Foreign Direct Investment Outflows Research Articles

Thick as thieves? Corruption, institutional trust, and investment locations

What makes corrupt investment locations still attractive to investing economies? This article examines whether states’ tendency to ignore corruption in investment targets is due to their being accustomed to corruption at home, or is instead due to a perception that despite flaws institutions can be counted on to remain functional. We argue that economies where corruption is viewed permissively would still likely invest in states equally perceived as corrupt but not necessarily due to shared collective tolerance. Rather, a perception of institutional dependability motivates the selection of investment locations, regardless of how people in investing states view corruption. To test our conjecture, we analyzed bilateral foreign direct investment outflows for 96 countries between 2001 and 2012 using exponential random graph models alongside value-based typologies for corruption and institutional confidence. Our results suggest that, overall, it is trust in institutions and not necessarily trepidation about corruption that mediates the selection of investment locations.

FOREIGN DIRECT INVESMENT OUTFLOWS AND ENVIRONMENTAL POLLUTION: HIDDEN COINTEGRATION ANALYSIS FOR TURKEY

The relationship between foreign direct investment, which is a type of cross-border and long-term investment, and environmental quality is a current issue that is heavily debated. Foreign direct invesments can ensure economic growth and development of countries, while also causing a change in environmental quality. In the research conducted, it is seen that changes in carbon dioxide emissions with foreign direct capital inflows are mainly investigated from the point of view of the host countries. However, foreign direct invesment outflows may have an impact on the environmental quality of the home country. Because foreign direct invesment outflows can enable the transfer of more environmentally friendly techonogies to the country and strengthen management skills. The impact of foreign direct investment outflows on the home country's environmental pollution is shaped by many factors (scale, technique, and composition effects). In addition to these effects, it is necessary to pay attention to the regional and sectoral distribution of capital outflows. The main aim of this study is to examine the links between Turkey's foreign direct invesment outflows and carbon dioxide emissions for the period 1990-2018. For this reason, a unit root test was applied to variables whose natural logarithm was taken. Tests showed that all series are stable of the same degree. Engle&Granger(1987) and Granger&Yoon(2002) tests were used to determine the cointegration relationship between variables. The crouching error correction model(CECM) was applied to determine the causality relationship. According to the results of the analysis; i) In terms of the Engle&Granger(1987) test, there was no long-term relationship between variables. ii) According to the Granger&Yoon(2002) test, it was determined that there is a bidirectional hidden cointegration relationship between the positive shocks of carbon dioxide emissions and negative shocks of foreign direct invesment outflows. iii) There is a bidirectional asymmetric causality relationship between the positive shocks of carbon dioxide emissions and the negative shocks of foreign direct invesment outflows. iv) It is observed that 1% negative shocks in foreign direct invesment outflows reduce positive shocks in carbon dioxide emissions by 0,26%. As a result, since negative situations in foreign direct invesment outflows have an effect on improving the quality of the environment, the environmental dimension should be taken into account in the policies to be made.

The Role of Economic Policy Uncertainty on Outward Foreign Direct Investments

This paper investigates the effects of economic policy uncertainty (EPU) on outward foreign direct investments (FDI) in 21 countries. We construct the relative EPUs to take into account multiple countries' uncertainty together. We develop a theoretical model for the relationship between uncertainty and outward FDI and estimate the dynamic effects of the relative EPU on FDI outflows using the dynamic panel and the panel VAR models. Our empirical findings show that a relatively high EPU in the home country significantly contributes to increased outward FDI. When the relative EPU shock occurs, FDI outflow peaks in the fifth quarter and gradually decreases over the next quarters.

Political Risk and Firm Exit: Evidence from the US-China Trade War

Does international conflict induce foreign firms to “follow the flag” and exit from a profitable market? We show that the US-China trade war broadly elevated political risks for multinational corporations (MNCs) operating in China, increasing firm exit overall. However, investment treaties can mitigate political risks at the country level while firm entrenchment determines resilience to risk at the firm level. Using a new dataset on all foreign-invested firms registered in China between 2014 and 2019, we implement difference-in-difference and triple-difference models to isolate the impact of increased political risks on MNC exit in the context of the US-China trade war. Our findings show that US and allied firms were not more likely to exit China, suggesting that foreign direct investment outflows do not follow the flag. Instead, firm exit is determined by the balance of heightened political risks against the availability of firm-level and institutional resources to mitigate these risks.

