSA countries with relatively high growth in the real sector will attract more FDI. While the effect of FDI on the real sector is positive at the disaggregated level, there is a positive bi‐directional effect between FDI and growths in manufacturing, industry and service value additions. The results are robust to key determinants of the growth–FDI nexus.

Determinants of foreign direct investment: employment status and potential of food processing industry in India

PurposeThe paper underpins an advanced domestic manufacturing that comes with some advanced employment specialization status of individual industries as the key determinant of foreign direct investment (FDI) and considers how FDI in the food processing industry in India relates to this focal point.Design/methodology/approachThis paper investigates how inward FDI inflows relate to domestic investment and revival in the industry using Auto Regressive Distributed lags (ARDL) model over the period 2000–2017. The model allows for different specifications to study whether FDI is responsible for the revival or the prior revival induces the FDI.FindingsThe results show the lack of proper advanced specialized employment status of the food processing industry. FDI in food processing is mainly guided by exports and imports opportunities and FDI plays no role in the revival of advanced growth in the industry. This finding explains why FDI in the industry is predominantly service sector oriented.Originality/valueThe paper underlines (1) the proper conceptualization of human capital as an important determinant of FDI; (2) reinterpretation of Kaldor's technical progress function that uncovers how employment dynamics embedded in intermediate goods specializations play a key role in supporting a higher pace of investment (and FDI); (3) labor costs' importance should involve not only the wage rate but also the advantages that a specialized employment base and (4) FDI in manufacturing demands a greater policy focus on developing domestic bases of intermediate goods specializations.

AN EXAMINATION OF THE RELATIONSHIP BETWEEN CHINA’S FOREIGN DIRECT INVESTMENT AND INDUSTRIAL PERFORMANCE IN AFRICA

This paper examined the relationship between Chinese outward foreign direct investment (FDI) and the industrial sector’s performance represented by the industrial sector’s contribution to the gross domestic product for a sample of 49 African countries between 2003 and 2019. The study also examined the moderating effects of Chinese FDI on Africa’s industrial performance. We employed panel fixed-effects and panel-corrected standard errors models to control for country heterogeneities and serial correlation in the disturbance terms, usually present in panel data and may bias the estimates. The results showed that Chinese FDI has moderating effects on industrial performance through industrial employment and natural resources. We also found a significant positive relationship between contemporaneous Chinese FDI and industrial performance, suggesting that Chinese FDI of a given year positively affects the same year’s industrial performance. The study further revealed lingering effects of Chinese FDI on industrial performance, implying the favorable impact of Chinese FDI on industrial performance in a given year may not be immediate. Policymakers are advised to improve the absorptive capacities of industrial workers and direct Chinese FDI towards transforming natural resources into industrial goods.

Инвестиционная привлекательность энергетического сектора России для иностранных инвесторов: оценка и рекомендации

The article analyses the investment attractiveness of the Russian energy sector for foreign investors. Analysis is based on such indicators as the volume of energy resources’ production and export as well as their dynamics, foreign direct investment in the country's energy industry, portfolio investment in the "green" energy industry. The author draws up a conclusion that despite the exports decrease in the main types of energy resources (oil, gas, coal, energy) over the past few years (2020–2021), Russia continues to play a leading role in the global fuel and energy complex, the volume of foreign direct investment in industry is steadily growing, the “green” energy industry is actively developing. The author also dwells on the difficulties that foreign investors have to face when investing in the Russian energy sector. The present study results in identifying the main directions for improving investment attractiveness of the Russian energy sector for potential foreign investors.

Can technological innovation, foreign direct investment and natural resources ease some burden for the BRICS economies within current industrial era?

Economic advancement has tended to affect the processes of industrialization, which has increased the value of exploited natural resources via the application of technology. Intensive use of natural resources via total reserves, technological innovation, foreign direct investment (FDI), and renewable energy can have an impact on the environment. Considering this, the present study investigates the nexus between industrialization, total reserves, inflows of FDI, technical innovation, renewable and natural resources, and CO2 emissions in the case of BRICS. To this end, annual frequency data for BRICS from 1990 to 2019 are employed in panel framework. The study employs a battery of econometric techniques, namely the Augmented Mean Group (AMG), Common Correlated Effects Mean Group (CCEMG), and Driscoll-Kraay estimators to explore the underlined relationship. The cointegration results based on Westerlund, J. (2007) show that there exists a long-run equilibrium relationship between the study outlined variables over the investigated period. From the empirical analysis, technological innovation and renewable energy both reduce CO2 emissions while industrial value-added, natural resources, FDI and total reserves contribute to the degradation of the environment. Additionally, the interaction between industrial value-added and technological innovation also has negative impact on the BRICS countries’ environment. Based on these outcomes, the BRICS economies are enjoined to pursue green technology growth without compromise for environmental quality in the bloc. Finally, numerous significant policy ramifications for protecting environmental quality in BRICS economies have been proposed in the concluding section.

