Foreign Direct Investment Investment Research Articles

Attraction of foreign direct investment in agriculture

Agriculture is an industry with potential and advantages for development, but it is increasingly difficult to attract foreign direct investment (FDI) flows. Up to now, the results of attracting FDI inflows into the agricultural sector have many limitations, not really reaching the industry’s potential. This study will assess the current situation of attracting foreign direct investments into the agricultural sector in Vietnam in terms of FDI capital scale, FDI capital structure based on agriculture standard, investment method, investment partners and by investment recipients. The Red River Delta is one of the two Vietnamese economic regions with highly agricultural production. With the tradition of agricultural production and many favorable natural, economic and social conditions, the Red River Delta can further develop into a major agricultural production area of the country, contributing to economic development of the region and the whole country. However, FDI investment in agriculture in the region is modest compared to the potential of the industry as well as compared to other sectors in the region. While FDI inflow into Vietnam and other sectors in the region tends to increase strongly, FDI into agriculture is very low and has not grown for a long time, which is contrary to the trend of FDI to other sectors of the Red River Delta as well as the whole country and also contrary to the FDI flows to global agriculture.

Impact of Macroeconomic, Governance and Risk Factors on FDI Intensity—An Empirical Analysis

The study analyzes the impact of macroeconomic, governance and risk factors on foreign direct investment (FDI) intensity with respect to the US market during the period 1960–2019. The study adopted regression methodology. The FDI, macroeconomic and risk data were sourced from the Federal Reserve Economic Data (FRED) database. The governance data were collected from the World Bank Governance Database. The study suggests that infrastructural investments lead to higher FDI. A stronger Euro leads to higher FDI activity in the United States. Research & Development investments is a significant factor which contributes towards enhanced FDI activity. The higher the corporate profitability, the greater the FDI inflows. Exports and imports are significant factors which determine FDI in markets like USA. Inflation has a negative impact on FDI flow regulations, which are aimed to promote private sector development is negatively related to FDI intensity. FDI activity by firms tend to be lower when corruption levels are higher in the country. The higher the governance perception in terms of voice and accountability of citizens, the greater the propensity to attract FDI. The perception of the effectiveness of a government’s commitment towards the quality of public and civil services is directly related to FDI investment.

The effect of mining foreign direct investment inflow on the economic growth of Zimbabwe

The study employs the autoregressive distributed lag (ARDL) approach to examine the relationship between foreign direct investment (FDI) in the mining sector on the Zimbabwe economy, while controlling for both non-mining FDI and domestic investment. Using data over the period 1988–2018, this research results show that foreign direct investment in the mining sector has a significant positive relationship with the country’s GDP in the long run. Mining FDI is revealed to have relatively higher effects as compared to FDI in non-mining sector and domestic investment. The short-run analysis observed that mining FDI as well as non-mining and domestic investment still has positive and significant impacts on growth but at a relatively lower extent. This implies that it takes some time for such investments to have their full effect on the economy.

Covid-19 and investment — an UNCTAD research round-up of the international pandemic’s effect on FDI flows and policy

The shuttering of commercial activity in the face of the Corona (Covid-19) pandemic will have a dramatic effect on the global economy. UNCTAD’s Division on Investment and Enterprise has been monitoring the impact on investment, as well as its implications for development.1 In the face of the unprecedented circumstances, this issue of the Transnational Corporations furnishes a brief overview of this work, notably from the perspective of foreign direct investment (FDI) and investment policy. UNCTAD’s World Investment Report (forthcoming, June 2020) will provide an expanded and in-depth analysis of FDI trends and investment policy developments that also accounts for the impact of the pandemic.

The impact of Chinese Foreign Direct Investment on economic growth of Peru

Since 2000, the Peruvian economic policy presented a positive impact on the economic growth thanks to Foreign Direct Investment (FDI) increase and the inclusion of foreign markets in the local economy. This study analyzes and quantifies the short and long-run impact of FDI and Foreign Direct Investment from China (FDICH) on economic growth in Peru, using annual time series data from 2001 to 2018 obtained from the Central Bank of Peru and the World Bank. Vector Autoregression (VAR) Model, Augmented Dickey-Fuller test, Johansen Co-integration test, and Granger Causality test were employed for data analysis through the production function. The findings revealed the impact and significance of FDI and FDICH in the short and long-run, which were positive and significant. Moreover, the Co-integration test (for long-run relationship) was positive, and the causality test in the relationship between all variables and the economic growth revealed the directionality of these links.

