Impact Of FDI Research Articles

The interconnection between fiscal policy and foreign direct investment with R&D: Insights from East Asian countries

As a technological powerhouse, Asia should not be overlooked. The region has been responsible for 87% of patent filings, 43% of startup investment, 51% of expenditures on research and development, and 52% of the global growth in tech company revenues during the past ten years. Within this framework, the current paper investigates the impact of fiscal policy and FDI on research and development in East Asian countries during the last 20 years. It further analyses the direction and shocks of these impacts. The methodological framework included theories of public policy and R&D management, the concept of absorptive capacity, etc. The database includes fiscal policy, FDI, domestic credit, and R&D data for 2000–2020. As a result, the paper adopted Autoregressive Distributed Lag (ARDL) and Granger causality tests to capture the short-run and long-run dynamic relationship among the variables. Next, we utilized Fully Modified Ordinary Least Square (FMOLS) and Dynamic Ordinary Least Square (DOLS) models to capture the cointegration between fiscal policy, FDI, domestic credit, and R&D. In light of this, the research revealed that the region’s fiscal policy and FDI outflows had a negative impact on the spending on R&D. Conversely, the results showed that FDI inflows and domestic loans provided to the private sector had a large favourable influence on research and development. It is also crucial to emphasize that the ARDL model produced results that were equivalent to the FMOLS and DOLS. Lastly, the Granger causality demonstrated a one-way causal relationship between fiscal policy and research and development. The study will help policymakers on how to promote R&D and enhance a country’s competitiveness in the global economy by paying enough attention to their fiscal policy. It will also assist policymakers to develop strategies to attract FDI that can benefit their R&D sector.

The Impact of FDI and Financial Depth on EU Regional Growth: Income and Spatial Heterogeneity

The Impact of FDI and Financial Depth on EU Regional Growth: Income and Spatial Heterogeneity

Investigating the Impact of FDI, Foreign Aid, and Islamic Capital Markets on Carbon Emission in ASEAN: The Moderating Role of Regulatory Quality

In the last few decades, member countries of ASEAN have experienced economic growth driven by increased FDI and FAID. However, the effect of this investment and foreign aid on carbon emissions in ASEAN countries is still not fully understood. This study examines the impact of FDI and FAID on carbon emissions in ASEAN countries, taking into account Regulatory Quality as a moderator. Panel data from 2011 to 2021 was collected using purposive sampling. The results show that FDI significantly and positively affects carbon emissions, while FAID does not show a significant effect. In contrast, the Islamic capital market shows a significant and negative impact on carbon emissions, demonstrating its potential to reduce emissions in ASEAN countries. Regulatory Quality moderates the relationship between FAID and carbon emissions in a positive way. This study recommends strengthening environmental regulations to mitigate the negative effects of FDI while promoting socially and environmentally responsible Islamic capital markets in ASEAN countries. Further research is needed to understand the factors influencing this relationship comprehensively.

Attaining environmental sustainability amidst the interacting forces of natural resource rent and foreign direct investment: Is Norway any different?

AbstractThis is a study of Norway's sustainable environment development amidst the interactions of natural resources, external investment (FDI) and economic development. Much has been done with respect to the study of Norway's economic performance in relation to the link between the natural resources and FDI with little emphasis on the environmental performance of the resource‐based economy. Also, Norway is classified as among the top countries in Europe with a greater percentage of adopting renewable energy, and no study has done a critical review of the impact of natural resources and FDI which are part of drivers of carbon emission that can counter the positive impact of renewable energy towards the Norway's sustainable environment. On this basis, this study adopts a time series data of Norway, 1970 to 2018 to study its environmental performance. Approaches such as structural break analysis, Autoregressive Distributed Lag (ARDL)‐bound testing and Granger causality estimations are utilised in this study for in‐depth analysis of the subject. Findings from ARDL confirmed a positive association between fuels and carbon emission, other indicators (economic growth and natural resources) are improving the quality of the country's environment. FDI even though shows positive sign remains insignificant in impacting the environmental performance in the short run reverted to a significant negative relationship with carbon emissions. This confirms the pollution halo hypothesis and rejects the pollution haven hypothesis (PHH) for Norway, and this trend can be sustained with the constant implementation of environmental rules in the country. Granger test confirms, a one‐way transition from fossil fuels to carbon emission, from carbon emission to growth, and from economic growth to fossil fuels. Also, a two‐way transmission is found between fossil fuels and FDI. These findings from Granger causality are consistent with the findings from ARDL, hence, two ways interactions between FDI and fossil fuel energy source consumption from Granger causality and the two variables (fossil fuels and FDI) are seen impacting on Norway's environmental performance. Findings from the estimates suggest that natural resources and FDI are mitigating pollution, hence, Norway's policy is expected to be resources and FDI driven in sustainable environment development.

