International Capital Movements Research Articles

Sustainability of Current Account Deficits in MINT Countries: Time Series Analysis

With the globalization process, there have been significant increases in international trade and international capital movements. In this context, international performance indicators of countries have come to the fore. The current account deficit is important in terms of expressing the external balances of countries. Today, the sustainability of the current account deficit, not its existence, is considered as a performance indicator. MINT countries are defined as countries with young populations and high development potential in terms of natural resources and geographical location. In this study, the sustainability of the current account deficits of MINT countries was investigated. The data range of the study was determined as 1981-2021. The current account deficit/GDP ratio of the countries and the export and import values of each country were used as the data set. As an econometric method in the study; From time series analyses, unit root tests, variance decomposition and cointegration tests were applied. According to the findings, the current account deficit was found to be unsustainable for the Indonesian economy. It has been determined that current account deficits are sustainable in the economies of Mexico, Nigeria and Türkiye. However, it has been determined that the sustainability of the current account deficit in Nigeria is weak. Within the framework of the findings, the unique structural situations of each country are explained.

Investigation of the Effect of International Capital Movements on Growth and Unemployment: Panel Data Analysis

Ülkelerin giderek daha fazla liberal politikaları benimsemeye başlamasıyla beraber gerek doğrudan yabancı yatırımlar gerekse portföy yatırımları dünya genelinde artmaya başlamıştır. Yabancı yatırımlar olarak adlandırılan bu tür yatırımları ülkeler kendilerine çekmek için çaba harcamaktadırlar. Daha çok gelişmekte olan ülkeler açısından önemli olduğu düşünülen yabancı yatırımlar, gelişmiş ülkeler tarafından da önemle talep edilmektedir. Bu çalışmanın amacı hem gelişmiş hem de gelişmekte olan ülkelerde doğrudan yabancı yatırımların büyüme ve işsizlik üzerinde, portföy yatırımlarının ise büyüme üzerindeki etkilerini araştırmaktır. Yabancı yatırımların gelişmiş ülkeler ile gelişmekte olan ülkelere olan etkilerinin de karşılaştırıldığı bu çalışmada; 15 gelişmiş, 15 gelişmekte olan ülke seçilmiş bu ülkelerin 1993-2018 yılları arası yıllık verileri kullanılarak panel veri analizi yöntemi ile incelenmiştir. Analiz sonuçlarına göre, doğrudan yabancı yatırımların hem gelişmiş hem de gelişmekte olan ülkelerin büyüme oranlarını artırdığı, işsizlik oranlarını ise azalttığı sonucuna ulaşılmıştır. Buna karşın portföy yatırımlarının gelişmiş ve gelişmekte olan ülkelerin büyüme oranları üzerinde istatistiksel olarak bir etkisi görülmemiştir. Ayrıca doğrudan yabancı yatırımların; gelişmekte olan ülkelerin büyüme oranlarının artmasına ve işsizlik oranlarının düşmesine sağladığı katkının, gelişmiş ülkelere sağladığı katkıdan daha fazla olduğu sonucuna ulaşılmıştır. Bu kapsamda doğrudan yabancı yatırımları çekmek isteyen ülkeler açısından; bürokratik engellerin azaltılması, çeşitli teşviklerin sağlanması, altyapıların iyileştirilmesi, yatırım yapmak isteyen şirketlere organize sanayi bölgelerinden bedelsiz ya da düşük bedellerle yer sağlanması ve enerji desteği gibi uygulamalar doğrudan yabancı yatırım girişlerini arttıracak faktörler olarak düşünülebilir.

UKRAINE IN THE INTERNATIONAL INVESTMENT CAPITAL MARKET IN THE CONTEXT OF POST-WAR ECONOMIC RECOVERY

UKRAINE IN THE INTERNATIONAL INVESTMENT CAPITAL MARKET IN THE CONTEXT OF POST-WAR ECONOMIC RECOVERY

New trends in capital flows in the world and Russia

In the aftermath of the global economic crisis of 2008—2009 new trends have emerged in the international capital flows: dynamics, volatility and geography of capital outflow and inflow have changed, the list of countries leading in these outflow and inflow have also changed, national restrictions on the import of capital have increased, international cooperation in monitoring international capital movements has expanded. The COVID-19 crisis and the geopolitical upheavals of 2020—2023 have added new trends to these processes. Russia’s participation in international capital flows has become noticeably smaller due to restrictions on Russian investments abroad and foreign investments in Russia, as well as problems with dynamics of the Russian economy.