Mexico’s Finance-Growth Nexus with Trade Openness, FDI and Portfolio Investment: Evidence from VECM Cointegration Analysis

This study investigates Mexico’s finance-growth nexus by controlling the “globalization” variables of trade openness, foreign direct investment (FDI) and portfolio investment together with the structural break dummy. Financial development is proxied by two indicators of size and efficiency. Implementing the cointegration and Granger causality tests in the framework of the vector error correction model (VECM), we found that: financial size is negative for economic growth with no feedback; financial efficiency and economic growth are in a negative bilateral relationship; trade openness and portfolio investment are positive for economic growth; and FDI is negative for economic growth and financial efficiency.

A Study on Impact of Make in India in Indian Foreign Direct Investment

That impact of globalization on employment can be a Central concern of current political current economic climate. For the “Make in India” promotion, the Government of India has diagnosed twenty-five precedence sectors that will be offered properly. Foreign direct investment (FDI) in India has received a the spian enhancement from instigating the Make in India scheme, as per the most recent Economic Survey. The investment climate in India has improved. Intending to attract and promote FDI, the Government of India (GoI) has put in place a policy framework on FDI, which is transparent, predictable, and easily comprehensible. India received FDI Inflow during 2014-2018 of US$ 223. Sectors such as Services, Computer software & hardware, Telecommunications, Trading, and Construction attracted the highest FDI. Most of the foreign countries like to invest in India during the 2018-19, India received the maximum FDI equity in flows from Mauritius, followed by Singapore and Japan. Total FDI investments in India during 2018-2019 are 62,001 cores, Government of India new polices to promote the FDI impact top 10 sectors services sector, Telecommunications, Computer software and hardware, Construction Development, Trading, Automobile Industry, Chemicals, Drugs & Pharmaceuticals, Construction (Infrastructure) Activities, Power. Most as of late, the all-out FDI value inflows for April 2019 contacted 36,463 crores. India During 2018-2019, India got the greatest FDI value inflows from Mauritius (Rs 57,139 crore), trailed by Singapore (112,362 crores), Netherlands (9,423 crores), USA (10,119 crores), and Japan (3, 28 4crore). This paper aims at explaining the impact of Make in Indian Foreign Direct Investment in various aspects.

FOREIGN DIRECT INVESTMENT AND THE PERFORMANCE OF INDONESIAN MARKETPLACE E-COMMERCE CORPORATION: AN APPLICATION OF NETWORK, OWNERSHIP, LOCATION AND INTERNALISATION FRAMEWORK

Data on real-time marketing performance from micro, small and medium enterprises (MSMEs) selling their products in marketplace e-commerce corporations (MECCs) is a big challenge for researchers studying the performance of MECCs capital structure. This article explores the use of Google Trends to determine the impact of Foreign Direct Investment (FDI) on MECCs’ performance. The findings of the trend analysis are explained using the N-OLI framework. It is found that there was a sharp trend decrease in MECCs with partial FDI (Tokopedia and Bukalapak) and full domestic investment (Blibli).On the other hand, there was a sharp increase in MECCs full FDI (Shopee). Other MECCs with full FDI, namely Lazada, has experienced a decrease but it is not as consistent as that of partial FDI. An increase trend in Shopee has negative correlation with a decline trend in Bukalapak. However, after being grouped, partial FDI has a significantly higher mean score compared to full FDI, and MECCs without FDI has the lowest mean score. This finding shows that in the case of Indonesia, FDI plays a role in encouraging the success of MSMEs, especially in MECCs, which have a combination of FDI and domestic investment.

