Foreign Direct Investment Research Articles

Does green financing promote outward FDI in enterprises? Evidence from China

In the context of sustainable development, green rules and standards have been incorporated into the international investment system. The specific advantages driving outward foreign direct investment (OFDI) by emerging market enterprises have also undergone profound changes. Green financing plays an important role in promoting green transformation and may become a new type of competitive advantage driving OFDI by firms. Based on legitimacy theory, we explore the impact of green financing on OFDI by emerging market firms. Using data from Chinese A-share listed companies from 2008 to 2021, we find that green financing significantly promotes corporate OFDI. Improving ESG levels, alleviating financing constraints and expanding production scale are the main channels. The positive effects of green financing on OFDI are more pronounced in heavily polluting industries, capital-intensive enterprises and state-owned enterprises. This study confirms the positive impact of green financing on OFDI earlier, and also provides useful inspiration and reference for emerging market countries to improve the green financial system and actively promote global green and sustainable development.

Redefining global entrepreneurship: shifting focus from China to Central and Eastern Europe

Purpose The purpose of this paper is to explore the viability of shifting foreign direct investment (FDI) from China to Central and Eastern European (CEE) countries in light of recent geopolitical and economic challenges. By analyzing case studies, it argues that CEE nations offer a compelling alternative for Western European businesses, with stronger intellectual property protection, political stability and alignment with European Union (EU) sustainability goals. The paper provides insights for firms and policymakers on mitigating risks and enhancing business operations by pivoting toward the CEE region, offering practical recommendations for adapting to shifting global trade dynamics. Design/methodology/approach The design methodology uses the case study approach to analyze the shift of FDI from China to CEE. This method examines the geopolitical, economic and legal contexts influencing business decisions, using real-world examples of Western European companies that have made this transition. The case studies highlight key factors in decision-making and the benefits of relocating investments to the CEE region. Findings The study identifies several advantages of the CEE region over China for Western European firms. These include geographic proximity, similarities in business values and purposes, environmental accountability, trustworthiness in business, enforceable noncompetition rules, lower risks of counterfeiting, reduced political and administrative risks, lower risks of intellectual property theft and reduced risks of negative publicity. Practical implications The findings suggest that Western European firms should consider redirecting their FDI to the CEE region to mitigate risks associated with investing in China. This move could offer long-term benefits despite short-term complications. Originality/value This paper contributes to the FDI theoretical framework by enhancing the cultural, administrative, geographic and economic (CAGE) distance framework. It provides a unique perspective on the shifting dynamics between Europe and China and highlights the potential of the CEE region as a viable alternative for FDI.

The effect of global collaboration on climate mitigation technologies in reducing CO2

The fundamental approaches to industrial growth, government interventions, and market structure have ignored the main consequences of the common idea of “growth first, clean later”. This study investigates the relationship between carbon emissions (CO2) and international collaboration in climate change mitigation technologies (ICCCMT), renewable energy consumption (REC), exports (EXP), imports (IMP), gross domestic product (GDP), foreign direct investment (FDI), natural resources rents (NRR), and domestic innovation in climate change mitigation technologies (DICCMT) for a panel of the Organization for Economic Cooperation and Development (OECD) countries over the period of 1990-2020. We adopted a series of econometric techniques for the visualization of the available data. We used second-generation econometrics estimations to verify cross-sectional dependence, co-integration, and stationary between the variables.Based on our findings, the study reveals that ICCCMT, REC, and DICCMT have a positive effect and contribute to CO2 mitigation of the 30 OECD economies. Furthermore, the findings reveal that ICCCMT can promote renewable energy consumption, thus the increase of REC will significantly mitigate CO2 emissions. The outcomes from the panel dynamic GMM model confirmed a positive relationship between CO2 emissions, FDI, exports, imports, and GDP. The study indicates that these variables can adversely affect climate change mitigation.