The modern tendencies of foreign direct investment flows in conditions of global instability

Investments are one of the main factors that stimulate the growth of production volumes, the development of innovative technologies, that improve the quality and competitiveness of manufactured products, create new jobs and reducing unemployment. FDI are the driving force behind the modernization of the economy of the home country, and the international movement of capital is one of the main driving forces of economic globalization. The study of the current state and prospects in the field of FDI indicates multidirectional aspects of international investment processes. FDI overall stocks are huge, and the growth of their volumes outstrips the growth rates of world GDP and international trade, which is a prerequisite for an in-depth study of FDI and is a particularly urgent task in conditions of global instability.

Does foreign equity investment impact the spillover effect of industries in China?

This study aims to systematically investigate the impact of foreign equity investment on the spillover across industries in China, both in terms of the contagion path and persistence of shocks and the performance during the COVID-19 pandemic. We use daily data on returns covering 2014 to 2022 and apply linear and non-linear causality tests and spillover framework. Our findings show that the two proxies of foreign investment, net buying and Δ Net Buying, significantly shock the spillover across 11 industry indexes of China’s stock market, particularly the spillover output and long-term spillover received of sectors. During the COVID-19 pandemic, international investors are bullish on China’s economy reflected in the continuous inflow of northbound trading, and the short-run influence on China’s stock market is weakened, while the long-run impact remains. Moreover, financial networks suggest that the path of movement international capital movement to accomplish overall contagion through shock in certain specific industries. Overall, this study evidence that the northbound trading generally overlooked by researchers is indeed an important channel of financial contagion to China’s stock market.

Транснационализация экономики: теоретико-методологический аспект

The purpose of this article is to study theoretical and methodological foundations of the economy’s transnationalism. The study of the transnationalism of the world economy is carried out at different levels in order to combine micro, macro, and global levels of analysis. The article examines the methodological foundations of transnationalism; identifies theoretical approaches to the study of the process of transnationalism; systematizes the results of research by domestic and foreign scientists devoted to approaches to the definition of the concept, principles, factors of transnationalism. Theories of international capital movement are systematized, the classification of theories of international production and FDI is presented. A large number of factors contribute to the appearance of transnationalism theories. The main obstacle to the consolidation of scientific views is the dynamic change in the way of transnationalism and comprehensive nature of the activities of TNCs (presence in most sectors of the economy). In 2021, global FDI flows recovered to pre-pandemic levels and reached $1.6 trillion US dollars. Cross-border transactions and international project finance were particularly active because of free financing terms. In 2022, however, the global environment for international business and crossborder investment changed radically. The global environment for international investment changed dramatically with the launch of a special military operation in Ukraine, which began at a time when the world was still recovering from the pandemic effects. The direct impact of special military operation on investment flows in the Russian Federation is the suspension of existing investment projects, the outflow of funds from the Russian Federation, the spread of asset value, losses and sanctions. These facts make the study of theoretical and methodological foundations of the transnationalism of economy relevant.

Quantitative easing in the US and financial cycles in emerging markets

Large international capital movements tend to be associated with strong fluctuations in asset prices and credit, contributing to domestic financial cycles and posing challenges for stabilization policies, especially in emerging market economies. In this paper we argue that these challenges are particularly severe if the global financial cycle is driven by quantitative easing (QE) in the US, and when the local banking sector has large holdings of government bonds, like in many Latin American (LA) countries. We first investigate empirically the impact of a typical round of QE by the US Fed on LA economies, finding a persistent expansion in credit to households and house prices, as well as a significant loss of price competitiveness. We next develop a quantitative macroeconomic model of a small open economy with segmented asset markets and banks, which accounts for these observations. In this framework, foreign QE creates tensions between macroeconomic and financial stability as a contractionary impact of exchange rate appreciation is accompanied by booming credit and house prices. As a consequence, conventional monetary policy accommodation aimed at stabilizing output and inflation would further exacerbate domestic financial cycle. We show that an effective way of resolving this trade-off is to impose measures that directly reduce the inflow of capital. Combining foreign exchange interventions with tightening of local credit policies can also restore macroeconomic and financial stability, but at the expense of a large redistribution of wealth between borrowers and savers.

