Prospects Of Foreign Direct Investment Research Articles

THE IMPACT OF FOREIGN DIRECT INVESTMENT ON THE ECONOMIC GROWTH IN MONGOLIA

Mongolian foreign direct investment is governed by the “Constitution”, “Foreign Investment Law” and other laws as well as international treaties to which Mongolia is a party. Mongolian s foreign direct investment fell by 35.8% from 2010 to 2011, 43.52% from 2012 to 2013, and 27.3% from 2014 to 2018. In recent years, there has been a trend of focusing foreign direct investment in the mining industry. As the inflow of foreign direct investment declines and the outflow increases, the economy still faces a series of problems, including foreign debt, budget deficits, exchange rates, and unemployment. This highlights the need to pay attention to the current investment environment and investment attractiveness policies, as well as appropriate policies that are in Mongolia’s interests. For this reason, it is still necessary to determine the prospects of foreign direct investment in Mongolia, the concentration of foreign direct investment in the non-mining sector, the implementation of foreign direct investment policy and its impact on the economy. Therefore, the purpose is to study and improve Mongolia’s foreign direct investment policy.

The Role Corporate Governance in Foreign Direkt Investment in Kosovo

Good corporate governance (CG) ensures transparency which makes Kosovo more attractive and valuable for investors or buyers. The transition to a market economy and private ownership transfer issue highlights the CG in Kosovo. This created the prerequisites for the creation of a new system of legal framework and thus a new model CG. The purpose of this paper is to inform interested parties by offering favors of Kosovo for investment. In addition to the literature, for this paper research various reports and data of Kosovo institutions were used and publications of this field online. Kosovo has good potential to offer prospects for foreign direct investment (FDI). FDI in Kosovo are very important for a sustainable economic growth. Government of Kosovo, supported by the international community has made continuous efforts to create an enabling environment and favorable investment. However, lack of law enforcement, high level of corruption, the judiciary and other factors affecting Kosovo has failed to be an attractive place for attracting FDI.

Chinese Investment in Ghana

Over recent periods, especially in the last two decades, Africa has recorded growth and received inflows of both direct and indirect forms of foreign investment. This is due to ongoing globalisation and to the redistribution or allocation of capital and wealth among nations with the idea of competing on a global scale. Many countries, particularly sub-Saharan African countries, have seen this trend as part and parcel of their long term development plan and growth agenda ever since China became a development partner for most of these countries. In this paper, the Investment Development Path (IDP) theory introduced by Dunning in 1981 is used to examine the basis of the Chinese Investment model. The author sheds light on Chinese investment in Ghana after 2008 and the performance of these investments. In order to examine the possible positive impacts and prospects of foreign direct investment in Sub-Saharan African countries, the author considers the significant role of Asian investment, especially that of the People’s Republic of China and its strategic dominance of investment on the continent. The last section of the article briefly examines the specifics of Chinese investment in Ghana. Finally, the author presents a summary and some policy recommendations.