Effect of capital market on economic growth: An analysis using the autoregressive distributed lag (ARDL) approach

The limits testing method known as ARDL (Autoregressive Distributed Lag) examines Nigerian capital market improvement and monetary development. Relevant indicators about the capital market are taken into account during analysis while considering influencing factors as well. This study aims to explore the relationship between the capital market and financial development in Nigeria. The study’s theoretical framework, which is based on the ARDL framework, includes both short- and long-term dynamics. The data used in this analysis was collected from the Central Bank of Nigeria (CBN), the World Bank database, and the Nigerian Stock Exchange (NSE). In this study, the Nigerian All-Share Index, foreign direct investment, currency exchange rates, and inflation rates are the free factors, while the increase in GDP is the dependent factor. Through cointegration analysis using the ARDL framework, it was discovered that in Nigeria there’s a lengthy equilibrium correlation between economic expansion and financial development. The coefficients determined allow for a deeper understanding of how capital market factors affect economic growth over time. Furthermore, utilizing an error correction model derived from the ARDL analysis offers insight into both brief dynamics and modified speed toward reaching a lasting state of balance. By utilizing the ARDL approach, this study adds to the continuing discourse surrounding how capital markets impact growth in Nigeria. Its empirical evidence provides valuable knowledge for policymakers and stakeholders looking to utilize capital markets effectively toward achieving long-lasting economic development within the country.

ФАКТОРИ НА ЦИФРОВАТА ТРАНСФОРМАЦИЯ

The digital transformation is profoundly changing organizations and creating new comparative advantages but also necessitating new approaches to management and organizational strategy. The majority of research on business’ digital transformation focuses on technological adoption, innovation, value creation and the dynamic capabilities of organizations. However, the question of why different organizations approach the digital transformation in various ways remains less explored. This article examines the possibilities of inferring various factors that have an impact on the adoption of digital technologies in order to improve the understanding of organizations' digital transformation strategies. Factors such as size, internationalization, research and development (R&D) expenses, foreign direct investment (FDI), turnover, wages and salaries have an expected impact on the adoption of new technologies in an organization and its digital transformation. This is supported by organizational theories such as the resource-based view (RBV), the knowledge-based view (KBV) and the technology-organization-environment (TOE) frameworks. Through examples from the scientific literature, a summary is provided on how the study of the interrelationships between these factors and organizations’ digital transformation can contribute to a better understanding of the different strategies in this field.

STUDY OF TRIPLE BOTTOM LINE FRAMEWORK TO DETERMINE THE OFDI PATTERN OF VIETNAM

This study investigates Vietnam’s Outward Foreign Direct Investment (OFDI) spanning from 1990 to 2022, utilizing the Triple Bottom Line (TBL) framework alongside the Fully Modified Ordinary Least Squares technique. The observed positive correlation between CO2 emissions and foreign investment underscores the importance of corporate sustainability. Vietnam’s extensive forested land, comprising 41.89% of its total area, emerges as a pivotal factor in attracting environmentally conscious investors. On the social front, the population size demonstrates a negative impact on OFDI due to heightened competition within the domestic labor market. Regarding economic variables, the Consumer Price Index and patent applications exhibit minimal effects, whereas a growing Gross Domestic Product (GDP) substantially boosts foreign investments. The proposed practical policies for promoting OFDI include reinforcing environmental regulations, incentivizing the adoption of eco-friendly technologies and prioritizing the conservation of forested areas.

A Study of Long-Run Equilibrium Relationship Between Foreign Direct Investment and Its Key Determinants in Malaysia

This study investigates the long-run equilibrium relationship between foreign direct investment (FDI) and its key determinants in Malaysia. Employing the Autoregressive Distributed Lag (ARDL) model on annual data between 1971 and 2021. The key findings confirm a long-run equilibrium relationship between FDI and the selected macroeconomic variables as a group. However, the individual impact of gross domestic product, inflation, exchange rate, and trade openness on FDI is not statistically significant when analyzed separately. Specifically, the long-run results suggest that the determinants do not have significant effects on FDI. Meanwhile, the short-run relationship between FDI and its determinants in Malaysia reveals a complex interplay of factors. Inflation and exchange rates play significant roles, with inflation generally encouraging FDI and exchange rate volatility creating mixed effects. Trade openness on the other hand shows some short-run significance but it is not consistently impactful. The error correction (ECM) model also confirms the existence of a long-run relationship. It highlights that while short-term fluctuations can occur, FDI tends to move towards a long-term equilibrium influenced by a relatively moderate speed of adjustment. The key conclusion implies that FDI is influenced by the combined effect of these variables in the longer term, but the individual contribution of each variable is not strong enough to stand out statistically. This research contributes to the understanding of FDI dynamics in Malaysia by providing insights, thereby informing policymakers and investors about effective strategies to attract and leverage FDI for sustainable development.

