Impact Of Foreign Direct Investment Research Articles

Do FDI and foreign remittance inflows affect the unemployment rate? A new insight

This study aims to investigate the impact of FDI and foreign remittances on unemployment from 1991 to 2020 from Bangladesh's perspective. With the use of EViews 10 version, this study used the ARDL technique to capture the long-run and short-run estimations. The study utilized the unemployment rate as a dependent variable and foreign direct investment (FDI) and foreign remittances as independent factors. The remaining factors include exchange rate, GDP growth, exports, and inflation rate; these are controllable variables. The results of the research show that FDI and foreign remittance have a positive and statistically significant association with unemployment rate in Bangladesh, both in the long run and in the short term. Thus, according to the findings, FDI and foreign remittances are creating more unemployment in Bangladesh. Unlike the general economic theory, which states that the bidirectional relationship of FDI with the unemployment rate, as well as foreign remittances with the unemployment rate, is inverse, these research outcomes basically suggest that FDI and foreign remittance inflows are displacing domestic labor with, perhaps, a low-cost, highly skilled overseas workforce, and also indicate that there might be an increasing trend in the brown-field investment sector. For policy implications, this investigation lends support to the theory that Bangladesh should focus more and more on skilled development policies for domestic workers and create a sound environment for foreign investors in order to reduce the country's unemployment rate.

Greenfield investment and job creation in Ghana: a sectorial analysis and geopolitical implications of Chinese investments

Multinational investment has attracted mixed reactions from scholars and policymakers concerning their role and impact on job creation in host countries, particularly in developing economies. Using Ghana as a case study, this paper examines the impact of Greenfield investment on job creation. Proponents of multinational corporations (MNCs) argue that foreign direct investment (FDI) leads to economic growth, creates technological spillover, increases exports, and creates jobs, among other benefits. This has encouraged developing economies to adopt developmental strategies around MNC activities. Although most researchers have analyzed the impact of FDI on job creation, the unanswered question is: Does greenfield investment in Ghana lead to significant job creation in the formal sector? Extant literature considers FDI monolithic, without adequately differentiating between Green and Brownfield investments. Using granular data from the FDI Markets, this research paper fills this gap by empirically analyzing the Greenfield investment by 386 multinational companies in Ghana from 2003 to September 2020. Over the specified year range, these companies engaged in 500 projects across Ghana. Adopting the ordinary least square analysis (OLS), the study demonstrates that Greenfield investment has a statistically significant and positive impact on job creation in Ghana. Out of the 31 sectors, only the following sectors contribute significantly to job creation through Greenfield investment in Ghana: Consumer Products, Food & Beverage, Industrial Equipment, and Non-automotive transport OEM. This paper contributes to a better understanding of how government investment in fixed assets (GCF) such as roads, railways, and industrial buildings in the local economy should be managed efficiently so as not to spur inflation, which correlates negatively with jobs. Finally, this paper analyzes Chinese investments in Ghana, comparing them with U.S. investments, and examining their broader geopolitical implications, which highlights the importance of aligning foreign investments with national development strategies and adhering to international norms and standards.

Foreign Direct Investment and the Nigerian Economy: An Empirical Analysis

The primary motive of this paper was to investigate the impact of Foreign Direct Investment on economic growth of Nigeria from 1985 to 2022. Ex – post facto research design was carefully carried out; annual time series data were extracted from Central Bank of Nigeria Statistical Bulletin of 2021 and World Development Indicator. Real Gross Domestic Product (RGDP) was used as the dependent variable proxy for economic growth. Foreign Direct Investment (FDI), Exchange Rate (EXCR), Trade Openness (TOPN) and Inflation (INF) all denoted for explanatory variables of the study. The estimated coefficients of the variables under study displayed that all the variables are integrated of the same order 1(1) exception of Foreign Direct Investment which was integrated of order 1(0). The bound test conducted showed that there is proof of the presence of a long run correlation among the variables used while the causality test clearly showed that FDI granger causes economic growth in Nigeria under review. Other diagnostic tests seen in this paper are unit root test, descriptive statistics, correlation coefficient matrix, Cointegration test and test of Normality respectively, and they long-established the validity and reliability of the model used. Based on the inferential results revealed by the research work, the paper came up with recommendation that government should improve the investment climate for both domestic and foreign investors through adequate infrastructural development, soft loans and tax holidays.