Прямые инвестиции из России за рубеж: изменения с 2018 года

The article considers the specifics of Russian foreign direct investment outflows in 2018 – the first half of 2020. Three main reasons for the new stagnation of Russian foreign investment expansion are identified: 1) the strengthening of “sanctions war” with the West after the election of Vladimir Putin for the 4th presidential term; 2) the slowdown in the global economy in 2018-2019 against the background of relatively low prices for hydrocarbons and other raw materials exported from Russia; and 3) the crisis caused by the coronavirus pandemic in 2020. These factors resulted in a reduction of both outward foreign direct investment stocks by Russian MNEs (partially due to revaluation of their assets after the collapse of the ruble rate), and a decrease in investments of wealthy Russians in foreign real estate as well as pseudo-foreign investment because of the regular attempts to conduct de-offshorization. Based on a study conducted at INION within the framework of the international program for studying MNEs from emerging markets, a list of leading Russian non-financial MNEs by the end of 2019 is presented. Further prospects of Russian direct investment are shown at the end of the article.

Direct Investment from Russia Abroad: Changes since 2018

The article considers the specifics of Russian foreign direct investment outflows in 2018 - the first half of 2020. Three main reasons for the new stagnation of Russian foreign investment expansion are identified: 1) the strengthening of sanctions war with the West after the election of Vladimir Putin for the 4th presidential term;2) the slowdown in the global economy in 2018-2019 against the background of relatively low prices for hydrocarbons and other raw materials exported from Russia;and 3) the crisis caused by the coronavirus pandemic in 2020. These factors resulted in a reduction of both outward foreign direct investment stocks by Russian MNEs (partially due to revaluation of their assets after the collapse of the ruble rate), and a decrease in investments of wealthy Russians in foreign real estate as well as pseudo-foreign investment because of the regular attempts to conduct de-offshorization. Based on a study conducted at INION within the framework of the international program for studying MNEs from emerging markets, a list of leading Russian non-financial MNEs by the end of 2019 is presented. Further prospects of Russian direct investment are shown at the end of the article. © 2021 Ltd Integration: Education and Science. All rights reserved.

Covid-19 Pandemic and Outward Foreign Direct Investment: A Preliminary Note

Abstract Social-distance policy of most governments and the pandemic impact of corona virus (COVID-19) on human health are expected to shutter international investment and business environment. However, there is little or no study to show the early empirical evidence on this relationship, most especially its impacts on FDI flows in the economies. This note provides a preliminary evidence of the impact of COVID-19 on FDI outflows. Our data cover cross-sectional first quarter, average data; between 1 January – 31 March, 2020 from 43 countries. Using Ordinary least square (OLS) and Quantile regressions, we document that there is a positive relationship between COVID-19 confirmed cases and FDI outflows. In addition, there is a positive impact of COVID-19 related confirmed deaths on FDI outflows across all quartiles estimations. This means that COVID-19 pandemic fuels the foreign direct investment outflows. The major causes could be the reduction in the ability of firms to invest due to a shortage in the number of skilled employees because they care for their health safety, a decline in corporate profits and increase in cost of finance. In addition, the propensities to invest have been widely affected negatively in most economies. These factors also become obvious when most economies experience a very high level of risk perception in financial market.

The influence factors of the national roles in the FDI network: A combined methods of complex networks and Panel Data Analysis

This paper examines the influence factors of Foreign Direct Investment (FDI) and focuses on the two main questions to be answered: (1) How do the foreign direct investment (FDI) network form and (2) what factors affect the formation of foreign direct investment (FDI) Network. First, we identify the basic FDI relationship in the homogeneous complex network of nations from 2001 to 2012. Then, we use the network indicators such as FDI relationships, independence, information control ability, FDI inflows and FDI outflows in FDI relations to construct the panel regression model to analyze the influence factors for Foreign Direct Investment. The results indicate that (1) The number of the nations with FDI relationships is increasing for 2001 to 2012, which highlight the importance of FDI relationship; (2) The nations in the FDI relationship network are getting closer and closer and the information of the network is controlled by few nations; (3) National competitiveness and inflows of FDI are directly related to each other; (4) Depreciation of exchange rate against USD increase FDI. This paper can help policymakers to better understand the features of FDI and thereby provides new insight for attracting FDI to promote economic growth.