Sovereign ESG and Foreign Direct Investment in the GCC: The Amplifying Role of Trade Openness in Economic Diversification

This study examines the relationship between Sovereign Environmental, Social, and Governance (SESG) initiatives and foreign direct investment (FDI) within the context of the Gulf Cooperation Council (GCC) countries from 2000 to 2022. The research explores how national ESG performance influences the attractiveness of these countries to foreign investors, with a particular focus on the moderating role of trade openness. Using a comprehensive panel data analysis, the study finds that strong SESG frameworks are positively correlated with higher FDI inflows, with trade openness amplifying the positive impact of SESG. Additionally, the use of Instrumental Variables (IV) estimation addresses endogeneity concerns, further confirming the robustness of the results. Moreover, the analysis reveals that trade openness amplifies the positive impact of SESG on FDI, suggesting that GCC countries with liberal trade policies and robust ESG practices are more successful in attracting sustainable and responsible investments. These findings contribute to the growing body of literature on ESG and FDI, offering valuable insights for policymakers seeking to enhance economic growth through strategic investments in sustainability and governance. The findings offer valuable insights for policymakers in aligning SESG frameworks with global ESG standards and leveraging global liquidity conditions to enhance FDI inflows, particularly in light of ongoing economic diversification efforts in the GCC.

Effect of Foreign Direct Investment, Energy Consumption and Unemployment on Income Distribution in Malaysia

The paper analyses the relationships between Foreign Direct Investment (FDI), Energy Consumption, Unemployment, and their effects on Income Distribution in Malaysia from 1990-2022. Despite economic growth, Malaysia faces income inequality, especially among ethnic groups. The study uses ARDL regression to find that FDI promotes income distribution by creating jobs and facilitating technology transfer. Increased energy availability boosts industrial production, which is crucial for equitable income distribution. High unemployment, particularly among graduates, exacerbates income inequality. Government initiatives aim to address unemployment through skills enhancement and entrepreneurship. The study concludes that FDI and energy consumption positively influence income distribution, while unemployment has a negative impact. The findings are valuable for policymakers in fostering inclusive growth and equitable income distribution in Malaysia. As Malaysia is an export-oriented country, these insights can lead to impactful improvements in the export sector, further boosting employment opportunities and economic resilience.

Deconstruction of green product innovation drivers for regional export-oriented industrial enterprises in China: the product space perspective

Achieving green economic growth requires enterprises to develop and promote green products that balance environmental protection, intensive resource utilization, and sustainable development. However, under the externality assumption, the green market is often faced with the challenge of insufficient supply. Based on 2004–2018 panel data covering regional industrial enterprises in 30 provinces in China, this study empirically tests the composite driving mechanism of the effect of an increase in the regional green production capacity, organizational factors, and environmental policies on the green product innovation (GPI) of regional export-oriented industrial enterprises (REIEs). This study finds that the increase in regional green production capacity directly drives an improvement in REIEs’ GPI level, that the regional green technology level and degree of human capital accumulation are indirect driving channels between capacity increases and product innovation, and that environmental regulations and green credit have a positive moderating effect on the influence of increasing green production capacity on GPI. Further threshold regression analysis reveals that increasing green production capacity, foreign direct investment, digitization, and trade openness have an inverted U-shaped promoting effect on GPI and that the proportion of local government expenditure shows a diminishing marginal utility effect on GPI.

Does the presence of democratic traits enhance Africa’s appeal for foreign direct investment?

Does the presence of democratic traits enhance Africa’s appeal for foreign direct investment?