Analyzing the Impact of FDI in the Automobile sector: An Empirical Study with Special Reference to India

Abstract: Indian automobile industry has grown rapidly and become a major contributor to the country's economy. It produces a wide range of vehicles like cars, motorcycles, commercial vehicles, and tractors for both Indian and international markets. The industry has attracted investments and boosted related industries like component manufacturing. The Indian government has implemented favourable policies to support the sector, including initiatives for electric vehicles. In this paper growth and progress of the Indian automobile industry are studied using secondary data for the period of 2011-12 to 2021-2022. The study found that, FDI inflows and its share in total FDI both significantly increased in the years 2021–2022. Consistent FDI inflows into the automobile industry promote related to technology advancement, the creation of employment opportunities, and the growth of India's automotive sector as a whole.

Exploring the asymmetric impact of economic complexity, FDI, and green technology on carbon emissions: Policy stringency for clean-energy investing countries

All economies are concerned about rising carbon emissions, which contribute to environmental degradation. The current paper formulates a novel framework to scrutinize the impacts of shocks in economic complexity, FDI, environmental technology, and renewable energy on carbon emission in the leading clean energy investment countries, spanning the period from 1995 to 2020. In spite of the constraint for better environmental defence and the realization of the Sustainable Development Goals (SDGs), this paper introduces an empirical approach utilizing the Panel NARDL methodology to investigate the asymmetrical connections between carbon emissions and relevant exogenous factors. Furthermore, we utilize additional techniques, namely AMG and CCEMG, to enhance the robustness of our findings. Our empirical findings reveal that positive shocks in economic complexity, FDI, environmental technology, and renewable energy reduce carbon emissions while negative shocks may result to elevated pollution levels in the long-run. However, adverse shocks in economic complexity and FDI cause increased pollution in the long run. Likewise, the short-run coefficient signs are also similar to the long-run coefficient signs but different in significance level and magnitude. This has paved the way for a well-designed policy for leading clean-energy investment countries should focus on structural change, FDI, technology and renewable energy consumption.

Asymmetric Impact of FDI on Inclusive Growth in Nigeria

Asymmetric Impact of FDI on Inclusive Growth in Nigeria

An Empirical Investigation of the Impact of Foreign Direct Investment on Indian Economy

The present paper is an attempt to highlight the impacts of FDI inflows to India on Indian GDP. The study is purely based on secondary data which covers 10 financial years (2011-12 to 2021-22), and the analysis of which was made through the application of Karl Pearson’s coefficient of Correlation and Multi Regression OLS model (Ordinary Least Square). The study exhibited a strong positive correlation between foreign direct investment and GDP (r= 0.870) and indicated that FDI is the most important predictor of GDP with R square value of 0.757 which showed that FDI accounts for 75.7 per cent of variations in GDP; and b-value {Unstandardized co-efficient (B=39.679)} indicated that as FDI increases by one unit (1 billion), GDP increases by 39.679 units. It was further indicated through the results that if impact of FDI remain constant, then there are other factors which are explaining GDP up to 28571.885 units.

