Effects Of Foreign Investment Research Articles

Foreign Direct Investment in a Recent Entrant to the EU: The Case of the Automotive Industry in Romania

A U.S.-based geographer presents the results of a survey of car and parts manufacturers in Romania with a focus on the role of foreign direct investment in the restructuring of the sector. Using a questionnaire and personal interviews, the author investigates and identifies the main factors attracting foreign automakers to Romania, which experienced a difficult transition after the collapse of the country's command economy and the ensuing loss of automotive exports to the neighboring states of CMEA. The paper covers the development of foreign ownership of vehicle assembly and car parts manufacturing plants, as well as the effects of foreign investment on Romania's national and local economies. Journal of Economic Literature, Classification Numbers: D20, F21, L62. 1 figure, 2 tables, 68 references.

The Effects of Foreign Direct Investment And Imports on Economic Growth: A Comparative Analysis of Thailand and the Philippines (1970-1998)

The main objective of this paper is to estimate the output elasticity of foreign direct investment (FDI) and imports in Thailand and in the Philippines during the period 1970–1998. Applying a CES generalization of Cobb-Douglas production function, the output response to FDI is the same in both countries, but imports affect Thailand more than the Philippines. The FDI contribution to every one percentage growth point is about 0.05 of a percentage point in each country where imports contribute about 0.47 of a percentage point in Thailand and 0.31 of a percentage point in the Philippines. As a result, the foreign investment and imports contribute about 52 percent of every one percentage growth point in Thailand compared to a lower 36 percent in the Philippines. The remaining effects on the economic growth are from labor and domestic investment. Both countries are labor intensive, but the impact of labor is more significant in the Philippines. The Philippine economy is also more domestic capital intensive than the Thai economy. Furthermore, the FDI path shows that the effect of foreign investment is more pronounced in the Philippines during the second half of the 1990s, whereas the imports are more effective in Thailand since 1994. Therefore, the Philippine economy could gain more from directing its economic policies to further liberalize its foreign investments. The Thai economy, on the other hand, should continue its reliance on imported foreign technology in order to accelerate its economic growth.

Catching-up to foreign technology? Evidence on the “Veblen–Gerschenkron” effect of foreign investments

The presence of foreign multinational enterprises may benefit local economies. In particular, highly productive foreign-owned firms may promote the technological catch-up of local firms. This channel of spillovers is defined as the “Veblen–Gerschenkron” effect of foreign direct investment and is analyzed in this article. Rather than the overall concentration of foreign-owned plants in a region or sector, it is their productivity advantage that determines the positive effect on domestic firms in geographical and technological proximity. We test this hypothesis using new firm-level data for German and Italian manufacturing firms during the 1990s. These two countries are particularly interesting due to the low productivity of domestic firms in some regions of East Germany and the Mezzogiorno. We find evidence of a significant (statistically and economically) Veblen–Gerschenkron effect which is robust to various ways of measuring the total factor productivity (TFP) of firms and to different empirical specifications.

Korean Overseas Securities and Global Investment Sentiment

Changes in the CB premiums are negatively related to the stock market movements of Korea and the U.K., mainly attributable to the fact that premiums are approximately the difference between CB prices and underlying stock prices. Further, the finding that CB prices are less sensitive to stock market movements than underlying stock prices can be a cause of the negative coefficient. Changes in fund premiums are positively related to stock market movements, in sharp contrast to the findings of Korean overseas securities. Consequently, we may suggest that fund premium changes are a proxy for global investors' investment sentiments toward the Korean stock market. The positive effect of foreign investment in the Korean stock market on the premium of DRs reinforces the finding.

Foreign Investment and Development: The Positive Effects of Embedded Foreign Investment in China

This paper integrates the concept of “embeddedness” from economic sociology into the global political economy perspective in order to understand the effects of foreign investment on development. 604 foreign invested enterprises in China are used to test whether or not foreign investment that is embedded in ethnic ties leads to more positive development outcomes than those produced by investment not embedded in these institutions. The analysis concludes that foreign investment that is embedded in ethnic ties leads to greater linkages to local firms and more high-value activities being transferred to the investee nation. The article concludes by arguing for a greater integration of the economic sociology and global political economy literatures.

