Importance Of Foreign Direct Investment Research Articles

Cointegration analysis and VECM of FDI, employment, export and GDP in Croatia (2002-2017) with particular reference to the global crisis and poor macroeconomic governance

Research background: The preconditions for attracting foreign investment are political stability and long-term capital investment, positively influencing the recipient country's development. During the crisis as well as in the unstable political environment, economic agents engage in speculative and risky acts for faster earnings. Purpose of the article: The paper aims to point out the importance of foreign direct investments (FDI) and other macroeconomic variables and their relationship with particular reference to the Croatian economy in 2002-2017. Methods: We use ADF test, development of the VECM model, testing of the stability of the VECM model, decomposition of the variance of the predictive errors of the variables, analysis of responses to unit orthogonal pulses. The vector correction auto-regression model (VECM) explores the long-term relationship between (FDI) and macroeconomic indicators in crisis time. Findings & Value-added: Applying the VECM model, we find that employment, export, and GDP variables are exogenous in the short term. The FDI variable is statistically significant and adjusts for the long-run equilibrium. Analyzing the responses to unit shocks, we conclude there is weak feedback of the observed variables and a weak effect of the observed variables in the Croatian economy. The FDI variable does not affect GDP, employment, and exports in Croatia due to poor macroeconomic management, corruption, regional development, inefficiency, and inefficient foreign direct investment structure.

The Determinants of Foreign-Direct-Investment (FDI) Inflows in Nigeria

ABSTRACT: Due to the importance of foreign direct investment (FDI), scholars are always keen to explore FDI determinants and analyze their implications. Nevertheless scholars have proposed mixed viewpoints of FDI and interpreted its determinants differently, which do not contribute to the knowledge advancement and amalgamation of FDI literatures. The current research, therefore, aims to advance the knowledge of FDI determinants in Nigeria through a new investigation on the key determinant factors affecting Nigeria's inward FDI. Data were collected from UNCTAD (1970-2014) and analyzed by auto-regressive distributed lag tests (ARDL). A comprehensive theory-based model was developed accounting for many variables, such as the interest rate, external debt, oil rents, the Gross Domestic Product (GDP) growth rate, trade and exchange rate volatility. The analysis of FDI determinants in the Nigerian economy yielded reliable, robust, and economically meaningful results thereby offering an insight into the driving factors of inward FDI. Findings indicate that the interest rate, external debt, oil rents, and GDP growth are all important determinants, possessing a long-run effect on FDI. Different from the literature, however, trade and exchange rate volatility are barely important to FDI. Several policy implications flow from the findings. From a policy point of view, regarding the GDP growth rate, there should be concerted efforts to boost the performance of the non-oil sector in Nigeria through more investments in the agricultural and industrial sectors making the growth of the economy spread across other sectors and, in turn, encouraging inward FDI in such areas. Countries such as Nigeria, endowed with natural resources, should pursue policies targeted at full deregulation (privatisation) of their natural resource sector to better utilize the abundance of their natural resources thereby attracting additional FDI. Nigeria should also pursue better debt management practices. When debts are acquired, they should be targeted towards future consumption and longer-term investments. Most importantly, as an import-dependent economy, the Nigerian government should also formulate export-driven and appropriate fiscal policies that will stabilize Nigeria's trade relationship with other world economies. The Nigerian government should create the necessary environment that will regulate macroeconomic and specifically monetary policy (interest rate) which is essential for the attraction of FDI inflows into the economy. Finally, Nigeria should ensure that the quality of exportable commodities is improved to enhance international competitiveness.

The Impact of Foreign Direct Investment on Economic Growth in the MENA Region

Economic growth is one of the basic objectives of countries' economic programs, which is influenced by various factors such as the amount of capital available. Attracting capital and foreign direct investment is an important way to accelerate the economy towards development and job creation, which can be considered an engine of economic growth and development. Considering the special importance of foreign direct investment (FDI) in economic growth, this article examines the impact of FDI on economic growth. For this purpose, the data of some countries in the Middle East and North Africa (Egypt, Saudi Arabia, Morocco, Jordan, Tunisia, Iran, Turkey, and Yemen) were selected for the period from 1980 to 2020. A second-generation panel cointegration method was used to achieve the study's objective. According to the results, the impact of FDI on economic growth in Egypt, Saudi Arabia, Morocco, Tunisia, Turkey, and Yemen during the study period is positive and statistically significant. In Jordan and Iran, FDI was found to have no impact on economic growth. Moreover, the impact of capital stock and labor on the economic growth of member countries is positive and significant, except in Tunisia, Egypt, Jordan, and Yemen.