ІНОЗЕМНЕ ІНВЕСТУВАННЯ В ЕКОНОМІКУ УКРАЇНИ: МАСШТАБИ, СТРУКТУРА, ПЕРСПЕКТИВИ

The experience of many countries around the world shows the effectiveness of attracting foreign direct investment to the economy. The purpose of the paper is to study the processes of foreign direct investment in the economy of Ukraine, its amount, structure, and prospects for development, as well as to find ways to intensify investment inflows to the country. The article examines the investment attractiveness of Ukraine on the basis of the index of investment attractiveness, calculated by the European Business Association in 2009-2017 years. According to the European Business Association data it has been established that in recent years businesses in Ukraine have not noticed any new negative factors for investment activity, but many unfavorable factors from previous years remain the same (high interest rates on bank loans; high level of corruption; slow pace of reforms; lack of progress in judicial and land reforms, etc.). The dynamics of inflows and outflows of foreign direct investment in Ukraine in 2008-2018 years is analyzed. It is established that for the last six years the country has not reached a significant increase in foreign direct investment at the level of 2008. The structure of foreign direct investment in Ukraine by types of economic activity is studied. It is established that investors are ready to invest only in already developed areas of activity: wholesale and retail trade, repair of motor vehicles, and financial and insurance activities, which provide a sufficient level of profitability. A short-term forecast of the inflow of foreign investments to Ukraine with the help of econometric analysis is developed, a graphic model is built. It is provided that if the trend described by the model is observed in the future, the amount of foreign direct investment inflows will increase in 2020-2021 years. The main recommended measures for Ukrainian government for the improvement of the investment activity in the country are optimization of the tax system, improvement of the procedure for payment of customs duties and taxes, creation of a system of legal protection for foreign investors, etc.

Overview of Ghana’s Export and Import, FDI inflow and outflow: Is there any connection between its trading partners and the source of its foreign investing countries?

Foreign direct investment inflows and outflows, export and import are seen as some of the major factors for transforming a country’s economic growth and development. This paper provides and evaluate literature review on importation and exportation alongside inward and outward FDI in Ghana. By considering some selected countries such China, India, the United States of America, and the United Kingdom in determining whether there is some sort of connection between Ghana’s trading partners and investing countries in its economy by the use of quantitative method. The results show that Ghana’s export values have improved rapidly over the past years with a continuous decrease in its imports. The outcome further proves that, at the initial level, export from Ghana to China, India, US and UK were of lower values and with much effort by the Ghana government to control the balance of trade deficit from these major trading partners is in the process of achieving the goal, as the country has been experiencing balance of trade surplus from China and India except in the situation US and UK. It was also revealed that China, India, US and UK are not only major trading partners, but also top investing nations in Ghana. It is suggested Ghana should increase its outward FDI and also encourages its multinational companies to embark on cross-boarder investment.

Technology Acquisition in China’s Automobile Industry: Focusing on the Local Producers

China’s automobile industry has succeeded remarkably since the 1980s. The Chinese government welcomed foreign automobile companies to form joint ventures. The local automobile companies began to enter the market in the late 1990s. To compete with the foreign rivals, they needed to acquire advanced technologies. Meanwhile, technology transfer through foreign direct investment (FDI) inflows was not so successful. Some of the local automobile producers developed their technologies through FDI outflows. The large local automobile producers have paid much attention to their own research and development (R&D) activities. China has tried hard to build its human capital. Acquiring intellectual property rights from foreign manufacturers has been another way for the local producers to acquire advanced technologies. They have also tried to establish partnerships with the local technology groups. The ways in which the local automobile companies acquired advanced technologies may provide meaningful policy implications for the other technology-intensive industries and developing countries trying to develop the automobile industry.

National economy investmentattr activeness: a bibliographican alysis

Introduction. The problem of country investment attractiveness, and approaches to its evaluation have been thoroughly debated over few last decades. Attracting of foreign direct investment (FDI) that is dedicated to creation of new jobs and added value in Ukraine, is relevant since independence declaration in 1991 and until now. It is believed, Ukrainian economy has unlimited investment potential, and reasonable high level of investment attractiveness, based on its geographical location and existing natural resources. Apparently, based on open access data, Ukraine has one of the worst in Europe FDI and GDP dynamic. Thus, the fundamental studies considering concept of “country investment potential” is highly relevant due to current macroeconomic condition in Ukraine. Within this work, authors researched recent studies of investment attractiveness evaluation around the world, and assumed their common principles.purpose of the research is to review most recent publications around the world on country investment potential evaluation topic.Results.The authors researched current relevant publications in journals which are indexed by international research databases. The analysis has shown that vast majority of current studies are connected to emerging market economies such as China and India. Among those papers, the most common approach to evaluate country’s investment attractiveness was usage of statistical methods. It allows considering a reasonably significant number of independent variables. Based on UNCTAD data [1], emerging economies show the best dynamic data related to GDP growth, and FDI inflows and outflows within last decade. According to abovementioned, the authors focused the research related to developing countries.Prospects. The Future researches could be long-term promising within the direction of country investment potential evaluation, taking into consideration socio-cultural determinants of specific countries in relevant statistical models.