Impact of Economic Growth and FDI on Indonesia Environmental Degradation: EKC and Pollution Hypothesis Testing

This study examines the impact of economic growth and FDI on environmental degradation in Indonesia through a two-hypotheses model. Environmental degradation is a crucial matter that needs attention and is often associated with economic growth and the FDI required by developing countries. Based on the externality theory, this study uses the EKC hypothesis, followed by pollution haven vs. pollution halo. With time series data from 1980–2021, two hypothesis models were estimated using the error correction method. This study's results support the EKC and pollution haven hypotheses. First, for the EKC hypothesis model, this study found that economic growth at an early stage increases environmental degradation, but economic growth beyond the turning point would reduce ecological degradation. Besides testing the EKC hypothesis, renewable energy consumption can reduce environmental degradation caused by carbon emissions. Second, for the pollution hypothesis model, it's been found that increased FDI can increase ecological degradation, thereby supporting a pollution haven. This research suggests that policymakers should require foreign investors to apply the green economy concept supported by a green taxonomy and then provide fiscal incentives to those who do so.

Exploring the Role of Foreign Direct Investment and Environmental Regulation in Regional Ecological Efficiency in the Context of Sustainable Development

Eco-efficiency (EE) is an important indicator of regional sustainable development, which reflects the efficiency of regional economic development in using resources effectively to reduce environmental pressures, and foreign direct investment and environmental regulation are very important in promoting regional economic growth and enhancing eco-efficiency. In this paper, we chose China’s panel data from 2009 to 2021, measured China’s regional eco-efficiency using the super-efficient SBM model, and explored environmental regulation and the impact of FDI on EE in different regions using the Tobit model, with conclusions as follows: (1) The average value of national EE in China during 2009–2021 was about 0.631, which was at a low level, and there were significant differences between regions, with the highest EE in the eastern region, and the central and western regions being lower than the national average. (2) FDI at the national level had a significant promoting effect on regional EE, with an elasticity coefficient of 0.0213, which verifies that the “pollution paradise” effect does not exist at national level. FDI promoted EE in the eastern region, while not being significant in the other two regions. The impact of the environmental regulation act on EE at the national level did not pass the significance test, but the impact passed the significance test with positive coefficients for both the eastern and central regions, while in the western region it was not significant. (3) Financial investment in science and technology promoted EE in the national, east, and central regions significantly, while not being significant in the western region. The economic development level of all regions was positively correlated with EE; the impact of urbanization on EE was significantly positive in national, central, and western regions, but was not significant in the eastern region. The industrial structure of all regions was not conducive to the improvement of EE, with the western region having the most negative impact on EE. The study in this paper represents an important addition and refinement to research in related fields.

Does The Foreign Direct Investment Affect Economic Growth in Jordan in Light of Commercial Openness

Purpose: This paper aims to examine the effect of foreign direct investment on economic growth in Jordan in light of the trade openness, during the period from 1999 to 2019. Theoretical Framework: This paper discusses how Jordan, as a developing country, has worked over the years to attract foreign investment by creating an environment of incentives, benefits, and legislation that encourages such investments; taking advantage of low local labor wages, high administrative costs, and great commercial openness. Design/methodology/approach: To achieve the objectives of the study and to construct the statistical model the study used analytical methodology. The following statistical methods were applied; Hausman, Wald Test, F-Test Statistic, Granger, Multicollinearity test, Normality Test, Lagrange Test, Multiplier Test, and Causality Test. Findings: After conducting the analysis tests, the results showed a statistically significant impact of open trade direct investment on economic growth, Moreover, findings showed a positive impact on the degree of economic growth, whenever the degree of trade openness and the flow of foreign investment increase. Research, Practical & Social implications: The independent variables in the study model were measured by the ratio of foreign direct investment from the nominal GDP. The variable (the degree of trade openness) was expressed as the ratio of exports and imports to trade volume. The generalized Method of Moments (GMM) was used in this study. Originality/value: In light of Jordan's extensive commercial openness, This investigation looked at the impact of FDI on economic expansion. The study's findings are in line with theoretical research and other studies that hold that a country's level of economic growth is not adversely affected by significant trade openness because foreign investments are not less effective.