Impact of Foreign Direct Investment (FDI) on Economic Growth: A Study of Brazil

Purpose: The aim of the study was to investigate the impact of foreign direct investment (FDI) on economic growth: a study of Brazil
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings: The study on Foreign Direct Investment (FDI) and economic growth in Brazil found a positive relationship between FDI inflows and GDP growth. FDI contributes to capital accumulation, technology transfer, and sectoral diversification, enhancing competitiveness. However, the impact varies across regions and industries, with disparities in spillover effects. Targeted policies are needed to maximize FDI benefits and promote inclusive growth, addressing regional disparities and socio-economic inequalities.
 Unique Contribution to Theory, Practice and Policy: Dependency theory, modernization theory & institutional theory may be used to anchor future studies on the impact of foreign direct investment (FDI) on economic growth: a study of Brazil. The study should provide practical recommendations for firms and corporate boards to enhance their corporate governance practices based on empirical findings. The study should inform policymakers and regulatory authorities about the implications of corporate governance regulations on firm performance and market competitiveness.

Impact of Foreign Direct Investment on the Indian Telecom Sector: An Analysis

This study examines the profound impact of Foreign Direct Investment (FDI) on the Indian telecom sector, offering insight into the sector’s evolution and opportunities. In recent years, FDI has played a pivotal role in transforming the Indian telecom landscape, contributing to both economic and technological advancements. From an economic perspective, FDI has significantly bolstered the financial health of telecom companies by infusing capital for network expansion and infrastructure development. This has translated into improved connectivity, greater market reach, and competitive pricing, benefiting the Indian consumer base. Additionally, FDI has spurred job creation and economic growth, positioning the telecom sector as a vital contributor to India’s economic development. Technologically, FDI has facilitated the adoption of cutting-edge telecommunications technologies. Foreign investors have brought in expertise and resources, accelerating the deployment of 4G and 5G networks, broadband penetration, and the proliferation of digital services. This technological progress has positioned India as a formidable player in the global telecommunications arena. This study underscores the transformative role of FDI in the Indian telecom sector, emphasizing its economic and technological benefits. It serves as a valuable resource for stakeholders, policymakers, and researchers seeking to understand the intricate dynamics of FDI in one of India’s most critical industries.

The Impact of Foreign Direct Investment on Economic Growth: Empirical Evidence

Foreign direct investments are an instrument widely used by countries, both developed and emergent, to achieve their economic development. Among others benefits, discussed in the specialized literature, investment inflows accelerate production, improve productivity, facilitates the transfer of technology, raise the qualification oh human capital, contributes to create new jobs and to boost the economic growth of the host countries. The main purpose of the research is to examine the short and long runs relationships between foreign direct investment (FDI) and economic growth in Algeria. To carry out our investigation, the time series data of the two variables are used over the period 1990-2023. This period covers the span time in which data on the volume of foreign direct investments are available. To achieve the research purpose, an ARDL model is built based on the unit root methodology of the Augmented Dickey Fuller and Phillips  Perron tests. The findings of the study show that the foreign direct investment (FDI) and economic growth are cointegrated, indicating the existence of a long relationship among them. They establish also that foreign direct investment (FDI) has a positive impact on economic growth. Building on the research results, Algerian decision makers should take the required actions to improve the climate business, making it more attractive for foreign investors.

Measuring the impact of foreign direct investment on exports in a sample of middle-income developing countries for the period (1990-2020)

Measuring the impact of foreign direct investment on exports in a sample of middle-income developing countries for the period (1990-2020)

The Impact of Foreign Direct Investment and Domestic Investment on Tourism in Pakistan

The current study considers the relationship of tourism with foreign direct investment and domestic investment in Pakistan. The study used time series data, which covers the period from 1990 to 2021 for the proposed variables of tourism receipts measured as the percentage of exports, foreign direct investment, gross fixed capital formation as a proxy for domestic investment and the control variables of domestic credit and trade openness. Johansen’s co-integration test and FMOLS are used in the study. Johansen’s co-integration test shows that the variables are co-related in the long run for Pakistan. The results of FMOLS show negative results. Further, the control variable of domestic credit to private sectors showed a positive relation with tourism receipts, although their relationship was insignificant. The variable of trade openness is also a vital factor in increasing tourism in the country. The result of the study implies that Pakistan should facilitate the tourism sector with domestic investment as the formation and re-innovation of the sector can attract foreign investment.