Growth Effects of Foreign Investment, Domestic Investment, and State Coercive Capacity

Growth Effects of Foreign Investment, Domestic Investment, and State Coercive Capacity

Income Inequality, Development, and Dependence: A Reconsideration

We reconsider the role of foreign investment in income inequality in light of recent critiques that question the results of quantitative cross-national research on foreign capital penetration. We analyze an unbalanced cross-national data set in which countries contribute different numbers of observations, with a maximum of 88 countries and 488 observations, dated from 1967 to 1994. Random-effects regression models that control for unmeasured country heterogeneity are used to investigate effects of foreign capital penetration on inequality (measured as the Gini coefficient) against the background of an internal-developmental model of inequality. We adapt Firebaugh's (1992, 1996) critique of the literature on the effect of foreign investment on economic growth to the study of income inequality and find that the stock of foreign direct investment has an effect on inequality that is independent of the mechanisms identified by Firebaugh. We explore Tsai's (1995) claim that the effect of foreign capital penetration is spurious and find that foreign stock has a significant positive effect on inequality net of region-specific differences. An alternative interpretation of the findings of the foreign investment/inequality literature is discussed in light of the discovery of an inverted-U shaped relationship between income inequality and foreign investment stock per capita. We conclude that thinking on the relationship between income inequality and investment dependence should be revised in light of an investment-development path relating the inflow and outflow of foreign capital to economic development.

Income Inequality, Development, and Dependence: A Reconsideration

We reconsider the role of foreign investment in income inequality in light of recent critiques that question the results of quantitative cross-national research on foreign capital penetration. We analyze an unbalanced cross-national data set in which countries contribute different numbers of observations, with a maximum of 88 countries and 488 observations, dated from 1967 to 1994. Random-effects regression models that control for unmeasured country heterogeneity are used to investigate effects of foreign capital penetration on inequality (measured as the Gini coefficient) against the background of an internal-developmental model of inequality. We adapt Firebaugh's (1992, 1996) critique of the literature on the effect of foreign investment on economic growth to the study of income inequality and find that the stock of foreign direct investment has an effect on inequality that is independent of the mechanisms identified by Firebaugh. We explore Tsai's (1995) claim that the effect of foreign capital penetration is spurious and find that foreign stock has a significant positive effect on inequality net of region-specific differences. An alternative interpretation of the findings of the foreign investment/inequality literature is discussed in light of the discovery of an inverted-U shaped relationship between income inequality and foreign investment stock per capita. We conclude that thinking on the relationship between income inequality and investment dependence should be revised in light of an investment-development path relating the inflow and outflow of foreign capital to economic development.

FDI and Telecommunications Privatization: Case Studies of Latin America, United Kingdom, and Hungary

This thesis observed the recent trend of privatization and the effect of foreign investment, and the example of the overseas experience of sale of the state-own enterprises. To study the enlightenment of the strategy which attracted foreign investment by way of privatization or the issue the Korean government needs to be paid attention to when foreigners invest in public sections. The most important enlightenment getting from the foreign instances is that although it takes a long time before privatization, the foreign investment could be effectively attracted and the price could be risen maximum only when the stable and transparent restriction system is established. In order to get a price as high as possible, the sell of stocks should be done in many times. Promote the competition of demand between investment institutions and private investors. Control and make use of the financial institutions properly by way of various attractive economic policies. And so on.

The Effect of Foreign Investment on the Real Estate Industry in China

This paper discusses the development of real estate industry in China in recent years. It argues that Hayek's theory of economic fluctuations can help to explain the contraction of the real estate market in 1994 in China as a whole. However, as a theory of the closed economy, Hayek's theory is found to be no longer robust when applied to cities where there is heavy foreign direct investment, such as Shanghai. We believe that it is the foreign direct investment that is making the real estate industry in Shanghai perform well, despite the government's tight monetary policy and the contraction of the industry in other parts of the country over the same period. The paper also argues that, while most foreign investment in real estate is classified as direct investment, it is very different from 'typical' foreign direct investment except in form and in fact shares most of the characteristics of portfolio investment. Foreign direct investment in real estate reflects the imperfections of China's capital markets.

Generating savings for Latin American development

The authors of this volume examine the contribution of savings to the process of capital formation, the relationship between domestic savings and domestic investment, and the effects of foreign investment on savings and capital investment in Latin America.

Developing national mining policies in Chile: 1974–1996

This paper discusses the mining development policies in Chile in the period 1974–1996. This period includes the military government that took over the country from socialist President Allende in 1973, and the return to democracy with the election of President Aylwin in 1989 and of President Frei in 1993. The paper analyses the economic and mining policies of the military and democratic periods, and then the country's mining investment, production and exports under the prism of the main institutional development policies pursued. The analysis focuses on copper mining, where investment and growth have created a mining boom unprecedented worldwide in this century since the discovery of the flotation process in the early 1900s. Thus it is of special relevance to examine the set of circumstances that has made this boom possible. The main discussion during this period regards the legitimacy of foreign investment in mining vs the capacity and potential of the state-owned company Codelco to be a protagonist of mining development. While the more liberal sectors of the political spectrum have supported the privatization of Codelco, the more conservative sectors support the continued ownership of Codelco by the state. This discussion will be of no great consequence if the mining boom continues. Nevertheless aspects of the discussion in 1996 questioned the economic development model employed by the country since 1974. Crucial for the legitimacy of foreign investment is the assessment of the returns that the country is receiving from mining investment. Two studies released in 1996 conclude that the overall effects of foreign investment in mining are positive at the national and regional levels and that a Dutch disease scenario does not seem probable for the future. Moreover, it is evident that had the mining boom not occurred, the country's economic growth would have been lower during the period 1988–1996. It also seems clear that the military government did not have identifiable viable options for a potentially successful mining policy at the time when the great policy decisions were taken. This has been validated by the policies adopted by the two democratic governments in more recent years. This does not signify that all is perfect. Indeed there are policy changes to be adopted, but they seem to be directed at adjusting the model so that the country improves its returns rather than upsetting the whole economic-institutional model.