The Role of Multinational Enterprises in Promoting China's Economic Development in People-to-people Diplomacy

Abstract: Over the past decade, there has been a growing narrative surrounding China's economic rise, driven by the nation's increasing economic influence, expansion of financial resources, and a surge in foreign direct investments. This has rendered the examination of China's economic trajectory a critical area of study. Multinational corporations, which are integral to the market economy, have been instrumental in fueling the economic expansion of China. Utilizing a combination of literature analysis and case studies, this paper delves into the pivotal contributions of these enterprises in fostering China's economic progress through grassroots diplomatic initiatives. Coca-Cola China exemplifies how multinationals, via deliberate people-to-people diplomacy, have significantly bolstered China's economy while also securing mutual gains. These findings underscore the significance of monitoring the evolving role of multinational firms in the global business landscape, which is increasingly vital for mutual prosperity and the enhancement of worldwide economic growth through equitable and reciprocal partnerships.

How Financial Development Is Driving the Growth and Environmental Dimensions of Sustainable Development in Africa: Heterogeneous Analyses

Globally, we face a policy dilemma between desiring more economic growth and safeguarding the deteriorating ecosystem, which have an apparent trade-off. Consequently, financing growth often comes with strong concerns for the ecological implications, which is yet to be empirically resolved. Hence, the current study examined the growth and environmental effects of financial development from three angles, each with a robust indicator, comprising financial development index, financial institution index, and financial market index. The scope of this study was financial development in 30 selected African countries from 1996 to 2021. This study extends the frontier of knowledge by estimating the moderating roles of regulatory quality and digitalization coupled with other control variables: renewable and nonrenewable energy, government expenditure, trade openness, and foreign direct investment. The empirical evidence relies on estimators such as common correlated effects (mean group), the system-generalized method of moment, and method of moment quantile regression. The findings from this study reveal that financial development propels economic growth but to the detriment of the ecosystem. However, when the interactive effects of regulatory quality and digitalization are considered, the negative externalities of growth-induced financial development are reduced. Furthermore, control variables such as renewable energy and foreign direct investment promote growth without escalating ecological damage. This is in contrast to nonrenewable energy, government expenditure, and trade openness, which propel economic growth at the expense of the ecological system. Policy recommendations that balance the trade-off between the two measures are put forward based on the research outcomes.

Impact of environmental information disclosure on environmental regulation intensity: evidence from 113 cities in China

Presently, the driving factors for environmental regulatory intensity, especially environmental information disclosure, remain unclear. Exploring the causal relationship between the two has an important guiding value for governments to achieve sustainable development. This research empirically examines the impact of environmental information disclosure on environmental regulatory intensity, and the possible action mechanisms and boundary conditions based on panel data of 113 Chinese cities from 2010 to 2020 using fixed-effects model, quantile regression model, moderating effect model, and spatial econometric models. The conclusions suggest that, first, a 1% increase in environmental information disclosure promotes a positive increase in environmental regulatory intensity of about 0.171%. Second, The regression coefficients of environmental information disclosure in the 10th, 25th, 50th, 75th and 90th quartiles are 0.489, 0.401, 0.443, 0.365 and 0.281 respectively, showing a decreasing trend. Third, transportation infrastructure and the resident’s education level exhibit positive interactions, with interaction term regression coefficients of 0.006 and 0.070, respectively; foreign direct investment exhibits a negative interaction, with coefficient of -0.029. Fourth, both environmental regulation intensity and environmental information disclosure show positive spatial correlations, with a 1% increase in environmental regulation intensity and environmental information disclosure in neighboring cities causing an increase in environmental regulation intensity of about 0.734% and 0.026% in this city. This research demonstrates the positive effects of adopting environmental information disclosure on the realization of sustainable development and provides empirical evidence for government policy formulation.