The Importance of Deep Integration in Preferential Trade Agreements: The Case of a Successfully Implemented Ukraine-Turkey Free Trade Agreement

We construct a 45-sector model of Ukraine with Turkey and six other regions to estimate the impacts on Ukraine of deep integration with Turkey in their potential Free Trade Agreement (FTA). Our central model contains foreign direct investment (FDI) in business services with endogenous productivity effects from additional varieties of goods or services in imperfectly competitive sectors. We model deep integration to include reduction of: (i) barriers against FDI in business services; (ii) non-tariff barriers in goods; and (iii) time in trade costs. We innovatively estimate the ad valorem equivalents of the three types of deep integration instruments we model, and we construct an 85-sector input-output table of Ukraine. We estimate that this FTA will increase welfare in Ukraine by 2.72 percent, with the deep integration aspects responsible for about 56 percent of the gains; but preferential tariff reduction by Ukraine alone contributes less than one percent of the gains. We show including these deep integration features and imperfect competition produce estimated gains 3.5 times larger than a model of perfect competition focusing on only a narrow agreement limited to tariff elimination. We estimate that a reduction of non-discriminatory barriers against both FDI and Ukrainian investment in business services would add an additional 2.0 percent of real household income to the estimated gains.

Economic growth effect of private capital inflows: a structural VAR approach for Nigeria

Purpose The purpose of this paper is to examine the effect of shocks in the various components of private capital inflows on economic growth in Nigeria using quarterly data in the period 1986Q1–2016Q4. Design/methodology/approach The study employs the impulse response function and the forecast error variance decomposition of the structural vector autoregression (SVAR) model. Findings The research result shows that shocks in foreign direct investment (FDI) inflows and portfolio investment inflows have a positive and significant impact on economic growth in Nigeria. In addition, FDIs accounted for significant variation in the growth of the Nigerian economy followed by portfolio investments, while personal remittances exerted the least variation in growth. Practical implications The government should promote a favorable macroeconomic environment for existing and potential foreign investors to ensure the continued inflows of FDI and portfolio investment. Originality/value The novelty of this study lies in disaggregating private capital inflows and analyzing the effect of the shock of each component on the growth of the Nigerian economy using SVAR.

Foreign Direct Investment Dynamics in South Africa: Reforms, Trends and Challenges

Abstract This paper gives an overview of foreign direct investment (FDI) in South Africa from 1980 to 2017. It highlights trends in FDI inflows, reforms that have been implemented to date, and challenges that need to be addressed in order to increase the FDI inflows into the country. Government reforms on FDI have been two pronged. Firstly, there are policies that are aimed at creating a strong competitive industry and a strong industrial base for investment. Among such policies are trade liberalisation policies, multilateral and regional integration policies, supportive industrial policies, and bilateral trade agreements. Secondly, there are policies that directly target the FDI investment. These policies include, amongst others, investment incentives, regulatory reforms, exchange control relaxation, and Bilateral Investment Treaties (BITs) reforms. The findings from this study show that FDI inflows have increased significantly from 1990 although they still remain depressed.

The effect of FDI on domestic investment and economic growth case of three Maghreb countries

PurposeThe purpose of this study is to show how foreign direct investment (FDI) affects domestic investment and economic growth. This study empirically examines this question in the case of three developing countries (Tunisia, Algeria and Morocco).Design/methodology/approachUsing the GMM estimator technique, the authors constructed a system with simultaneous equations by three endogenous variables: economic growth (GDP), FDI and domestic investment (DI).FindingsThe study was a nuance, its results, at the role of investment–growth relationship, are of paramount importance though subtle and slightly different.Originality/valueThe authors used data from international institutions such as the IMF, UNCTAD, OECD and the World Bank for macroeconomic aggregates. However, the interest rate variables are derived from the central banks of the three countries in the sample. The analysis covers the period from 1980 to 2014.