Impact of Foreign Direct Investment, Inflation, Labor Force, and Population on Improving Living Standards in the Philippines

Vast amount of literature has well-established FDI as an important determinant of technology acquisition and modernization, economic development, capital accumulation, and employment. Economists are too engrossed in how FDI positively affects the economic growth of both the home and host countries; only a few have been associated with investigating how FDI actually improved the living standards of the people. This paper examined the impact of FDI, Inflation, Labor Force, and Population on improving living standards in the Philippines from 1985 to 2021 using the different econometric tests which are: (1) Augmented Dickey-Fuller Test, (2) Jarque-Bera Normality Test, (3) Variance Inflation Factor, (4) Breusch-Pagan Heteroskedasticity test, (5) Breusch-Pagan-Godfrey Autocorrelation test, (6) RAMSEY Reset test, (7) Correlation Matrix, (9) OLS Multiple Regression, (10) Johansen Cointegration and (11) Granger Causality. The findings in the various tests revealed that FDI, Inflation, Labor Force Participation, and Population have cointegrating relationships with Self-Rated Poverty Rate within the time series. Moreover, the OLS regression model has shown that Labor Force Participation and Inflation have significant relationships with living standards while the country’s FDI and Population are insignificant. Granger Causality also revealed that Inflation, Labor Force, and Population Granger caused living standards in the Philippines and only FDI not. With all of the results of the tests, it is evident that the dependent variables affect the living standards in the Philippines, it just varies on how little or extensive it is. This study supports the loosened restrictions to foreign ownership as the results affirmed the significant effects of most of the dependent variables on the Self-Rated Poverty Incidence; however, must still take precautionary measures as some variables exhibit insignificance in the long run. The paper recommends implementing policies that are moderately reliant on Foreign Direct Investment, Population, Inflation, and Labor Force Participation rate because all of the variables are proven to be related to the Self-Rated Poverty Incidence, which is the variable used to measure the living standards in the Philippines. However, the Philippine government should focus and be meticulous on policy clauses that would benefit not just the corporate but also its employees to help attain prosperity for the country and its countrymen and to help alleviate poverty.

Foreign direct investment and carbon emissions from land use, land-use change, and forestry (LULUCF): empirical evidence from tropical forest countries

Since 1990, global forest area has been reducing; tropical forests have suffered from different anthropogenic and natural factors that account for forest loss. Tropical deforestation is the second driver of anthropogenic emissions; increasing demand and investments in tropical forests drive these emissions. These forests attract significant foreign direct investments, but the effects of these investments on carbon emissions from land use, land-use change, and forestry are not well enshrined in the literature for the countries under study. This paper seeks to analyse the impact of foreign direct investments on carbon emissions from land use, land-use change, and forestry amongst 30 tropical forest countries from 1996 to 2019. The sampled countries were disaggregated by tropical blocs: Amazon, Congo basin, Australasia, and Southeast Asia, and by income levels; low-income, lower-middle, upper-middle, and high-income. The findings reveal a U-shape structure of the impact of FDI on carbon emissions from LULUCF within Congo basin and Amazon countries; at higher levels of FDI, emissions from LULUCF will increase while Australasia and Southeast Asian countries show an inverted U-shape impact, thus at higher levels of FDI, there will be a negative and significant impact on carbon emissions from LULUCF. The income levels reveal an inverted U-shape for low-income and high-income countries and a U-shape for upper-middle-income countries; the impact for lower-middle-income countries is not significant. Overall, for the whole sample, the impact depicts a U-shape. This paper proposes high-level development of environmental conditions for FDI for different sectors that align with country and regional green growth plans. Enhancing national and regional governance systems to enforce decisions and fight corruption effectively can significantly promote green FDI for green growth.