EFFECTS OF DIRECT FOREIGN INVESTMENTS ON THE ECONOMY OF THE REPUBLIC OF CROATIA

The aim of the paper is to investigate and provide an argumentative explanation of the effects that direct foreign investments have on selected macroeconomic indicators in the Republic of Croatia in the period from 2000 to 2020. This paper analyses the effects that direct foreign investments have had and are having on selected macroeconomic indicators of the Republic of Croatia over a 20-year time series. Most often, advocates of a greater inflow of FDI argue their positions with GDP growth, higher employment, price stability, increased exports of goods and services, and a generally better standard of living for Croatian citizens. The very entry into the Union created numerous advantages for Croatian companies, facilitated the exchange of goods with the members, but did not bring the expected influx of investments. Of the desired numerous greenfield and brownfield investments and mergers and acquisitions of companies, the realization was below expectations due to the stated objective, but also numerous subjective reasons. More precisely, investments have arrived in tourism and trade, but have been absent in basic industry and agriculture. The developments that have been observed in recent years will certainly, in addition to attracting foreign capital, contribute to the Croatian economy, especially in the IT field and green technologies. Investment experience so far shows that in the Republic of Croatia, most foreign investments have been reduced to the purchase of majority ownership in domestic vital companies, which has resulted in job reductions, disincentives for exports, and impairment of national competitiveness. In the sense of the above, the starting hypothesis of the work is: based on the knowledge of the theoretical characteristics of foreign direct investments and the functioning of the movement of international capital and technology transfer, the importance of foreign direct investments for the economy of the Republic of Croatia can be presented. In the analytical part of the paper, statistical methods of linear regression and correlation were used to analyse the influence of direct foreign investments on GDP, employment, long-term interest rate and current account of the balance of payments. The basic research results show that there is a clear and moderate connection between FDI and GDP. The conclusion of the research in the paper emphasizes how the beneficial effect of the inflow of FDI on the gross domestic product indirectly or directly positively affects employment, long-term interest rates and the balance of payments of the Republic of Croatia. Based on the analysis carried out, it can be stated that foreign direct investments can bring improvement to the national economy only when; if they target more advanced industries so the potential technological spillovers are greater, if they establish strong ties with domestic companies that can absorb spillovers in such a way, if part of the production is exported which has a positive effect on the balance of payments and if they motivate domestic companies to follow them.

The importance of foreign direct investment in the development of the natural gas industry in Iraq

The natural gas sector in Iraq is one of the most important sources of energy after oil, as this sector imposed itself to be a major factor and supportive of economic policy, so it is necessary to develop plans and strategies for its optimal investment through specialized foreign investments in this field to reduce and prevent burning gas, raise its productivity and increase its reserves and exports, thus achieving economic diversification of the country and not relying on crude oil as the only source to supplement the general budget foreign.

Economic and Political Development of Ukraine: Importance of Foreign Direct Investment

Economic and Political Development of Ukraine: Importance of Foreign Direct Investment

Determinants of FDI Stock in Some Central European Countries

Given the importance of foreign direct investment (FDI) in the economy, the purpose of this study is to identify and investigate the economic indicators that can explain the development of FDI in the economies of Central and Eastern European countries such as the Czech Republic, Poland, Hungary, and Slovenia throughout the period 1995–2020. When developing multiple linear regression models, the following explanatory variables were considered: exports, imports, import concentration and diversification indices, the balance of trade, the balance of payments, and different components of the economic freedom index. Therefore, it was shown that a rise in exports and imports has a beneficial impact on enhancing the flow of foreign direct investment (FDI) in each of the nations examined for this study. Furthermore, an increase in the value of the import diversification index is shown to have a beneficial effect on the levels of foreign direct investment (FDI) in the Czech Republic, Hungary, and Slovenia, as determined by this study. On the other hand, the import concentration index has been shown to benefit foreign direct investment in Poland. Furthermore, it was discovered that the balance of payments was a positive factor in the Hungarian economy. In contrast, the trade balance was shown to be a positive element in Poland and Slovenia. Both indicators have positively impacted foreign direct investment (FDI) flow.