Effect of terrorism on economic growth in Pakistan: an empirical analysis

The paper examines the impact of terrorism on economic growth in Pakistan. Channel variables, such as foreign direct investment (FDI), domestic investment, and government spending, through which terrorism influences economic growth, are identified. For empirical analysis, annual data for the period 1972–2014 are used, and a structural model is estimated using the generalised method of moments (GMM) estimation approach. The results reveal that (1) the impact of terrorism on FDI and domestic investment is significantly negative, whereas the impact on government spending is significantly positive and (2) the net effect of terrorism on economic growth is negative. One per cent increase in terrorism reduces FDI by 0.104 per cent, domestic investment by 0.039 per cent and economic growth by 0.002 per cent. To increase economic growth more resources must be allocated to improve law and order. To attract foreign investment, complementary domestic investment must be increased.

Domestic and Foreign Investment in Advanced Economies. The Role of Industry Integration

Previous research using country or firm data has been inconclusive on the sign of the relation between domestic and foreign investment. Though several hypotheses have been formulated, the factors determining the sign of this relationship are not clearly identified yet. In this paper we explore the role of industry integration in determining the relation between outward foreign direct investment (FDI) and domestic investment by using disaggregated data at the industry level and several indicators of industry integration. The proportion of intangible investment is used as a proxy of horizontal integration and several measures of participation in Global Value Chains (GVCs) as proxies of vertical integration. The empirical results confirm that the relationship between outward FDI and domestic investment is very varied and differs across industries and countries. That relation is positive (complementary) for those industries with low intensity in intangible investment and high forward integration in GVCs –two features of vertically integrated industries– and becomes negative for those industries with high intangible investment (usually more horizontally integrated).

IMPACT OF FOREIGN DIRECT INVESTMENTS ON EMPLOYMENT IN THE REPUBLIC OF CROATIA

Globalization has enabled "joining" the rest of the modernity project. Expressive values such as knowledge, information, symbols and communication have become an imperative. Planetary power has encouraged the movement of free international capital in the global village. Digital economy and networked politics are responsible for the freedom of movement of capital that has become the part of financial globalization. From the range of stimulating factors to the free movement of international capital, the thrust of foreign investment plays an important role. The intricacy of neoclassical theory and the neoliberal political economy have enabled stronger interconnectedness and deeper integration of national economies. Consequently, there have been changes in the way of thinking of the ruling elites in terms of importance of foreign direct investment (FDI). Such awareness has also come through to the ruling elites of the Republic of Croatia who apply the strategy of attracting FDI based on pragmatic nationalism. FDIs are incorporated into the "national box" in the Republic of Croatia as one of the tools to gain advantages. In the perspective of advantages and disadvantages, the work is focused on the employment category from the perspective of the Republic of Croatia as the recipient of FDI or political foreign direct investment (PFDI). Given the importance of attracting FDI in the Republic of Croatia, the subject of the research includes consideration of the essence of Croatian FDI and employment in the Republic of Croatia in terms of identifying the attracted investments and the correlation with the growth or decline in employment. The aim of the research is to identify and deepen the topic of FDI in Croatia and its impact on employment in the Republic of Croatia. In addition, the aim is to explore and identify key FDI providers and employment impacts.

The Impacts of Domestic and Foreign Direct Investments on Economic Growth in Saudi Arabia

This paper investigates the causal links between domestic capital investment, foreign direct investment (FDI), and economic growth in Saudi Arabia over the period 1970–2015 by using the autoregressive distributed lag (ARDL) bounds testing to cointegration approach. The fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOLS), and the canonical cointegrating regression (CCR) are employed to check the robustness of the ARDL long run estimates. The results show that in the long term there are negative bidirectional causality between non-oil GDP growth and FDI, negative bidirectional causality between non-oil GDP growth and domestic capital investment, and bidirectional causality between FDI and domestic capital investment. FDI affects negatively domestic capital investment in the short run, whereas domestic capital investment affects negatively FDI in the long run. Both finance development and trade openness affect positively non-oil GDP growth, FDI inflows and domestic capital investment in the long run. The findings are important for Saudi policy makers to undertake the effective policies that can promote and lead domestic and foreign investments to enhance economic growth in the country.