Tiesioginių užsienio investicijų Lietuvoje pritraukimo veiksniai

Foreign direct investment (FDI) flows are highly dynamic, but the factors of FDI flows are not fully determined in the process of globalization. Undoubtedly, foreign investment is a driver of economic growth. This constitutes the importance of the assessment of FDI factors and foreign capital opportunities. This article analyzes the importance of the investment environment for FDI and FDI importance for the economy, considers the main FDI theories, identifies key determinants and interferences of FDI. The aim of the research is to assess the investment environment, the factors of foreign capital inflows and to analyze the prospects of FDI in Lithuania. The analysis of scientific research papers made it possible to focus precisely on the most important aspects of FDI. The information of statistical databases provided opportunities to substantiate FDI dynamics and its factors. Literature analysis identified the essence of FDI and the main economic theories: the production cycle, exchange rates and imperfect capital markets, internalisation (domestic distribution), and Dunning eclectic paradigm. Theories have different approaches to the problems arising from the movement of capital between countries and the prospects of international investment. They also analyze the relation of FDI to legal, institutional, political environment, international organizations, competition, operating costs, economic growth, cultural differences, macroeconomic situation. Literature also indicates the impact of FDI on the receiving country‘s economy. In general, it was found that the recipient country‘s gains exceed the negative impacts, and the increasing volume of FDI increase the incentives for economic growth. Economic growth promotes further capital growth. Scientific analysis made it possible to focus on the most important aspects of FDI in Lithuania. Thus, the empirical part of the research, the analysis of FDI dependence on various macroeconomic factors is based on comparative statistical methods and econometric models. FDI in Lithuania is also assessed with regard to activities, investing countries. Undoubtedly, the methods used in the research are particularly important because they determine the results. The study uses the following methods: abstract, systematic comparative, logical analysis, analytical - critical method, correlation, regression analysis and cross-sectional models. The economic environment is assessed using investment attractiveness ratings which are broadly recognised by the international community. FDI in Lithuania is assessed using the gravity model. It should be noted that the FDI gravity model has not yet been applied in Lithuania. At the end of the article, according to the conducted significance and impact analysis, FDI prospects for the future and quantitative FDI forecast are discused. Authors conducted FDI stock inflows in Lithuania applying gravity model which confirms the main assumptions. FDI stock in Lithuania is positively affected by level of economic development, but it is negatively affected by unfavorable geographical location: distance from developed countries which tend to invest rather than receive FDI. FDI in Lithuania in certain industries comes without special incentives, but less attractive activities should be encouraged by state regulation, while ensuring favorable business conditions. The main factors of FDI disclosed include economic development, specialization of FDI outflow and inflow countries, transparency of business environment, cultural distance, communication. However, the most important factors are combined effects – the country’s ability to benefit from market perspectives. The growth of FDI in Lithuania was forecasted. It will not be fast, but balanced political, administrative and financial solutions would have positive impact on capital inflows. In conclusion, Lithuania has the potential to receive more FDI in the future.

Long-Term Prospects of Inward Foreign Direct Investment in the Baltic Sea Region

This article models the long-term prospects of foreign direct investment in the Baltic Sea Region. After the turbulences of the crisis years and an idiosyncratic decline in 2012, these flows are expected to recover in 2013–2017, although at a slow speed. Going beyond the values forecast by the model, we can also expect a relatively slow but steady growth in the late 2010s. However, modeling and forecasting cannot fully take into consideration one-off shocks, which are still not excluded given the vulnerabilities of the world economy. The main reason for limited potential growth of foreign direct investment and its vulnerability is the relative openness of the Baltic Sea Region to external shocks. However, on balance, the growth of foreign direct investment in the region can be still faster than in other parts of the world, thanks to the solid macroeconomic bases of the region's economies.

The Effect of FDI to Accelerate the Economic Growth of Bangladesh and Some Problems & Prospects of FDI

Foreign Direct Investment (FDI) has great impact on the development of a developing country like Bangladesh. The foreign investor seeks for new sources of investment where the developing country seeks for new sources of fund to develop the country. The FDI does not only bring sources of fund in a developing country but also new technology in a developing country. The FDI has the important role to develop the garments & weaving, telecommunication, banking and pharmaceuticals industry of Bangladesh. In this paper the role of FDI in economic growth (GDP) is analyzed to find out relationship between FDI and GDP in Bangladesh. To analyze the impact, The GDP has been taken as a dependent and FDI as an independent variable to run the regression analysis where the result shows that the FDI can explain about 83% data of GDP, p value much less than 0.05 to reject null hypothesis and GDP changes 64.0709 units for changes of each unit of FDI. The correlation matrix shows the GDP and FDI is highly correlated (0.912024962) in perspective of Bangladesh economy, so the FDI has grater impact on GDP or Economic Growth of Bangladesh. Some of the problems and prospects of FDI in Bangladesh is also discussed in the paper. JEL Classification Code: F21

The Impact of the Global Financial Crisis on Emerging and Frontier Markets in Africa