The knowledge economy and development in light of the economic shocks in Arab world

With the beginning of 1990, world moved towards knowledge in the economy as sustainable development engine depending on production factors and economic growth rate based on four basic pillars of the knowledge economy: (1) economic incentive, (2) institutional system, (3) education, human resources and innovation, (4) communication technology information. In light of the economic shocks facing the Arab world, as the most recent was the COVID-19 pandemic in 2019, which led to decline in economic growth rates for Arab countries. The main objective of study is the effect of economic shocks on the knowledge economy and development in Arab countries during (1991: 2020). The study relied on secondary data and used descriptive economic analysis and the statistical analysis represented by the simple regression method. The study showed the most important factors affecting on an employment share of real GDP as an indicator of the production inputs contribution and technological progress in real GDP. The results of the study cleared a positive relationship between economic shocks and the barrel of oil price, as well as it showed the difference in the impact of the barrel oil price on the employment's share of real GDP in dollars in the Arab countries. The study indicated the importance of foreign direct investment in advancing development in the Arab world.

Application of multi-criteria Vector Measure Construction Method (VMCM) to assess importance of foreign direct investment (FDI) to host country's regional economy

Foreign Direct Investment (FDI) is an important element supporting the growth of national economies. Through competitive advantage and innovation, foreign-invested enterprises can become an important agent of beneficial structural change and have a positive impact on the host economy as a whole. In general, through the provision of external capital, FDI can contribute to the economic growth of a country hosting the investment and plays a particular role in the regional economy which encompasses all activities of an economic nature pursued in a given area. The article examine the role that foreign-invested companies play in the economy at the regional level. The significance of the foreign direct investment for the regional economy was conducted using the example of sixteen Polish voivodships. For the purpose of the study the Vector Measure Construction Method (VMCM) was used to determine the importance of FDI for the economies of each Polish provinces (voivodships) and to produce their ranking and classification. According to the study findings, voivodships where the examined problem was of a similar nature were assigned to particular classes. A definite leader was the Mazowieckie voivodship, which was the only one to be included in Class I. The most numerous Class II included 11 voivodships, which constituted approximately 70% of the total number of provinces. Four voivodships fell in Class III, comprising entities with the lowest aggregate measures. This means that Polish regions are mostly homogeneous in terms of the importance of foreign direct investment to the performance of their economies.

The Role of Foreign Direct Investment in Economic Development of Developing Countries

Derive the importance of foreign direct investment in the world, particularly in the developing countries. FDI is critical for the developing countries which need multinational funding and expertise to expand, give structure, and guide their will to boost manufacturing and service sectors. Due to its role in promoting the growth and development wheel, providing financial resources complementary to national savings, and contributing to the transfer of technology and skills associated with modern production methods, it has emerged as one of the most significant sources of support for development. As the deteriorating economic conditions of developing countries did not leave them with many options or other solutions, their only option was to open their economies. The research touches on multiple subjects such as: Statistical Decision Theory by using statistical data to prove some of the research points, Multidimensional Statistical Analysis, Financial Econometrics which includes the financial related remarks as GDP part of the research, etc. In this sense, the goals of this paper are to highlight the importance of FDI in achieving the development in developing countries.

“Killing the Golden Goose?”: FDI in Poland 2022

This article is a follow up on recent events that relate to participation in foreign direct investment (FDI) activities in Poland in light of the Law on Freedom of Economic Activity (LFEA), the Act on Control of Certain Investments and the Amendments thereto, which provide for the rules on foreign participation in the Polish market and later restrictions on the purchase of Polish assets by discrete categories of investors. The article builds on research published in 2021 relating to the existence and importance of FDI in the Polish economy that had been negatively affected by a series of challenges and paradoxes in Polish society.