Глобальні тенденції міжнародного руху капіталу

The article examines the global trends of international movementof capital in the form of foreign direct investments, which were characteristic of the period of development of the world economy in 2011–2022, during which the world financial and economic crisis took place and the COVID-2019 pandemic spread internationally. The directions of international expansion of transnational companies are studied in view of their participation in the formation of global value chains, which consistently connected with each other in the global space the types of economic activities for the creation and promotion of products. Based on the analysis of international statistics data, clusters of countries were singled out, which acted in different years as the largest recipients of foreign direct investments and were in the circle of economic interests of large international business. Changes in the direction of foreign direct investment flows of leading transnational corporations are shown and their influence on the geographical localization of production processes within global value chains since the end of the 20th century until now is demonstrated. Special attention is paid to the examination of the forms and directions of international movementof capital in Asian countries, which hold the global leadership in attracting foreign direct investments. In the system of factors that influence the direction of foreign capital movement in the international space, a separate group of factors related to the effect of global transactional risks is singled out. The latter change the direction of foreign direct investment in the global economy and need to be taken into account in the formation of industrial policy by the governments of national economies.

STRATEGIC MANAGEMENT IN THE MODERN ECONOMIC DEVELOPMENT OF STATES

The purpose of the article is to summarize the foundations of strategic management and its development in order to ensure effective activity under the influence of modern transformational processes. The article discusses the most influential trends in modern development associated with the processes of globalization. Development in the context of globalization, modern challenges determine the goals of improving approaches to managing economic development. The content of strategic management in economic development is revealed. The importance of strategic management in the formation and implementation of economic development priorities is determined. The necessity of using modern management tools to ensure the sustainability of economic growth, the formation of competitive advantages on this basis and the introduction of foreign experience is highlighted. Strategic management is able to ensure activities in accordance with the mission, is a success factor in a competitive environment. The process of developing and implementing development strategies is implemented at different levels; nationwide, regional, municipal and corporate strategies are being implemented. Estimating costs based on strategic analysis is important when choosing a development strategy. Integration processes are associated with the possibility of risks and threats. Forms of capital export are direct and portfolio investments. For a transitional economy, investments to increase the economic and production potential are significant. Among other forms of international capital movement, the role of portfolio investment is growing sharply. The international movement of capital generates economic growth and is currently an important direction in the study of the economy, the impact of capital migration should be taken into account and the investment position of the country should be assessed. In Ukraine, there is a tendency for a significant predominance of direct investment in the country over direct investment from Ukraine. The results of the study showed that strategic development planning should be considered as the basis for ensuring success. Strategic planning is the process of modeling the future with the determination of goals and the concept of long-term development. Strategic planning is the process of modeling the future with the definition of goals and the concept of long-term development. The strategic system is also being developed to ensure economic security.

RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENTS, OPENNESS AND ECONOMIC GROWTH: EVIDENCE FROM DEVELOPING COUNTRIES

The importance of free international movement of capital and openness to trade on the world market is very well known and elaborated in the relevant literature. Despite the fact that the most developed countries in the world are the carriers of international capital movements, especially through foreign direct investments, the inflow of foreign capital through foreign direct investments (FDI) is one of the key goals that developing countries set through their development strategies. In this way, developing countries strive to make their economies attractive for the presence of foreign capital in order to increase the level of production and raise the level of employment. What distinguishes developing countries is the high participation of foreign trade. Unlike large economies, which are said in the literature to be self-sufficient, small economies with insufficiently developed economies are nevertheless able to compete on the global market. The subject of research in this paper was to investigate the impact of FDI inflows on the economic growth of developing countries. The research covered 82 developing countries in the period from 1980 to 2020. In the paper, Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) methods were used to examine whether FDI viewed through the share of inflows in GDP and openness viewed through the share of total exchange in GDP increase GDP per capita in developing countries. The obtained results with a high level of statistical significance testify in support of the conclusion that FDI and openness to foreign trade increase GDP per capita in developing countries.

The Case for Residency-Based Taxation of Financial Transactions in Developing Countries

The globalization process does not permit a country that wishes to be involved in this process to take an independent stand in choosing its tax system, especially with respect to financial transactions. Choosing tax rules that are unacceptable in the world’s leading countries could adversely affect an economy’s competitiveness in the world’s capital markets. The growth in international capital movements is a contributory factor in this respect.In 1923, a committee comprised of four economists submitted a report to the League of Nations that set forth the basic principles underlying international tax principles, most of which still prevail today. Upon the issuance of the League of Nations Report in 1923, two generally recognized regimes for international tax have emerged – residency (or global) and source (or territorial). In a residency-based tax regime, residents are taxed on their worldwide income. In a territorial regime, by contrast, residents are not taxed on foreign source income, and foreign taxpayers are taxed on income generated in the source country. Over the years, there has been a significant degree of convergence among countries; as of today, most tax jurisdictions, whether developed or developing, use both source and residence taxation to some extent. According to Professor Reuven Avi Yonah, most countries follow an “international tax regime” in both their internal laws and tax treaties.