The financial crisis that has swept through the global economy since the middle of 2007 has led to a sharp deceleration in economic growth in the emerging and frontier market economies in Africa. The record growth performance of gross domestic product of about 6 percent per annum that Africa had experienced during 2002–07 has been seriously interrupted. The consequences on employment and poverty of this interruption could be dire. In the end, the economic impact of the crisis on Africa will depend crucially on the duration and depth of the global recession, the strength of the recovery, the revival of capital markets and foreign investment, and on developments in commodity prices. Ultimately, Africa’s emergence from the crisis will also depend on the policy reactions of the countries that are most seriously affected. Since the transmission channels through which the global crisis is affecting Africa varies significantly across countries, setting common policy guidelines for a group of countries as diverse as the emerging and frontier countries of Africa is impossible. But, policy makers must act! They are faced with the dilemma of responding to the short-term declines on output and rising unemployment that have already occurred, but in an environment of great uncertainty about the future course of the global economy and global financial markets. In this environment, it is important that any short-term responses do not impair medium-term prospects. This paper examines the channels through which countries are being impacted by the crisis, identifies the key policy challenges they are confronting, and makes suggestions for formulating appropriate fiscal policy, dealing with the decline in private remittances and tourism and the likely significantly weaker prospects for foreign direct investment, and for determining the scope for official financing. In general, it is essential that countries continue to pursue policy reforms that will place them in the best possible position to take advantage of the improvement in the global economy when that occurs.

Foreign direct investment in Japan: multinationals' role in growth and globalization

1. Introduction 2. The extent and history of foreign direct investment in Japan 3. The surge in inward FDI 4. Japan's economic growth and foreign direct investment 5. The performance of foreign firms and the macroeconomic impact of FDI 6. The impact of foreign direct investment in Japan: case studies of the automobile, finance, and health care industries 7. The prospects for foreign direct investment in Japan 8. Conclusion.

Foreign direct investment in Africa: Performance, challenges, and responsibilities

This paper examines the performance, promotion, and prospects for foreign direct investment (FDI) in Africa. Factors such as political and macroeconomic instability, low growth, weak infrastructure, poor governance, inhospitable regulatory environments, and ill-conceived investment promotion strategies, are identified as responsible for the poor FDI record of the region. The paper stresses the need for more trade and investment relations between Africa and Asia. It also argues that countries in the region should pay more attention to the improvement of relations with existing investors and offer them incentives to assist in marketing domestic investment opportunities to potential foreign investors. Finally, the paper argues that the current wave of globalization sweeping through the world has intensified the competition for FDI among developing countries. Consequently, concerted efforts are needed at the national, regional, and international levels in order to attract significant investment flows to Africa and improve the prospects for sustained growth and development.

Investing Profitably in China: is it Getting Harder?

Using information from the Toyo Keizai, this article studies the performance of 2,962 foreign subsidiaries across the period 1985–1999 to show a picture of declining profitability from foreign direct investment by MNE’s in China. Despite the influence of macro-level factors, such as the historically fluctuating performance of the Chinese economy, we observed that of the many factors that may affect profitability, subsidiary-specific factors had the greater influence. The findings suggest that there are significant benefits for early entrants into the market, but caution against the use of high majority ownership control. Other evidence showed that larger subsidiaries tended to perform better. Managerial implications for MNEs and the future prospects of foreign direct investment in China are discussed.Since China opened up to the outside world in 1979, it has been attracting increasing amounts of foreign direct investment (FDI), and after 1993 became the second largest recipient of FDI flows in the world. Meanwhile, a major participant in the upsurge in global foreign direct investment in the 1990s was Japan. By the mid-1990s, Japan became the second largest FDI source country in the world behind the United States. China, in particular, has become a major destination for Japan’s direct investments, absorbing one-ninth of all Japanese foreign investments at the end of 1996.1Studying Japan’s worldwide direct foreign investment, we found that the proportion of profitable Japanese subsidiaries in China has been declining. In fact, this was the only part of the world where this was the case. While over 71 percent of Japanese subsidiaries in China claimed profits in 1992, the percentage steadily slipped to around 50 percent by 1999 (see Table 1Table 1Performance of Japanese subsidiaries in China (% profitable)1992 (%)1994 (%)1997 (%)1999 (%)Loss11 (13.3%)27 (16.1%)99 (21.7%)201 (24.3%)Break-even13 (15.7%)35 (20.8%)114 (25%)205 (24.8%)Gain59 (71.1%)106 (63.1%)243 (53.3%)421 (50.9%)Total # Reporting83168456827Source: Toyo Keizai, 1999.). This poses two interesting questions. Is it really getting harder to invest profitably in China? And what could have influenced the profit performance of foreign subsidiaries in China?