THE FINANCIAL FACTORS AFFECTING FOREIGN DIRECT INVESTMENTS IN TURKEY

Küreselleşmenin dünyayı tek bir küresel köye dönüştürmesi doğrudan yabancı yatırım hacminde önemli bir artış ortaya çıkarmıştır. Bu süreçte doğrudan yabancı yatırımlar özellikle gelişmekte olan ekonomiler için giderek artan şekilde ekonomik büyümenin önemli bir kaynağı haline gelmiştir. Öyle ki, doğrudan yabancı yatırımlar gelişmekte olan ülkelerde istihdamı ve üretimi artırmanın yanı sıra bilgi ve teknoloji yayılımı yoluyla üretim yapısında önemli değişikliklere yol açmıştır. Bu nedenle gelişmekte olan ülkeler doğrudan yabancı yatırımları ülkelerine çekmek için büyük çaba sarf etmektedir. Doğrudan yabancı yatırımların gelişmekte olan ekonomiler açısından öneminin artmasına paralel olarak doğrudan yabancı yatırım girişlerini etkileyen faktörler ekonomi literatüründe kapsamlı bir şekilde incelenmeye başlanmıştır. Bu çalışma Türkiye’ye yönelik doğrudan yabancı yatırım girişlerini etkileyen finansal faktörler üzerinde durmaktadır. Bunun için, global krizin başlangıcından pandemiye kadar geçen süreci içine alan 2008Q4-2019Q4 döneminde global faiz oranı ve borsa indeksi ile döviz kurunun doğrudan yabancı yatırım girişleri üzerindeki etkisi ARDL yöntemi ile analiz edilmiştir. Ekonometrik sonuçlar, Tobin’in Q Teorisi çerçevesinde, global borsa indeksindeki yükselişlerin Türkiye’ye yönelik sermaye girişlerini pozitif yönde etkileyen önemli bir değişken olduğunu göstermektedir. Öte yandan kur seviyesindeki değişimler doğrudan yabancı sermaye girişlerini kısa dönemde pozitif uzun dönemde ise negatif yönde etkilemektedir. Genel olarak global faiz oranında gelişmeler ile doğrudan yabancı sermaye girişleri arasında anlamlı bir ilişki bulunmamıştır. Böylece ampirik bulgular finansal göstergeler içinde global borsa indeksindeki değişimlerin Türkiye’ye yönelik doğrudan yabancı girişlerini etkileyen en önemli faktör olarak öne çıkarmaktadır. Böylece elde edilen sonuçlar Türkiye’ye yönelik doğrudan yabancı sermaye girişlerini teşvik için Tobin’in Q teorisi çerçevesinde tasarlanacak politika seçeneklerinin önemini ortaya koymuştur.

A STUDY ON IMPACT OF COVID-19 ON INDIAN INWARD FOREIGN DIRECT INVESTMENT

Over time the importance of Foreign Direct Investment is elevating around the world. It not only flourishes the economy with funds but also brings in other benefits like technology and expertise. Moreover, it is a capital infusion without any debt burden on the economy. The covid-19 pandemic has carried a negative economic growth rate and employment ratio in the world (World Bank indicators). Specifically, the Gross Domestic Product growth rate and employment ratio in India were reduced by 7 percent and 8 percent in 2020. In these circumstances, FDI can provide a major boost to the economy. This paper attempts to find out the impact of Covid-19 on inward Foreign Direct Investments by comparing the pre-covid-19 investments with investments during covid-19. The paper investigates the impact on a world level and BRIC nations. It further examines the impact of the pandemic on India’s inward FDI through the impact on components of FDI and the impact on sector-wise, country-wise, and region-wide distribution. The paper concludes that global investments were reduced by 34 percent and among the BRIC nations, Russia was the most affected country. In India, the correlation between inward FDI and covid-19 is positive and significant. The positive growth is influenced by the covid-19 pandemic-driven investment in the drugs and pharmaceuticals sector and Facebook’s big investment in Reliance-jio. Investments from Mauritius were reduced by considerable volume but investments from the U.S.A soared despite the pandemic. Except for the west zone which can be attributed to investments in Gujarat, investments in all other three zones were reduced during covid-19. The Indian investments were centralized with 82 percent of total investments in Gujarat, Maharashtra, Karnataka, and Delhi.