The Impact of Foreign Direct Investment and Domestic Investment on Tourism in Pakistan

The current study considers the relationship of tourism with foreign direct investment and domestic investment in Pakistan. The study used time series data, which covers the period from 1990 to 2021 for the proposed variables of tourism receipts measured as the percentage of exports, foreign direct investment, gross fixed capital formation as a proxy for domestic investment and the control variables of domestic credit and trade openness. Johansen’s co-integration test and FMOLS are used in the study. Johansen’s co-integration test shows that the variables are co-related in the long run for Pakistan. The results of FMOLS show negative results. Further, the control variable of domestic credit to private sectors showed a positive relation with tourism receipts, although their relationship was insignificant. The variable of trade openness is also a vital factor in increasing tourism in the country. The result of the study implies that Pakistan should facilitate the tourism sector with domestic investment as the formation and re-innovation of the sector can attract foreign investment.

Does governance matter to ensure significant effect of foreign direct investment on poverty reduction? Evidence from developing and emerging countries

This paper examines the moderating role of governance in the effect of Foreign Direct Investment (FDI) on poverty using simultaneous equations models for sub-Saharan African, Asian, Latin American and Eastern European countries over the period 1996–2017. The main objective of this study is to examine the role of governance as a moderator of the FDI effect on poverty. Our analyses support a positive significant impact of FDI on poverty reduction in sub-Saharan Africa and Latin America but a negative effect in Eastern Europe, while it is not significant in Asian economies. In addition, we detect a positive conjoint impact of FDI and governance quality on poverty in all African, Latin American and Eastern European economic communities. However, this interactive effect is negative and not significant in Asia. This means that FDI reduces poverty in the presence of governance quality. Our results support that in the poorest countries (sub-Saharan Africa, Latin America), poverty is more sensitive to interactions between governance and FDIs than in the richest countries (ASIA). As policy implications of this study, governments in less developed regions must give great importance to improving the quality of governance. In this way, it becomes possible to attract foreign direct investment and increase household consumption reducing poverty as main purpose of Sustainable Development Goals (SDGs) for 2030.

Evaluating the Impact of Foreign Direct Investment on Economic Growth in Zambia;1996-2020

Zambia has sought to attract foreign direct investment because of the many benefits that it brings to the economy. Foreign direct investment is considered beneficial not only because it brings in much-needed capital but also because it generates employment and provides access to advanced technologies and other spillovers. It has been argued that foreign direct investment has a positive impact on the economic growth of the host country by reducing inflation, unemployment, interest, and the national saving rate. This motivated the conduct of this study. The aim of this study was to establish the relationship between FDI and a country’s economic growth, in the case of Zambia from 1996 to 2020, with the purpose of providing knowledge and information to the government, potential investors, and academia on how FDI can contribute to the economic growth of the country. The study was designed with a case study nature and made use of secondary data accessed from UNCTAD, the World Bank, the Bank of Zambia, CSO, etc. and analyzed using an econometrics software known as EViews. The main findings are that the inflow of foreign direct investment varied at a decreasing rate from 1996 to 2020. The results justify the decreasing rate due to the to the global pandemic and a reduction in mining activities. Further, it was found that overall, FDI leads to economic growth. Although the results show that FDI leads to an improvement in interest, unemployment, and the national saving rate, the impact was not significant. However, the results show that FDI has a significant impact on inflation. Hence, the government should build stronger and also safeguard its relationship with foreign investors, as they are key partners in fostering the economic growth of the country.