Effects of foreign direct investment on the economy and environment

Classical theories linking increased CO2 emissions to a country's economic development supported by foreign direct investment in industrial plants, coking plants, ironworks, shipbuilding, and other heavy industries marked the 20th century, with large MNCs seeking refuge in underdeveloped economic development. The second millennium of Croatia began with deindustrialization, both due to the extinction of large state-owned industrial losers and due to transformation and privatization, where the interest of capital was in the financial and tourism sectors. This does not mean that FDI was not present, but the expected greenfield investments were missing, especially after joining the EU. To what extent FDI has influenced the increase in carbon emissions is the subject of research in this paper.

Феномен прямых инвестиций, не связанных с “классическими” ТНК

The article is devoted to the review of current scientific research on foreign direct investment (FDI), which is not related to “classical” TNCs. It is shown that a separate study of “born global” firms from TNCs is required mainly because of the need to adjust the theoretical concepts that explain the phenomenon of TNCs. The separate study of FDI of sovereign investment funds and investors in foreign real estate is useful mainly due to the applied tasks of state regulation of such investments. Non-standard FDI can also include investments by pseudo-TNCs, with round-tripping FDI through offshore and similar jurisdictions, as well as FDI by private equity funds. At the same time, pseudo-TNCs and private equity funds can be studied within the framework of the established paradigm of TNCs analysis. Therefore, relatively small amount of publications are devoted to such topics. The majority of publications on non-typical FDI appeared only in the 2000s, which illustrates the blurring of the usual boundaries of FDI. Russian scientists are still focused on studying TNCs. This is partly due to the fact that a new direction has also emerged in such analysis – the study of TNCs from developing and post-socialist countries, which are often difficult to attribute to “classic” Western multinational investors. In this aspect, Russian and generally post-Soviet TNCs turned out to be interesting material for analysis at least in the first 10–15 years of the 21st century. However, the analysis of new FDI players is important for Russia for a number of reasons: 1) creating comfortable conditions for the import of capital to Russia while respecting national interests (FDI of sovereign funds, especially Chinese and Arab); 2) encouraging forms of capital export that contribute to improving the position of Russia in the international division of labor (primarily FDI in modern industries of small “born global” firms); 3) limiting excessive capital exports (FDI of pseudo-TNCs and individuals).

Does Industrial Agglomeration or Foreign Direct Investment Matter for Environment Pollution of Public Health? Evidence From China.

This article focuses on the interaction between China's industrial agglomeration, foreign direct investment (FDI) and environmental pollution of public health in the past 15 years. By conducting theoretical and empirical research, we try to reveal the relationship and mechanism between the economic growth and public health from the perspective of environmental pollution. By constructing an embedded theoretical model of industrial agglomeration and FDI, this article combines other environmental pollution influencing factors, expounds the impact mechanism of industrial agglomeration on environmental pollution. Based on the provincial-level panel data of China on environmental pollution and industrial agglomeration, the empirical test is carried out through the threshold panel regression model. According to the results, industrial agglomeration can significantly rectify the regional environmental pollution, thereby benefiting public health. FDI has a phased impact on the relationship between industrial agglomeration and environmental pollution. Specifically, when the level of FDI is low, the positive improvement effect of industrial agglomeration on environmental pollution is relatively strong. This is mainly because industrial agglomeration can promote economic growth, technological progress, and enhance environmental awareness. When the level of FDI exceeds the first threshold and continues to rise, the positive improvement effect of industrial agglomeration is maximized. Before the level of FDI exceeds the second threshold, this effect gradually weakens. The population concentration and excessive expansion of city scale brought about by industrial agglomeration will lead to the increase of regional resource and energy consumption, thus aggravating environmental pollution. The policy implication is that while the government and enterprises are vigorously increasing the level of foreign investment, they must pay equal attention to economic growth and public health, and the level of industrial agglomeration should match the level of foreign investment so as to give full play to the positive improvement effect of industrial agglomeration on environmental pollution, and realize the coordinated development of the regional economy, environment and population health.