The Impact Of Foreign Direct Investment On Turkish Economy 2010–2016

Summary This study focuses on Foreign Direct Investment (FDI) inflows and how they are linked with the economic indicators in Turkey including the Real Effective Exchange Rate (REER), and Gross Domestic Product per capita of Purchasing Power Parity - GDP (PPP) in Turkey. The GDP (PPP) variable is used because it shows significant causality on REER, along with the exchange rate volatility of the U.S Dollar in the Turkish stock market. Also, as an important sector of the Turkish economy, tourism revenue is elucidated according to the Organization for Economic Co-operation and Development (OECD) data from 2016. The main objective of this study is to evaluate the impact of the FDI investment on economic condition in Turkey for the period between January 2010 and July 2016. The selected period is important because it represents the crucial time for Turkish economy following the 2008 global financial crisis along with the ongoing Civil War in neighboring Syria that had initiated in 2012, Turkish-Russian crises of 2015, and the military coup attempt in Turkey in 2016. It is argued that despite all the negative international and regional developments, FDI and Tourism play key roles in attracting income to the country. This is presented in the level of REER and GDP for PPP. The results also support the findings of many economists, who have previously asserted that the Turkish economic interaction is growing at a globalized level, and is able to compete with the other large attractive areas for foreign investors around the world. Finally, the results demonstrate that the tourism industry was the least affected sector in Turkey.

FOREIGN INVESTMENT REGULATION IN THE SERVICES SECTOR IN AFRICA: SADC EXPERIENCE

The growth of the service sector foreign direct investment (FDI) globally reflects an underlying need for appropriate regulation. As investors look into the African continent for investment opportunities, they need to find a regulated environment that can support their investments and related rights. This includes both intra-Africa FDI flows and investments that emanate out of the continent. The focus of this paper is on the Southern African Development Community (SADC). This paper will show that FDI will be critical for trade liberalization to be realised in the region. The findings of the paper point to the need for an institutional and regulatory framework in order to understand the consequences for investment flows. Where gaps are, appropriate cover needs to be found.

Examining the impact of public investment and private investment on economic growth: empirical evidence from BRICS nations

This paper examines the factors impacting economic growth and the interlinkages of public investment, foreign direct investment (FDI), and private domestic investment using a panel data sample of Brazil, Russia, India, China and South Africa (BRICS) group of nations covering the time period of 1990 to 2014. We have made use of economic growth models suggested by Vu Le and Suruga (2005) in order to estimate economic growth and the individual impact of public investment on FDI and private domestic investment, respectively. The empirical results indicate that the private domestic investment along with FDI play a significant role in contributing towards economic growth. Further, analysing the impact of public investment on FDI and private domestic investment suggests that an increase in public investment in BRICS nations reduces the positive impact of FDI and private domestic investment on economic growth (crowding-out effect) when exceeding certain extent levels. Hence, we can conclude that from an overall prospective, public investment in BRICS nations has a substitutable effect on FDI and private domestic investment.

The Importance Of Foreign Direct Investments On Economic Development In Transitional Countries: A Case Study Of Kosovo

The role of investment, in particularly foreign direct investment (FDI), is regarded as one of the most important contributors of economic growth. The past quarter century has witnessed remarkable growth in FDIs flow all over the world. This is due to the fact that many countries, especially developing countries, see FDI as an important element in their overall strategy for economic development. This paper provides a review of the economic impact of FDI, with specific focus on developing countries particularly Kosovo and ex-Yugoslavian countries in the Balkan Peninsula. FDIs contribute to the economic development of host country in two main ways. They include the augmentation of domestic capital and the enhancement of efficiency through the transfer of new technology, marketing and managerial skills, innovation, and best practices. Secondly, FDI has both benefits and costs, and its impact is determined by the country’s specific conditions in general and the policy environment in particular. This is in terms of the ability to diversify, the level of absorption capacity, targeting of FDI, and the various opportunities for linkages between FDI and domestic investment. The paper aims to clarify the main causes of failure of foreign direct investments in Kosovo and reviles the importance of indicators that majorly has an institutional nature. Neither the amount nor the effects of foreign direct investment were satisfactory. Therefore, the paper reviles that in this aspect, a wide range of actions needs to be made, which is specifically related to government institutions and the business community.