Unveiling new insights into China's marine ecosystem: Exploring the fishing grounds load capacity curve

As one of the most swiftly industrializing countries in the world, China is struggling with significant challenges facing its environment, in particular in its marine ecosystems. Hence, economic activities increasingly are influencing these ecosystems, requiring their study crucial for sustainable development. Therefore, it is paramount perceiving the potential implications of economic growth and foreign direct investment (FDI) for marine health. The study aims to explore the impact of economic growth and FDI on China's marine ecosystem during 1980–2019, examining the probable intersections of economic advancement, FDI, and marine sustainability, the study used a novel nonlinear Fourier Autoregressive Distributed Lags (FARDL) approach. Notably, the paper confirms the Fishing Grounds Load Capacity Curve (FGLCC) hypothesis, demonstrating a nonlinear affiliation among income levels and maritime conditions. Moreover, the results point out that FDI initially worsens marine conditions until a certain threshold is reached, marking a pivotal change in the influence of FDI from environmental degradation to improvement. In addition, the study underscores the critical need for policies that balance economic development with Chines' marine environmental sustainability, emphasizing the importance of intended regulatory and strategic interventions. These insights are vital for enhancing marine requirements and ensuring well-being and health of future generations, providing significant implications maritime policymakers in addressing marine environmental challenges amid economic development.

Foreign direct investment and inclusive finance: do financial markets and quality of institutions matter?

We examine the impact of foreign direct investment (FDI) on financial inclusion. To identify the causal effect of FDI on financial inclusion, we use plausibly exogenous source of variations in bilateral investment treaties (BITs) as a novel instrumental variable (IV) for net FDI inflows. Using annual data for a broad panel of 90 countries over the period 2004 to 2017, our results show that FDI improves financial inclusion for both “access to finance" and “use of financial services". This impact is more pronounced for relatively poor countries and developing countries compared to rich and developed countries. We also find that higher financial market development and quality institutions improve financial inclusion directly. Moreover, financial market development and institutional quality can serve as potential channels and moderating variables through which FDI affects financial inclusion. Our results are robust to various estimations and sample splitting and have important implications for policy on financial inclusion.

Remittances, Debt Service Payments and Economic Growth in Nigeria

The study investigates the intricate relationship between the effects of remittances (REMIT) and debt service payments (DSP) on economic growth (RGDP) as well as other key variables, external reserve (ER), foreign direct investment (FDI), and external debt (EXTD) on economic growth (RGDP) in Nigeria from 1995 to 2021. Various statistical techniques, such as Ordinary Least Square (OLS), Augmented Dickey Fuller (ADF) tests and ARDL, were used. The result indicates the existence of a positive correlation between RGDP and FDI; DSP and ER exhibit a moderate negative correlation, while REMIT and DSP show a strong negative correlation. ER and REMIT indicate a correlation, while EXTD and ER indicate a negative correlation. All variables are I(1) and the ARDL Bound test for co-integration indicates that a long-run relationship exists between dependent and independent variables. ARDL estimation shows that only the coefficient of external debt is significant. The R2 shows that 84% of the variation in RGDP is explained by the independent variables. The test for autocorrelation (DW = 2.33) indicates no autocorrelation in the error term.
 This study recommends that policymakers should implement measures to attract and retain foreign investments, given the positive impact of FDI on RGDP, and Policymakers should explore strategies to channel remittances into productive sectors, such as investments in infrastructure, education, and small-scale enterprises.

Shades of sustainability: decoding the impact of foreign direct investment on CO2 emissions in Africa’s growth trajectory

Shades of sustainability: decoding the impact of foreign direct investment on CO2 emissions in Africa’s growth trajectory

Integrating of FDI, institutions, ICT and logistics for promoting domestic entrepreneurship: evidence from fsQCA

PurposeThis paper aims to assess the relationships between foreign direct investment (FDI) and domestic entrepreneurship (DE) with the moderating role of formal institutions (FI), logistics and information communication technology (ICT) capacities.Design/methodology/approachThe study is based on unbalanced panel data of 53 countries from 2006 to 2020 at different stages of development, using a fuzzy-set qualitative comparative analysis.FindingsThe research results indicate that FDI directly affects the establishment of domestic entrepreneurship. Additionally, FDI firms via the buffer mechanism of FI, logistics and ICT development for DE. Through its adjustment to the quality of institutions, logistics and ICT infrastructure, GDP per capita determines the direction of FDI's impact on DE.Originality/valueThe study's findings grant empirical evidence and theoretical contributions to the relationship between FDI and domestic entrepreneurial development through the buffering mechanism of FI, logistics and the role of ICT.