Russian-Ukraine War and its Impact on the European Economy

This study examines the impact of the Russian-Ukraine war on the economy of Europe, concentrating on trade disruptions, energy security, foreign direct investment (FDI) flows, and the socioeconomic ramifications of the war[1]induced refugee crisis. This study employs the descriptive research design, qualitative research method and a secondary source of data collection. The research uncovers the problems and possibilities coming from the war, as well as the larger implications for economic growth, development, and stability in the area. The results reveal severe interruptions to commercial links between European nations, especially Russia, and Ukraine, with key sectors such as energy, manufacturing, and agriculture facing considerable disruptions. Energy security emerges as a significant worry, spurring attempts to diversify energy sources and lessen dependence on Russian supply. Meanwhile, the war has resulted in a drop in FDI inflows to Russia and Ukraine, aggravating economic concerns in both nations and hurting their growth prospects. Furthermore, the research shows the burden on social welfare systems in European nations hosting migrants, since the inflow of refugees exerts great demands on resources and capabilities. Investments in housing, health care, education, and social welfare are vital for satisfying the different needs of displaced people and facilitating their long-term integration into society. However, issues connected to social cohesiveness, community connections, and political dynamics within host nations also occur. The study recommends diplomatic resolution of the dispute through peaceful discussions, involving European Union (EU) member states- Russia, Ukraine, and other parties. This could involve neutral mediation, de-escalating initiatives, and confidence-building measures.

Assessing the internationalization dynamics of emerging markets: a comprehensive analysis utilizing SWARA-WASPAS techniques

Purpose This paper aims to evaluate the internationalization of countries represented in the MSCI Emerging Markets Index. The evaluation considers high-technology product imports, foreign direct investments, research and development expenditures, patent and industrial design applications, exports and gross domestic product (GDP) data, representing production. Design/methodology/approach This paper uses the Step-Wise Weight Assessment Ratio Analysis (SWARA) method to assess and rank the criteria for evaluating emerging markets. Four academics who are authorities in the field of foreign trade were consulted to weigh the criteria. The Weighted Aggregated Sum Product Assessment (WASPAS) method, considered one of the most reliable and robust MCDM techniques, was then used to evaluate and rank the countries. Findings The findings obtained during the research process reveal the internationalization dynamics of these countries based on the indicators they possess. As a result, it is observed which countries achieve higher performance in the internationalization process based on relevant criteria. Originality/value This study is theoretically unique and valuable as it simultaneously offers the potential for development to macro-level international trade theories, such as the technologic deficit hypothesis, and meso-level internationalization theories, such as the Uppsala model. Additionally, integrated multiple criteria decision-making (MCDM) methods, which are not frequently used in cross-country studies, have been used, and the performance of emerging markets has been ranked. The findings obtained from this application distinguish the research from the existing literature by transforming it into a performance ranking rather than focusing on the antecedents or consequences of internationalization and their interactions.

Exploring the Dynamic Link Between Trade Openness, External Debt, and Economic Growth in Sub-Saharan Africa: Challenges and Considerations

This study investigates the dynamic relationship between trade openness, external debt, and economic growth in Sub-Saharan Africa, focusing on the period from 1990 to 2023. The research examines how trade openness and external debt impact regional economic performance by employing Panel Autoregressive distributed lag (ARDL) techniques utilizing the pool mean group and mean group estimator’s approach. The analysis reveals that while trade openness does not stimulate economic growth, external debt similarly has significant challenges, often hindering long-term development prospects within Sub-Saharan African countries. The findings underscore the importance of managing debt sustainably and aligning trade policies with growth-enhancing strategies. Additionally, human capital and institutional quality are essential endogenous growth factors that significantly influence economic growth in Sub-Saharan Africa. The study recommends that while trade openness alone may not directly drive economic growth, its benefits can be amplified by complementary strategies such as investing in human capital, technological adoption, and industrial policy. The study concludes with policy recommendations to enhance economic resilience and foster sustainable growth, such as attracting foreign direct investment, combined with infrastructure development and sound fiscal management.