Overview of Ghana’s Export and Import, FDI inflow and outflow: Is there any connection between its trading partners and foreign investing countries?

Foreign direct investment inflows and outflows, export and import are seen as some of the major factors for transforming a country’s economic growth and development. This paper provides and evaluates literature review on importation and exportation alongside inward and outward FDI in Ghana. By considering some selected countries such as China, India, the United States of America, and the United Kingdom in determining whether there is some sort of connection between Ghana’s trading partners and investing countries in its economy by the use of the quantitative method. The results show that Ghana’s export values have improved rapidly over the past years with a continuous decrease in its imports. The outcome further proves that, at the initial level, export from Ghana to China, India, the US, and the UK were of lower values and with much effort by the Ghana government to control the balance of trade deficit from these major trading partners is in the process of achieving the goal, as the country has been experiencing balance of trade surplus from China and India except in the situation the US, and the UK. It was also revealed that China, India, the US, and the UK are not only major trading partners but also among the top investing nations in Ghana. It is suggested that Ghana should increase its outward FDI and also encourages its multinational companies to embark on cross-border investment.

Environmental regulation and foreign direct investment: Evidence from China's outward FDI

This paper investigates whether environmental regulation affects patterns of foreign direct investment (FDI) and how such patterns change across time, industries, and destination countries. We examine the pattern of Chinese FDI outflow over 2008–2018 and apply difference-in-differences estimation to circumvent other potential confounders. As a result, we find evidence that host countries with more relaxed environmental regulations attract foreign direct investment from polluting industries. However, the preference for destinations with lax regulations has been weakened among China's multinational enterprises since the promotion of the “Belt and Road Initiative” began in 2013.

Determinants of foreign direct investment outflow from India to Poland

Abstract This article concerns the determinants of foreign direct investment (FDI) outflow from India to Poland with some insights to other European countries. This topic strongly relates to globalization of foreign trade and especially new economic initiatives between European Union (EU) and India, which was one of the first countries to develop trade relations with EU. According to CEIC data – Financial Data and Economic Indicators, India’s FDI outflow increased slightly to 1.4 billion USD in September 2019 in comparison with 996.5 million USD in September 2018, but it is still below the average of 1.8 billion USD for a period of 2007–2019. Available at: https://www.ceicdata.com/en/india/foreign-direct-investment-outflow/foreign-direct-investment-outflow (accessed October 19, 2019). Very limited number of the scientific research can be found in European literature about India’s FDI outflow to EU countries in period of 2004–2019. Indian economists made some research on that topic. Professor J. Ramachandran (listed among the Best Management Thinkers for the year 2015, the first Bain Fellow in India) from Indian Institute of Management Bangalore in 2004 and Professor Jaya Prakesh Pradhan from Central University of Gujarat in 2008 explored the evolution in Indian outward FDI, referring to a shift in the pattern of overseas expansion and basis of competitiveness of Indian companies. The main goal of this article is to explain what really triggers Indian investors to go to Poland and what kind of businesses they form. Some examples of the Indian-based companies are mentioned to support the analysis. The author of this article also researched on different governmental bilateral trade agreements and initiatives, trying to find any direct impacts of that on the India FDI outflow to Poland and other EU countries. He used empirical method of the analysis based on accessible data for period 2004–2019 and literature in that topic and also direct interviews with private Indian investors who made decision to start and run their business in Poland or other EU countries. The main conclusion is that Poland the leader of Visegrad Group is an interesting investment for India and India can be for Poland a counterpart investment partner to China.

Foreign Direct Investment in the West African Region: Analyses on the Values of Inflow and Outflow

With regards to the ongoing development in investment activities in the Economic Community of West African States(ECOWAS) and the entire African continent is because of institutional reforms and initiation of sound investment policies. Foreign direct investment(FDI) inflow and outflow severs as a source of capital formation for most developing and least developed countries. This paper provides an overview and analyses of the flow of FDI to the ECOWAS region by considering 16 nations under this region in determining their performance towards FDI attraction and their contribution to outward FDI across the globe by the use of the quantitative method. The outcome shows that there is a continuous decline in FDI inflow to the ECOWAS region over the past 10 years. The result also proves that Ghana and Nigeria are the major recipients of foreign direct investment inflows in the West African region. The result further indicates that Nigeria is the major contributor of outward FDI from the ECOWAS region. It is recommended that the region should increase its outward FDI.