REVISITING THE IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN THAILAND

Past studies have researched how foreign direct investment has played a pivotal role in stimulating Thailand’s economic growth. However, Thailand’s foreign direct investment inflows have exhibited huge fluctuations from1979 until now. Empirical studies have revealed that foreign direct investment worsens and weakens current accounts, raising foreign debt. In addition, foreign firms with large influence on market shares might crowd out domestic investment. Hence, this study aimed to re-examine the impact of foreign direct investment on Thailand’s economic growth in both the short and long run by employing yearly data from 1980 to 2019using the Vector Error Correction Model and Granger Causality test. Besides, this study also investigated the impact of other determinants of economic growth, namely real effective exchange rate and trade. The empirical results revealed that foreign direct investment has positively impacted Thailand’s economy in the long run. Inaddition, foreign direct investment emerged as the most influential variable on economic growth. Given the importance of foreign direct investment for Thailand, The Board of Investment of Thailand should implement effective policies and provide incentives that benefit foreign investors to invest in the country. In addition, the government should implement further intervention measures to improve the positive spillover effects fromforeign direct investment.

The Role of Foreign Direct Investment in Economic Development: A Consideration of the Chinese Experience

The study aims to highlight the importance of foreign direct investment in enhancing the country’s economic development. The work presents one of the world's leading experiences in this field, which is the Chinese experience. The purpose is to benefit from this experience and promote foreign and domestic direct investment that depends on innovation, especially in the light of the foundations and the qualifications that are available in the Arab countries, including Algeria, on the one hand, and the indicators that place them in late ranks in this field on the other hand. The study results showed that the level of creative capabilities and economic components that characterize China are great. Similarly, exploiting these components in foreign direct investment has a positive impact on fostering comprehensive economic development

Foreign Direct Investment in the Function of Increasing the Competitiveness of Serbian Agriculture (perspectives of organic agriculture)

In this paper, the authors emphasize the importance of foreign direct investment in Serbian agriculture. In the contemporary world, we are witnessing a large number of significant changes of the social, economic and technological nature, as well as the new challenges facing the national economies at the macro and micro levels. In the contexts of globalization and integration into the modern economy, issues are related to competitiveness and ensuring the highest quality of national business environment. In these conditions, when almost all the raw materials are available, natural advantages have almost the only effect on competition policy. Agriculture is a broad term, which, in addition to primary agricultural production, includes manufacturing, i.e. production of finished food products.

Developing Tendencies of Foreign Direct Investments

The formation process of foreign direct investment theories began in the second half of the twentieth century, it was period that the importance of foreign direct investment (FDI) in international capital movement increased, and this period was characterized by the rapid growth of multinational enterprises, which, in turn, is a major source of FDI. Scientific and technological progress has become the basis for decisions of transnational companies to invest capital in to different parts of the world and to coordinate and control its many branches from one country. During this period scientists actively began to develop theories and mathematical models of foreign direct investments, which meant studying the genesis of FDI, as well as analyzing their impact on the economy of both the host and the issuer countries. The analysis of foreign direct investment theories is closely related to the study of the activities of multinational corporations. Among them are some paradigms containing interesting discoveries that view the foreign direct investment as a contributing factor for the economic growth of the host country and its industrial development. In this article, the author consider the key theories and models of foreign direct investment: 1. The Product Life Cycle Theory, which is developed by Vernon; 2. Transnational companies and monopolistic computation theory, which is developed by Hymer; 3. Generalized theory of economic development, which is developed by Akamatsu; 4.The competitive advantage of nation’s theory, which is developed by Porter; 5.The eclectic paradigm and country's investment development theory, which is developed by Dunning; 6.Differential model of capital distribution between countries by Leontiev. The theories and models provide a basic range of motives of investors' behavior in the world market. It also makes it possible to analyze what impact foreign direct investment has on the economy of the recipient country and what forecast the recipient country's economy will have. Keywords: Globalization, Foreign Direct Investment, Economic Growth, Multinational Corporations, Analysis of Basic Theories and models;