VỐN ĐẦU TƯ TRỰC TIẾP NƯỚC NGOÀI VÀO PHÁT TRIỂN CÔNG NGHIỆP Ở VÙNG KINH TẾ TRỌNG ĐIỂM BẮC BỘ GIAI ĐOẠN 2010-2018

The Northern key economic region, which includes Hanoi, Vinh Phuc, Bac Ninh, Quang Ninh, Hai Duong and Hung Yen, is the main centers of Vietnamese politics, economics, culture and science and technology. This region has many advantages in terms of economic exchange and international integration. In the period of 2010 - 2018, the region has really become a reliable destination for domestic and foreign investors, attracting increasing investment capital, especially foreign direct investment (FDI) in the manufacturing industries. Thanks to FDI in industry, the growth rate of gross output is the highest among 4 key economic regions; changing industrial structure (emerging electronics, informatics, manufacture mechanics ...); ownership structure (the FDI sector ranks first with 4 key economic regions) and territorial structure (industrial production value of Bac Ninh province has surpassed that of Hanoi city, leading the whole Northern key economic region). The paper focuses on analyzing FDI in industrial development and its role in socio-economic development of the Northern key economic region in the period of 2010-2018.

Heterogeneous green innovations and carbon emission performance: Evidence at China's city level

Green innovation has been positioned as an effective way to balance economic development and environmental governance. However, the impact of green innovation (i.e., innovation relating to the environmentally sound technologies (ESTs)) on carbon emission performance in a large developing country, such as China, has been paid little attention. This paper investigates the impact of green innovation on carbon emission performance based on a panel data set covering 218 prefecture-level cities in China from 2007 to 2013. First, we examine whether heterogeneous green innovations have a synergistic effect on carbon emission performance using the two-way fixed effect model, instrumental variable method, and spatial econometric model. Moreover, using a causal mediation effect model, we identify four kinds of potential transmission channels of green innovation affecting carbon emission performance: energy consumption structure effect, industrial structure effect, urbanization effect, and foreign direct investment (FDI) effect. The results indicate a positive effect of green innovation and its sub-categories on carbon emission performance in China. However, a noteworthy phenomenon is that direct carbon emission-reduction innovation and green administrative innovation have a weaker effect on carbon emission performance than other kinds of green innovations. In addition, the positive effect has an evident heterogeneity in different kinds of cities. To be specific, green innovation has an evident positive impact on carbon emission performance in key cities for environmental protection, resource-based cities, non-resource-based cities, and central cities. Meanwhile, a “snowball” effect and a symbiotic effect of carbon emission performance exist in local cities and between cities, respectively. Finally, we find that green innovation significantly decreases and increases carbon emission performance through industrial structure effect and FDI effect, respectively.

China’s Foreign Investment Encouraged Catalogue and Negative Lists as a Tool of Foreign Direct Investment Attraction

<p>Theoretical background: Due to the growing maturity of Chinese market the country needs to adjust its policy regarding foreign direct investment (FDI), i.e. to increase openness for FDI, to keep control over them in key industries and to influence their inflow in desired industries and regions. Adopting the negative-list approach and changes in both the negative list and encouraged industry catalogue provides tools for this challenge.</p><p>Purpose of the article: The purpose of this article is to present how changes in China’s Foreign Investment Encouraged Catalogue and Negative Lists both in free-trade zones (FTZs) and at the national level are used as a tool for managing country’s FDI inflow.</p><p>Research methods: Analysis of legal documents and reports as well as literature review.</p><p>Main findings: Starting from the adoption of negative-list approach in FTZs in 2013, the negative lists had been drastically reduced both in reference to FTZs and national level. Those reductions lead to a decrease in China FDI restrictiveness index. FTZs were used as a testing area for both the negative list composition and negative-list approach itself. Negative lists allowed the state to keep control over FDI in key industries allowing, at the same time, greater freedom for foreign investors. Encouraged catalogue is used not only as a tool for attracting FDI from desired industries but also for addressing regional inequalities.</p>

Environmental Regulation and Foreign Direct Investment: Evidence from China’s Eleventh and Twelfth Five-Year Plans

This paper investigates environmental regulation and its impact on inward foreign direct investment (FDI) in developing countries. Based on the Chinese province-industry-level panel data in the period 2001 to 2015, we use a difference-in-difference-in-differences (DDD) model to evaluate pollution haven behavior in the context of China’s 11th and 12th Five-Year Plans SO2 emissions reduction policy. The results show that the policy leads to fewer FDI inflows to its highly-polluting industries in provinces with tougher pollution reduction targets. In addition, the environmental policy has significantly inhibited FDI inflows in provinces with stricter environmental enforcement, while investment in provinces with worse environmental enforcement is insensitive to environmental policy. These findings are consistent with pollution haven behavior. In contrast, FDI in industries with high levels of technology is not significantly influenced by the policy, whereas the FDI in industries with low levels of technology shows a negative response to environmental policy. This is overall evidence confirming a pollution haven effect (PHE), although technology differences could alleviate the negative effects of environmental regulation on inward FDI.