Assessing the Impact of Foreign Direct Investment on Unemployment Rate in Nigeria

Recent studies have shown that high rate of unemployment as currently witnessed in Nigeria, is one of the factors that can undermine the attainment of goal eight (Decent work and Economic growth) of Sustainable Development Goals (SDGs) by year 2030. Since foreign direct investment (FDI) is an important factor in creating jobs and improving economic growth, it is considered a veritable tool for reducing the unemployment level. Although there have been studies on FDI and unemployment in literature, there is hardly any study on the impact of FDI on rural and urban unemployment. The study pursued threefold objectives which are to ascertain the impact of FDI on aggregate unemployment in Nigeria; to examine the impact of FDI on urban unemployment rate in Nigeria and to determine the impact of FDI on rural unemployment in Nigeria. The study utilized data from 1990 to 2020 as well as dynamic ordinary least squares (DOLS) which eliminates problems of endogeneity and serial correlation. The theoretical framework of the study is anchored on the Keynesian theory of unemployment. The result obtained showed that FDI has a significant impact on aggregate and urban unemployment in Nigeria. However, FDI did not impact significantly on rural unemployment in Nigeria. To effectively use FDI to reduce unemployment, the Nigerian government needs to create an enabling business environment, including favorable investment policies, streamlined regulatory procedures, and infrastructure development plans. Encouraging collaboration between foreign investors and local stakeholders, promoting technology transfer, and implementing strategies to enhance the skill levels of the local workforce are also important aspects to consider.

Analysis of the Influence of FDI on Employment in China

Since the reform and opening up, China continuously improves the investment environment, the foreign direct investment (FDI) continues to grow, which has an impact on all aspects of our economic activity. In recent years, due to the influence of the novel coronavirus epidemic, China's employment situation has fluctuated to a certain extent. How to use foreign direct investment (FDI) to stabilize China's employment situation and increase the number of employment has profound practical significance. Based on this, this paper uses China's 2011-2020 provincial panel data to study the impact of FDI on employment in China. The empirical results show that FDI has a promoting effect on employment in China, and the robustness and endogeneity tests support this conclusion. In view of this, the government should make full and rational use of foreign direct investment, balance the distribution of foreign direct investment between regions, and guide the adjustment of the structure of investment introduction.

Determinants of global migration: The impact of ESG investments and foreign direct investment

In response to global economic, social, and environmental problems, ESG investment principles have changed the approach to directing and structuring foreign direct investment. Additionally, they are becoming an essential factor in attracting migrants. This article aims to determine the impact of foreign direct investment on global migration trends and their peculiarities with the introduction of ESG investment principles. For this purpose, global foreign direct investment flows, global ESG investment flows, and global migration trends have been analyzed from 1995 to 2022. Pairwise correlation calculation was used as the primary analysis method through R-Studio software with integrated R programming language. The results indicated a 35% correlation between the volume of global ESG investment flows and the number of international migrants (as a percentage of the total population, which varies between 3.2% and 3.6%) for 2010-2022. Subsequently, regression analysis was conducted to explore the relationship between critical variables: investment flows and the level of migration in four European countries (France, Poland, the Czech Republic, and Germany). It was determined that investment inflows led to new jobs, accelerated economic growth, and improved business climate, thus encouraging reduced outflow and increased inflow of migrants. Investments based on ESG principles also reduce emigration as they enhance the quality of life in the host country, provide better environmental protection, and promote more transparent corporate management. However, it should be noted that investments have no apparent impact on migration caused by external factors such as wars or political conflicts, so such analysis should not include periods of global economic and political unrest.

Diversity within commonality: A comparative study of the impact of foreign direct investment and trade openness on economic growth

The relationships between foreign direct investment (FDI), trade openness, and economic growth are complex and analyzed by many researchers. Still, there are some gaps in our knowledge as literature documents positive, negative, and ambiguous impact of FDI and trade openness on economic growth. This paper addresses one of these gaps and focuses on the similarities and differences among countries from Central and Eastern Europe and West Africa. The econometric analysis covers the 1995-2022 period and employs panel data methods to reveal the long-term positive impact of FDI and trade openness on economic growth in West African countries and long-term positive impact of FDI on economic growth in Central and Eastern European countries. We also demonstrate that apart from cross-border linkages captured by FDI and trade flows, economic growth in Central and Eastern European countries positively correlates with global economic development, however, in case of West Africa this effect is statistically insignificant.