НАПРЯМИ ПОСИЛЕННЯ ВПЛИВУ БАНКІВСЬКОЇ СИСТЕМИ НА РОЗВИТОК ІНВЕСТИЦІЙНИХ ПРОЦЕСІВ ЗА УМОВ СУЧАСНОГО СТАНУ УКРАЇНСЬКОЇ ЕКОНОМІКИ

The effect of factors hindering the transition of the domestic economy to sustainable development is analyzed. based on an objective assessment of its state after the fall in 2020. Among the most powerful factors hindering economic growth is the imperfection of the structural construction of domestic social production. It is characterized (compared to highly developed countries) by a significant share of the primary sector. This, combined with the policy of foreign trading partners to protect their markets from imports of high value-added products, gives the domestic economy a distinct raw material character. Thus, the state and its banking system face the issue of solving the complex problem of structural restructuring of the entire economic complex as the most important prerequisite for sustainable economic growth. The most justified way to fulfill this task is to significantly strengthen investment processes, which, combined with the innovation component, will allow Ukraine in the near future to take a decent place among the industrialized countries. One of the crucial areas of this task is to expand the process of lending to businesses by all financial institutions and, above all, by the banking system. The great importance of foreign direct investment for the Ukrainian economy is determined, as they are usually aimed at the use of new technologies and production of high-tech products. Important components of the Government's action plan to stimulate economic development based on the creation of favorable conditions for lending to small and medium-sized businesses in the country are considered. The reasons for insufficient efficiency of investment programs implementation are revealed. The shortcomings of the NBU's policy in its attempt to stimulate the expansion of the process of lending to the real sector of the economy by commercial banks have been revealed. The state and peculiarities of foreign direct investment movement for the last two years are analyzed. Based on the study, the need to introduce measures that can strengthen the influence of the banking system on the dynamics of economic growth is substantiated.

YÜKSEK JEOPOLİTİK RİSK, TÜRKİYE'NİN DOĞRUDAN YABANCI YATIRIMLARINI SINIRLIYOR MU?

The acceleration of capital transfers between countries after globalization has increased the importance of foreign direct investments in developing countries. Lack of capital in developing countries such as Turkey, constitute obstacles to investment. In this context, foreign direct investments that will come to the country are important in terms of eliminating the negativities caused by the lack of capital. Foreign direct investments are affected by many factors. One of them is the country's geopolitical risk. In this study, it is aim to investigate the impact of geopolitical risk on foreign direct investment in Turkey by using ARDL Bound Test for the 1998-2018 period. In addition to the geopolitical risk, real exchange rate, labor force, real GDP and savings that affect foreign direct investments were also included in the study. According to the analysis re-sults obtained, while geopolitical risk and labor force had a negative effect on FDI; real GDP, real exchange rate and savings have and positive effect on FDI.

Role of foreign direct investment in banking sector and their impact on employment: Kosovo case

The purpose is to identify the role and importance of Foreign Direct Investment (FDI) for the Kosovo economy, emphasizing FDI in the banking sector and their impact on employment growth - comparing FDI levels with countries of the Western Balkans. Data processing design is in line with a focus on data published by local and international organizations and institutions, using methods deductive, comparing research data synthetically and analytically with direct access to literature, scientific journals, official reports published domestically and abroad. Kosovo aims to regulate favorable legal infrastructure by attracting as much FDI as possible to other countries in the region. In this context, in Kosovo the economic field is regulated by legal provisions covering the area of FDI, which is very favorable compared to other Western Balkan countries. This paper provides sufficient data to show the current state of FDI in Kosovo compared to the countries of the Balkan region, as well as the extent to which FDI has affected employment growth in the Kosovo banking sector. The practical implication also relates to identifying the improvement of positive legal conditions for more FDI attraction. The data in the paper present the real situation of FDI in Kosovo and their role in economic development, emphasizing the country's banking sector and how Kosovo stands for FDI relative to the Western Balkan countries.