IMPLEMENTATION OF INNOVATIVE INDUSTRY 4.0 TECHNOLOGIES FOR THE RECONSTRUCTION OF THE ENERGY SECTOR OF UKRAINE

Abstract. The article explores the implementation of innovative Industry 4.0 technologies in the energy sector of Ukraine. It investigates key issues in the energy sector, including the reduction of electricity production capacities due to destruction, capture, and damage to property, low levels of innovation activity in energy enterprises, high energy intensity of production, moral and physical aging of equipment, and a low influx of foreign direct investments into Ukraine's energy sphere. The majority of the analyzed period indicates a relatively low level of interest from foreign investors in the examined sector of the domestic economy. The study identifies the Industry 4.0 toolkit applicable for the restoration of damaged and modernization of outdated infrastructure, enhancing the efficiency of Ukraine's energy sector. It is noted that among the tools, special attention should be paid to monitoring and forecasting systems, the Internet of Things (IoT), big data, integrated digital platforms, smart financial technologies, smart meters, remote monitoring systems, and artificial intelligence. The author emphasizes the peculiarities of applying this toolkit to solve the diagnosed problems in the energy sector of Ukraine. It is noted that the use of Industry 4.0 tools, namely the Internet of Things and big data analytics, can significantly improve the monitoring and management of energy processes. The problem of low innovation activity of Ukrainian energy companies can be solved by creating integrated digital platforms and developing partnerships between companies to share innovations. The use of smart financial technologies can make Ukraine's energy sector more attractive to investors. The high level of electricity losses during generation and distribution can be addressed by introducing smart meters and remote monitoring systems.

Corruption in the Nigerian Public Sector: Causes, Consequences and Sustainable Solutions

Corruption in Nigeria's public sector has long hindered the nation's development, stability, and prosperity. It permeates various facets of governance and society, leading to detrimental consequences, including economic stagnation, social injustice, and the erosion of public trust. Historical factors, such as the legacy of colonial exploitation and successive post-independence governments' mismanagement, have entrenched a culture of corruption. Despite efforts to combat it, including the establishment of anti-corruption agencies like the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC), corruption remains pervasive. This study adopts a qualitative research design to explore the complex dynamics of corruption in Nigeria's public sector. Using Albert Bandura's social learning theory as the theoretical framework, and it explores how corrupt behaviors are observed, imitated, and reinforced within the public administration. The research identifies multiple causes of corruption, including institutional weaknesses, economic pressures, and cultural norms, which create an environment conducive to corrupt practices. The consequences of corruption are enormous: It undermines economic growth and development, deters foreign direct investment, exacerbates poverty and inequality, erodes public trust in government, and fuels political unrest and instability. Addressing corruption requires a comprehensive approach involving the strengthening of institutional frameworks, promoting transparency and accountability, improving public sector management, and fostering a culture of ethical leadership. Sustainable solutions to combat corruption include; enhancing the capacities of anti-corruption agencies, to be independent of the executive body, implementing public procurement reforms, ensuring budget transparency, and enforcing stringent anti-corruption measures.

Foreign direct investment in Singapore: the case of Pharmaceutical & Biological Products sector

Motivation: The motivation for the study was the fact that despite of being a small country Singapore is one of the largest recipients of foreign direct investment (FDI) in the world. It is also the location of the largest multinational enterprises (MNEs) in the Pharmaceutical & Biological Products sector.Aim: The objective of this article is to identify and assess the FDI scale and structure in Singapore in the years 1990–2022, with a focus on the Pharmaceuticals & Biological Products sector, and to show Singapore as an FDI location against the background of Asia and the world.Materials and methods: The article uses secondary data from the World Investment Report published annually by the United Nations Conference on Trade and Development (UNCTAD) and statistics published by the Department of Statistics Singapore (DOS). The study uses statistical and economic analysis, comparison, analogies, synthesis, and the method of measuring and aggregating data.Results: Singapore is one of the largest recipients of FDI not only in Asia, but also in the world. In 2022, Singapore’s share of FDI inflows to Asia was 21.3%, and its share of global FDI inflows was 10.9%. From 1998 to 2007, FDI stock in the Pharmaceuticals & Biological Products sector accounted for a significant share of total FDI stock in Singapore and the manufacturing industry, reaching over 40% in 2007. Since then, the share of the analyzed sector has been seeing a downfall. At the end of 2022, the share of FDI in analyzed sector was 4.9% of the FDI in the manufacturing industry and 0.6% of the total FDI.