Asian Economic Problems and Prospects for Foreign Direct Investment: Local Evidence from the UK

This paper explores the implications of the Asian crises and economic problems in the Japanese economy on a UK region with a high dependence on employment in Asian manufacturing transplants. The paper examines the development of the Asian transplant sector in the case region (Wales), and maps out the economic significance of the sector on the local economy. Following a review of the potential impacts of economic problems in Asia on the local transplant sector, the paper uses local case evidence to explore recent changes in the Asian manufacturing base in Wales. Recent reversals in the transplant sector have largely been caused more by “local” manufacturing conditions. The paper concludes with a discussion of factors that are most likely to affect the trajectory of the Asian transplant sector in the case region in the new millennium.

Foreign Direct Investment in Africa: Rhetoric and Reality

Foreign Direct Investment In Africa: Rhetoric and Reality Paul Bennell (bio) It is now widely recognized that the future development of sub-Saharan Africa (SSA) depends considerably upon the success of individual economies in attracting relatively large inflows of foreign direct investment (FDI) into high potential growth sectors. This is not only because of the general paucity of investment resources, exacerbated by the debt crisis facing many countries, but also because FDI brings with it the new technologies and related skills essential for sustained export-led economic growth. Without the inflow of FDI, there is a real danger that SSA economies will fail to become internationally competitive and as a result, will remain at the margins of an increasingly integrated global economy. During the 1960s and 1970s, the majority of newly independent African governments adopted socialist or quasi-socialist development strategies. Even in the more pro-capitalist countries, most notably Côte d’Ivoire and Kenya, politicians and senior policymakers were often wary about foreign capital, fearing it might assume a dominant position in strategically important economic sectors. SSA governments nationalized many foreign companies during this period while channeling scarce capital resources into establishing or enlarging state-owned enterprises, particularly in the industrial sector. Multinational corporations were generally regarded as an increasingly dominant and pernicious form of international capitalist exploitation. Consequently, governments imposed a battery of regulations on FDI [End Page 127] which deterred all but the most determined investors. However, once governments started to introduce pro-market and thus pro-private sector ‘structural adjustment’ polices from the early and mid-1980s onward, official attitudes toward FDI also began to change. This change was further encouraged by mounting evidence of the positive role FDI played in the Asian tigers’ economic transformation. Earlier socialist development strategies emphasized national self-reliance. Dependence on foreign capital and international trade was seen as perpetuating ‘underdevelopment.’ By contrast, the now hegemonic neo-liberal, pro-capitalist development paradigm is based on the fundamental proposition that both developed and developing countries can only achieve long run sustainable growth through global economic integration. Increased exports and FDI, therefore, play a vital role in facilitating the integration process. Most African governments are now implementing comprehensive economic reform programs. By the mid-1980s, the need for reform had become overwhelming because of deep-seated and protracted economic crises. Real per capita incomes plummeted in most countries, and export production, still heavily based on primary commodities, was in a parlous state of decline. The first phases of the usual IMF/World Bank-designed structural adjustment programs concentrated on correcting basic macro-economic distortions, namely massively overvalued exchange rates, out of control inflation, and huge budget deficits (typically more than 10 percent of gross domestic product). By the early 1990s, having achieved considerable progress on the macro-economic front, officials began to focus attention on more fundamental structural impediments to growth and poverty alleviation. In particular, most SSA countries now need to downsize and comprehensively restructure the public sector which has largely dominated economic life since political independence. At the same time they must support private sector development. Consequently, privatizing state-owned enterprises, developing local entrepreneurial skills, and injecting foreign capital and skills now top the economic reform agenda. The purpose of this short article is to describe and explain major trends in FDI since the start of economic reform programs in sub-Saharan Africa, and then to consider the short- and medium-term prospects for foreign investment throughout the continent. The following section begins with a summary of the most important [End Page 128] indicators of FDI involvement, namely net investment inflows, net income, and rates of return, and the number of subsidiaries or affiliates and employees of foreign-owned companies in SSA. It subsequently considers the main reasons for the as yet limited increase in FDI. The final section then discusses the key factors that are likely to influence future levels of foreign investment. South Africa has been excluded from the discussion mainly because its economy is so much larger and more sophisticated than any of the other SSA economies. Prospects for FDI in South Africa, a semi-industrial, highly urbanized country, must be considered separately. Any assessment of recent...