Economic Disarticulation and Social Development in Less-Developed Nations: A Cross-National Study of Intervening Structures

Abstract This study investigates the thesis that disarticulated economic structures explain the effects of economic dependency, especially foreign investment, on social development. The research incorporates alternative conceptions and measures of economic dependency and examines the net effects of these alternative measures on (a) disarticulation and (b) social development net of disarticulation and level of economic development. Using cross-national data, cross-sectional regression analyses revealed that (1) foreign investment has substantial lagged effects on quality of life, as does sectoral disarticulation, (2) the effect of foreign investment on quality of life varies by level of development, (3) sectoral disarticulation is a consequence of export dependence and foreign investment and (4) sectoral disarticulation mediates the effect of foreign investment on quality of life. While disarticulation is an intervening structure in the effects of dependency on quality of life, it has equal or stronger ind...

Foreign Investment Effects on Balance of Payments: A Bangladesh Case Study

Foreign Investment Effects on Balance of Payments: A Bangladesh Case Study

Foreign Investment Effects on Balance of Payments: A Bangladesh Case Study

Foreign Investment Effects on Balance of Payments: A Bangladesh Case Study

Country-of-Origin Effects of Foreign Investments in the People's Republic of China

This paper investigates the existence of country-of-origin effects occurring in foreign investments in the People's Republic of China. The eclectic theory of international production posits that the pattern of foreign investments should vary by country of origin. This aspect of the eclectic theory is difficult to test directly, especially in developing countries, because of the relatively small numbers of foreign investment projects in a single country. The data used in this research cover 1,665 Sino-foreign joint ventures (JVs) from 1979 to 1985, allowing a more reliable test of this aspect of the theory. Statistical evidence suggests that country-of-origin effects are indeed present in foreign investment activities in China.

Effects of Foreign Investment, Exports, and Economic Growth on Third World Food Consumption

World-system and related theories indicate that international dependence has important impacts on the satisfaction of basic needs such as nutrition. However, previous crossnational studies of food consumption have yielded ambiguous findings on the effect of export dependence on consumption; they also have neglected the potentially intervening role of economic growth — the focus of earlier cross-national research and an object of ongoing controversy. Our panel analysis of 59 Third World countries for 1967–1985 shows that reduction of primary export dependence promotes food consumption, and that transnational corporate (TNC) investment dependence has an exceptionally strong harmful effect on consumption. Economic growth, however, mediates very little of the effects of dependence on consumption, signifying the limited relevance of earlier crossnational research on growth. Our findings, which support world-system, dependency, and related perspectives, are upheld by robust regression analysis.

Effects of Foreign Investment, Exports, and Economic Growth on Third World Food Consumption

Effects of Foreign Investment, Exports, and Economic Growth on Third World Food Consumption

The Effects of Foreign Investment Upon Political Protest and Violence in Underdeveloped Societies

n recent years, scholarly attention increasingly has centered upon the political implications of the many economic linkages that evolved rapidly and multiplied since World War II. Keohane and Nye (1977) argue that these linkages created an interdependent world that structures: (1) the conduct of foreign policy and the exercise of power in international politics, and (2) the domestic political environment and the incidence of local political conflict. A considerable body of empirical research has developed to concentrate upon the first of these problems, with a number of scholars devoting their attention to the constraints that dependence places upon foreign policy behavior.' For example, Armstrong (1981) and Richardson (1978) examined the relationship between trade linkages and foreign policy conflict, Dolan et al. (1982) and Dolan and Tomlin (1984) studied the effects of dependence upon relations between dominant and subordinant states, Moon (1983, 1985) has focused upon the effects of foreign aid upon the recipient's behavior toward donor nations, and Rothgeb (1987) has investigated the role played by direct foreign investments in foreign policy making. The issues surrounding how dependence structures domestic politics been explored less and not led to much empirical research. This especially has been true of the study of the impact of dependence on domestic political conflict (Snyder 1978; Rogowski 1987). As Zimmermann (1983: 204-205) notes, external linkages have only begun to gain close attention as predictors of [domestic] political violence and instability. Stohl (1980: 325) and Gurr and Lichbach (1986: 32) con-

The Effects of Foreign Investment upon Political Protest and Violence in Underdeveloped Societies

The Effects of Foreign Investment upon Political Protest and Violence in Underdeveloped Societies