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;

ІСТОРИЧНІ ТРЕНДИ ТА СУЧАСНІ ТЕНДЕНЦІЇ МІЖНАРОДНОГО РУХУ КАПІТАЛУ В УМОВАХ НЕВИЗНАЧЕНОСТІ

The article defines the phenomenon of international capital movement, examines its trends and current state in the conditions of incomplete recovery from the pandemic and after the start of the war in Ukraine. The authors describe the reasons that encourage countries to export capital, describe its main characteristics and influencing factors. It was concluded that the most profitable way of financing is financing with the help of direct foreign investments. It is also stated that the international movement of capital is characterized by periodic volatility, various periodic trends and structural changes. The historical prerequisites of the current state of the international movement of capital are also investigated. In particular, the historical periods in the 20th century, when there were changes in the direction of capital movement on a global scale, are highlighted and the reasons for such changes are substantiated. It was found that immediately after the war, investments were made mainly in the countries of Western Europe, and starting from the mid-80s, these countries themselves became large exporters of capital. The article emphasizes the difference in capital flows of the second half of the 20th and the beginning of the 21st centuries, when information was added to the traditional factors of production and new types of highly mobile capital appeared, moving only at a higher rate of profit. It is also stated that the movement of capital today is affected by the transition of the economy of developed countries to the post-industrial stage of economic development, which leads to the restructuring of the international division of labor and the expansion of scientific and technical cooperation. The authors also assessed the trends towards the recovery of direct foreign investment in the world after the pandemic and the prospects of an economic recession as a result of the war in Ukraine. It is noted that in 2021 the investment sector has fully recovered after the pandemic (especially in developed countries), but it is expected to slow down due to military actions in Ukraine, because the first signs of a threatening recession are already visible, which will most likely accelerate the decline in investment.

Економічна дипломатія в інституційній системі деофшоризації міжнародної бізнес-діяльності

The article is devoted to the study of economic diplomacy as one of the institutions of the national level, which actively interacts with similar institutions of other countries of the world community, performs, among other things, a few functions to de-offshore international business activities, ensures and lobbies the interests of domestic companies and firms in the global competitive space, creates a positive image of the state. It is noted that the contradictory influence of globalization processes and their consequences on the international business system, the growth of the level of turbulence, uncertainty and riskiness of the external business environment, the institutionalization of the international economy, the intensification of competition on the world and regional markets, which are accompanied by the growth of the scale of offshore business and the diversification of its mechanisms functioning, objectively determine the strengthening of the role of diplomatic institutions in protecting the interests of national companies, realizing national interests, ensuring transparency and openness of international capital movement in the form of direct and portfolio investments, coordinating efforts to de-offshore international business activities. Attention is focused on the fact that despite regional features and national differences in the theory and practice of diplomatic activity, three directions or models of economic diplomacy have been formed, which are actively used in the processes of de-offshorization of international business, each of which has its own mechanisms and tools. It was emphasized that for Ukraine, with a sufficiently high degree of business offshorization, a purposeful, coordinated policy on the de-offshorization of business activity, the creation of a favorable investment, tax, currency, and financial environment, balanced and consistent diplomatic support for domestic business is necessary.

Investment cooperation between Russia and India

The long-term cooperation between Russia and India in the investment field is analyzed. This cooperation is of great strategic importance not only for the development of these countries, but also for solving problems at the global level. The world is currently undergoing large-scale changes affecting various spheres of public life. On the basis of Russian and Indian statistics, as well as statistics of international organizations, conclusions are drawn about the uneven distribution of foreign direct investment between Russia and India, and their different position in the international movement of capital is indicated. Examples of specific investment projects between TNCs of the two countries are given. Prospects for investment cooperation between the two countries have been substantiated. The purpose of this research is to study investment cooperation between Russia and India. The theoretical basis of the study was the works of Russian and foreign authors, which examine the issues of the socio-economic situation of developing countries, and in particular, the economic development of India and Russian-Indian relations. The work used methods of analysis and comparison of theoretical positions, as well as methods of statistical and analogy, expert assessments. It was found that the most interesting projects for the Indian economy are the extraction of oil and other minerals, construction, trade, and real estate. For Russia, the sphere of manufacturing is of particular investment interest, as well as the sphere of trade and the financial sector.