Media corruption perceptions and US foreign direct investment

ABSTRACT Media play an important role in shaping people’s beliefs and ideas. More specifically, media have a great influence on what we think about foreign countries. The media influence the way a country’s citizens view the people and governments of other countries and shape our image of them. All types of articles about foreign countries are covered in the media. Investors looking to invest abroad certainly pay attention to what is reported in the media about corruption in other countries. Since corruption plays a huge role in investment decisions, this paper investigates the role of corruption coverage in Wall Street journal on US foreign direct investment outflows. We find that an abundance of corruption stories about a specific country in The Wall Street Journal can demotivate investors and reduce the amount of US foreign direct investment outflows to that country.

Chinese Foreign Direct Investment in Brazil: Evolution, Trends and Concerns over Critical Infrastructure

As a part of the massive outflow of Chinese foreign direct investment observed in the past two decades, Brazil has emerged as a top recipient of Chinese FDI and central piece for China’s food and energy security strategies. However, Chinese SOE’s acquisitions of critical infrastructure and sensitive technologies have raised concerns worldwide over potential national security risks. In this context, this article aims to (i) analyze the evolution of Chinese FDI in Brazil since 2010, identifying its main drivers and trends, and to (ii) survey the global trend towards strengthening screening mechanisms for FDI, under national security grounds – identifying its implications for Brazil’s investment policy. In the context of U.S.-China trade war and technological rivalry, it is argued that restrictive measures on FDI have been characterized by a blurring between realistic risk assessment and geopolitical interests.

The Influence of Taxes on Inflows and Outflows of Foreign Direct Investment

Macroeconomic management of a small open economy in a currency board arrangement faces two serious problems: first, under a fixed exchange rate, fiscal policy is the only effective macroeconomic instrument for smoothing out the business cycle; second, the twin deficits phenomenon, if it exists, may jeopardize the stability of the currency board arrangement. This paper uses quarterly seasonally adjusted Eurostat data for the period of 1999–2019, the Hodrick–Prescott filter and a vector autoregression (VAR) to answer the three questions that are of utmost importance to Bulgarian policy-makers: first, is the discretionary fiscal policy of the Bulgarian government procyclical or countercyclical? Second, do the automatic stabilizers in the Bulgarian state budget function properly? Finally, is the twin deficits hypothesis valid for Bulgaria? Our findings imply that the fiscal discretion of the Bulgarian government is procyclical, while the automatic fiscal stabilizers do not work effectively. The first part of the twin deficits hypothesis (the causal link between the fiscal balance and the current account balance) is confirmed but the second part of the twin deficits hypothesis (the positive relationship between the fiscal balance and the current account balance) is rejected for Bulgaria. It may be inferred that both sides of the Bulgarian state budget (revenue and expenditure) need to be improved in order to increase the effectiveness of Bulgaria’s fiscal policy. Low budget deficits (not higher than 3% of GDP) are recommended for improving the current account balance and encouraging economic growth.

FOREIGN INVESTMENTS IN PRIORITY SECTOR THE ECONOMY OF KAZAKHSTAN

The inflow of foreign direct investment in Kazakhstan is carried out through the establishment of joint ventures, subsidiaries, privatization of state-owned enterprises with foreign capital, transfer of large industrial enterprises to the management of foreign firms and investment in the banking sector.The article analyzes the inflow of foreign direct investment in the context from 2014 to 2018, in the priority sectors of the economy of the Republic of Kazakhstan, which are the mining industry, processing industry, professional scientific and technical activities and innovative development.The paper deals with the issues of investment in priority sectors of the economy of Kazakhstan. The methodological basis of the research was analytical and statistical methods, dialectical method of cognition and observation.The works of well-known authors of economists were studied and considered. According to the research of the analytical review, by 2022 the inflow of foreign direct investment should grow by 26% compared to the data of 2016, and the ratio of FDI to GDP should be at the level of 19%, while at the moment this figure is 16.5%. Given the investment restructuring and the direction of investment in the service segment of the economy, by 2022 the volume of foreign investment in fixed assets of the non-commodity sector of the economy should increase to 50%, also compared to 2016.The bulk of foreign investment continues to be directed to areas that do not require large-scale investments and are characterized by rapid payback.Thus, drawing a conclusion on the study of trends in the functioning, outflow and inflow of foreign direct investment in the priority sectors of the economy of the Republic of Kazakhstan, in the sectoral structure of investments, the main share is the mining industry, and the oil and gas industry is still in one of the first places in terms of attracted investments. Industries such as construction and manufacturing receive the least amount of foreign investment.The article has scientific value and novelty of research.