The Impact of Chinese FDI on Zambia's Socio-Economic Development

There has been an increase of Chinese investments in many parts of the globe. According to Bo Li (2016), China’s outward foreign direct investment OFDI stock has grown from $1 Billion in 2004 to more than $30 Billion in 2014. However, there is an ever-growing volume of literature premised on the criticism of the impact of Chinese investment in Africa and other parts of the globe. Many studies have cited China as being after the resources of its host countries without much concern to the effects or benefits to local populations, (James Mayers:2015) and (Reisen and Rielander:2011). This paper made an attempt to explore the impact of Chinese FDI on social economic development focusing on job creation and poverty reduction in Zambia. The study was largely qualitative in nature and adopted a mixture of descriptive and explorative study designs. The study focused on Zambia because of the unique bilateral ties with China which span over decades. Furthermore, many studies done on Chinese FDI usually aggregate all African countries overlooking the differential impact of the source and type of Chinese FDI in Africa which makes it difficult to generalize findings, (Abdoulkadre Ado Zhan Su:2016). While many studies only focus on the economic effects of FDI by stressing on quantitative aspects, this study went further to analyze a mixture of qualitative and quantitative variables within the socio-economic context. This approach was adopted in order to provide a comprehensive analysis and hence a point of departure from other similar studies done on this subject. Less focus was laid on characteristic of FDI which in itself was a delimitation. A number of key conclusions revealed through my findings are that China has made significant investments in different sectors of the economy which have translated into job creation and helped to lift thousands of local people from poverty. However, despite the numerous investments made, jobs created are mostly for unskilled laborers. In addition, although most firms meet the minimum wage requirement, wages still fall below the Basic needs and nutrition basket, (Jesuit Center for Theological Reflections:2022). These are some of the areas of concern which have undermined notable gains. The paper therefore starts by unpacking suppositions surrounding FDI, then makes efforts to disambiguate economic growth from economic development before stressing on the findings and finally drawing conclusion. Keywords: FDI, economic growth, economic development, sustainable development. DOI: 10.7176/JESD/14-10-01 Publication date: May 31 st 2023

Exploring the impact of human capital development and environmental regulations on green innovation efficiency.

Following a consensus among world leaders at COP26 and COP27, every country is trying to deal with environmental issues. In this context, the role of green innovation efficiency is crucial, as it can positively drive the environmental efforts of a country. However, past research has ignored the methods through which a country can drive green innovation efficiency. To address this research gap, this work selected data from 2007 to 2021 in China, measured the green innovation efficiency (GIE) of each province, and constructed a systematic GMM model to analyze the role of environmental regulation policy and human capital on GIE. The findings of the study are as follows. (1) The overall GIE in China is 0.537, which is still at a low efficiency level, and high efficiency is mainly concentrated in the eastern region, while the western region has the lowest level of GIE. (2) The relationship between environmental regulations and GIE in the whole country and in the eastern, central, and western regions is shown to be "U" shaped. The regression coefficient of human capital on GIE is found to be positive, but there is regional variation, which is not significant in the western region and shows a significant positive correlation in other regions. (3) There is regional heterogeneity in FDI's impact on GIE; the results in the eastern region are consistent with the national results, which can promote GIE, but not significantly in the central and western regions; marketization can improve GIE in the national and eastern regions, but is not significant in the central and western regions; scientific and technological innovation can promote GIE except in the central region; and economic development can improve GIE in all regions. Studying the impact of environmental regulation and human capital development on the efficiency of green innovation and realizing the coordinated development of the environment and economy under institutional innovation and human capital innovation is of great significance for the development of China's low-carbon economy and has important reference value for accelerating sustainable economic development.

Examining the Perspectives of Gender Development and Inequality: A Tale of Selected Asian Economies

The rising concern about gender inequality among the economies in South, South-East, and Eastern Asia motivates us to study the context of gender development in terms of bridging gender disparity. To show the impact, the data has been extracted from various authentic sources- Varieties of Democracy (V-Dem), World Bank Development Indicators database, Sustainable Development Index, The Observatory of Economic Complexity and Human Development Reports of the 24 South, South-East, and East Asian economies from period 2000–2020. This research was carried out empirically using various techniques such as the Ordinary Least Squared Method (OLS), Generalized Methods of Moments (GMM), and Generalised Quantile Regression. The findings of the research show a significant impact of FDI and Economic Complexity in the reduction of gender inequality. Along with this, access to justice and electoral democracy will be providing more representation to women by reducing the gender gaps. Several policy implications have been proposed following the results of the study.