Features of the American foreign direct investment: the role of the American holdings

Article is dedicated to the determination of key features of the United States participation in the international capital movement on the example of FDI outflows and inflows, and confirmation of its heterogeneous nature. Tax reform that has been implemented in the end of 2017 led to the result when USA was deleted of the list of TOP-20 world investors of 2018 (by UNCTAD). The scientific opinion and fears were connected with the forecasts that the tax reform could change the movement of FDI flows back to the USA from foreign countries, especially, and the countries with the low taxes and the most favorable investment regimes. At the same time, it needs to underline that the analysis of U.S. FDI inflows and outflows showed that the negative indicator of U.S. FDI outflow (export) in 2018-2019 was connected with the repatriation of U.S. holding companies profits, that were doing business in countries with the most favorable tax and investment regimes. The authors tried to investigate the nature of the American holdings role and the integration of U.S. in to the global system of FDI and capital movement.

Global Foreign Direct Investment: Structural Changes in the Current Crisis

The current crisis, as well as complicated economic relations between countries, sustainable development risks of global value chains (GVCs), and international trade protectionism cause changes in the modern system of global foreign direct investment (FDI). Due to the complexity of these risks and the vulnerability of the world economy to future global recessions, it is necessary to develop a new concept of cross-border capital flows in the form of FDI. The research aims to identify structural changes in global FDI in the context of international trade and capital market challenges. Structural and dynamic analysis and a descriptive assessment were conducted to examine global foreign direct investment in the system of international capital movement, taking into account the unstable economic environment. A test of the impact of the current coronavirus crisis revealed that the retrospective transformation of global FDI occurred due to changes in the internationalisation of companies, cross-border mergers and acquisitions, and regional structure of FDI. Corporate disinvestment and the growing importance of intangible assets also played an important role. As a result, the slowdown in global FDI led to a decline in reinvested earnings in many economic sectors. As the long-term recovery of the world economy will be largely determined by the dynamics of global FDI, transnational companies (TNCs) should consider local crises and strive to geographically distribute capital investment. The research revealed that the differentiation of national GVC strategies and new approaches to foreign outsourcing of TNCs are the main risks of regionalisation or nationalisation of global value chains and a corresponding decrease in FDI. The findings can be used to modify well-known FDI concepts, taking into account their impact on modern international economic relations.

Retrospective analysis of foreign investment in the context of the evolution of economic theories

The article provides a retrospective analysis of the formation and evolution of foreign direct investment in terms of various economic theories taking into account changes in the stages of socio-economic development. The study of these historical and economic issues was carried out using systematic analysis and historical method; which allowed us to identify the genesis and analyze the evolution of economic theories on the formation and development of foreign direct investment. The author conducted a detailed study of the history of investment activities and management of foreign direct investment from the oldest origins in the ancient world to modern forms of innovation. It was found that at different times, repre- sentatives of various economic theories (open economy, market modernization, monopolistic competition, international capital movements, etc.) worked on under- standing complex investment processes, risk management and methods of obtaining economic benefits, who considered foreign direct investment as a guaranteed im- provement and development of society. The analysis of scientific literature and statistics shows positive social, po- litical, economic, technological and other effects of investment activities: job creation and training, export diversification and improvement of export perfor- mance, introduction of science-intensive technologies, activation of local firms – suppliers and subcontractors, the introduction of effective management methods, foreign exchange inflows, etc. Analyzing the genesis of economic theories, opinions and research, we conclude that humanity, feeling the need for savings, pays considerable attention to investment. The stages of the investment economy and the choice of methods of control over them indicate the urgency of this problem, and today scientists continue to discover new aspects of investment opportunities and develop innovative forms, mechanisms, tools of investment policy. Key words: economic theories, foreign direct investment, investment activity, international capital movement.

Main Features of Contemporary International Economic Relations in Waste Management

The article analyses the current state of the main forms of international economic relations (IER) in waste management. Applying statistical data, the author estimates the roles that international trade in waste, international trade in waste management services and international capital movement play in the development of IER. A conclusion is drawn that trade in wastes is of vital importance for IER burgeoning, whereas the influence of the other forms is comparatively insignificant. An environmental policy that largely determines the nature and geographical structure of IER is pinpointed as the key growth factor. Finally, the ambiguity of the environmental impact that IER retain is revealed.