The Impact of FDI and Financial Development on Entrepreneurship in ASEAN Countries: A Panel Analysis

Entrepreneurship plays an essential role in economic development and identifying factors that incentivise entrepreneurial activity is relevant for both academia and policy. This paper investigates the impact of Foreign Direct Investment inflow (iFDI) and financial development on entrepreneurship in member countries of ASEAN for the period 2006–2020. We use common panel analysis approaches including pooled OLS, fixed, and random effects regressions to inspect the data. To address endogeneity issues, we further employ GMM estimation. Our analysis reveals that iFDI has a significant positive effect on entrepreneurship in ASEAN countries where financial development is high. The direct relationship between entrepreneurship and financial development is not significant and warrants further investigation.

The impact of fdi and regional factors on economic growth in Vietnamese provinces: A spatial econometric analysis

ABSTRACT By using spatial econometric models, this paper studies the impact of foreign direct investment (FDI) inflows and regional spatial factors on economic growth of 63 provinces in Vietnam over the period 2007–2018. Results show that, after controlling for the important factors of the growth model (human capital, physical capital, and institutional quality), FDI inflows have a rather limited direct and indirect impact in boosting economic growth of localities in Vietnam. Results from the estimation of spatial variables show three especially interesting key points: i) there is a close relationship in economic growth and economic shocks among neighbouring provinces; ii) capitals from state sector and domestic non-state sector of neighbouring provinces have a positive impact on economic growth in the host province; and iii) surprisingly, there is a trend of competition among neighbouring localities in attracting not only high-quality human resources but also in terms of untrained human resources.

Foreign direct investment, environmental regulation and urban green development efficiency—An empirical study from China

ABSTRACT This study investigates the existence of the pollution halo hypothesis in China. To realize the goals, an urban green development efficiency measuring framework was established applying SBM directional distance function and Malmquist-Luenberger index. Using linear panel model and nonlinear panel model and data of 284 cities in China from 2008 to 2019, we have found that the pollution halo hypothesis does exist in China because FDI increases urban green development efficiency. The mechanism analysis of introducing environmental regulation indicates that the impact of FDI on urban green development efficiency presents a ‘U-shaped’ feature. The implementation of strict environmental regulation can significantly increase the positive impact of FDI on the urban green development efficiency. In addition, the analysis of regional heterogeneity has shown that when the environmental regulation intensity exceeds the turning point, FDI in eastern and central China plays a significant positive role in urban green development efficiency, while that in western China is inhibitory effect. Our empirical results have suggested the Chinese government should further utilize the positive role of FDI in urban green development, including gradually and orderly implementing strict environmental protection regulatory policies, and implementing green energy conservation transformation projects for energy intensive industries.

Impact of Inflation and FDI on Economic Growth: A Time Series: Analysis of Pakistan

The objective of this research paper is to check the impact of inflation, exchange rate and FDI and economic development researcher used time series data from 1973 to 2020 for my project, which researcher gathered from the sources World development indicator and State Bank of Pakistan. For inflation researcher used the proxy of Consumer Price Index (CPI), and other variables remain the same. The study paper's goal is to provide answers to the following questions: What percentage of inflation is beneficial to an economy? The three factors in the study paper's subject have a favorable long-term association with the findings. This indicates that when inflation is below the 2.80 percent barrier, which is the point at which it hinders growth, the Pakistani economy expands at its fastest rate. The marginal effect of FDI on growth is found to be positive when inflation is below the threshold, but it is found to be negative when inflation is over the threshold. In conclusion, the Pakistani government must harness, develop, and stabilize the nation's macroeconomic system while ensuring that inflation stays below the threshold in order to prevent alienating foreign investors.