Quality Of FDI Research Articles

Question of Threshold in the Triptych Quality of Institutions, FDI and Economic Growth in Sub-saharan Africa: An Estimation Using the GMM Method in a Two-step System.

Question of Threshold in the Triptych Quality of Institutions, FDI and Economic Growth in Sub-saharan Africa: An Estimation Using the GMM Method in a Two-step System.

Impact of Foreign Direct Investment on Poverty Reduction and Economic Development

Purpose: The aim of the study was to investigate the impact of foreign direct investment on poverty reduction and economic development
 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 revealed that FDI significantly contributes to poverty reduction and economic development. FDI is linked to higher economic growth rates, driven by its infusion of capital, technology, and market access. This influx of investment creates jobs in host countries, particularly in labor-intensive sectors, effectively reducing unemployment and improving living standards. Additionally, FDI promotes technology transfer and innovation, enhancing the competitiveness of domestic industries. Furthermore, FDI's positive spillover effects extend to human capital development through skill training and improved employability, leading to higher wages and overall poverty reduction. These findings underscore FDI's multifaceted role in fostering sustainable economic growth and social progress.
 Unique Contribution to Theory, Practice and Policy: Dependency Theory and Resource-Based may be used to anchor future studies on Foreign Direct Investment. Investment Promotion Agencies should establish effective investment promotion agencies to attract quality FDI, offering incentives, streamlined regulations, and investor support services. Stringent environmental regulations should be enforced to prevent FDI from causing negative environmental externalities and promote sustainable development practices.

FDI, international trade and global value chains (GVCs): India's GVC participation, position and value capture

Using OECD Trade in Value Added (TiVA) database (2021, 2022) and Asian Development Bank (2022) dataset, this paper indicates that though India's GVC participation rate has risen over time, it was lower than that of several economies in Asia-Pacific and its relative share in participation gains was marginal. Nevertheless, India's relative share in forward and backward GVC content to (and from) the region was not as peripheral. Raising net participation gains will require key enablers, and stimulating the mutually reinforcing FDI-GVC relationship by attracting quality FDI inflows. Findings based on the panel, fixed-effects model support the hypotheses that production-based GVC participation, revealed comparative advantage based on value-added exports, the country's relative economic size, and economic complexity (in medium-to-high technology manufacturing sectors) positively affect economic upgrading through capturing a greater share in world's domestic value-added in an industry while relative GVC position has a negative effect.

Does the Construction of Free Trade Zones Improve The Quality of FDI Utilization

Since the Shanghai FTZ was established in 2013, 21 FTZ have been set up nationwide, forming a strategic layout featuring coordination between east, west, north, south and China, and overall coordination between land and sea. At the same time, our economy has entered a new normal, the transformation of foreign capital management system is accelerated, the level of investment is continuously improved, the pace of "going out" is accelerated, and it is necessary to improve the quality of FDI utilization. Based on the inter-provincial panel data from 2013 to 2019, the establishment of FTZ was regarded as a quasi-natural experiment, and the effect and influence mechanism of the establishment of FTZ on the utilization quality of FDI were explored by using the multi-stage differential method, and the reliability of the regression results was examined by a series of robustness tests. The study found that the establishment of FTZ significantly promoted the improvement of FDI utilization quality. The free trade zone has significantly and positively promoted the utilization level of foreign direct investment through the moderating effects of magnetic attraction effect of business environment, reduction of access facilitation effect and industrial agglomeration precipitation effect. In the current world situation, the research conclusion of this paper provides theoretical support for China to strengthen the win-win cooperation with other countries by using free trade areas, and provides enlightenment for the establishment and development of free trade areas in the future.

The FDI-spawned technological spillover effects on innovation quality of local enterprises: evidence from industrial firms and the patents in China

ABSTRACT Foreign direct investment is a topic of crucial importance for emerging market countries for capital accumulation, innovation and sustainable development. From the perspective of technological innovation, the article explores how ‘desirable’ the FDI is in stimulating domestic innovation. Using industrial firm-level data from 1998 to 2013 combined with patent database from China National Intellectual Property Administration and patent citations from Google Patents, the article captures the significant impact of innovation quality of regional FDI on the innovation quality of local firms with both multi-fixed effects and instrumental variable estimations, which are proved to be reliable with robustness checks. Further, under different entry modes, the article finds that M&A FDI plays a more positive role in spillovers compared with greenfield investment. Finally, the article explores the upstream and downstream linkage benefits and intra-industrial benefit from FDI innovation, which shows that the intra-industrial benefit, or the demonstration effect is prominent. Our article renders a more direct micro evidence of FDI spillovers and sheds light on FDI attracting policies.

Research on the Positive Effect of Improving the Quality of FDI on Improving Environmental Pollution

Based on the theories of "pollution refuge" and "pollution halo", this paper analyzes the relationship between FDI quality and environmental pollution by constructing FDI quality index system, using the data of 30 provinces and cities in China from 2007 to 2019 and using ordinary panel regression and threshold regression, and concludes: The improvement of FDI quality can improve the environmental pollution to a certain extent, and there is regional difference, the eastern and central regions are more significant than the western regions; The threshold regression results with RD as the threshold variable show that the impact of FDI quality on the environment will be more significant with the increase of R&D investment, indicating that the country should strive to improve the quality level of FDI.

Global Imbalances: The Role of Institutions, Financial Development and FDI in the Context of Financial Crises

This paper examines the role of the quality of institutions, financial development and FDI on current account imbalances, which narrowed during the Global Financial Crisis. In doing so, we utilize (i) a sample of 49 advanced and emerging economies during 1984–2014; (ii) a novel three-clustered indices of institutional quality and (iii) two measures of financial development, the share of FDI and a measure of financial crisis in addition to standard determinants of the current account. We find that the better the quality of institutions and the greater the financial development, the larger are current account deficits; meanwhile, FDI contributes to boost current account balances. Moreover, financial crisis episodes tend to improve current account balances, particularly for countries that are highly open to trade and to receive FDI, as in the case of advanced economies and East Asian countries.

An Empirical Analysis of Energy Consumption, FDI and High Quality Development Based on Time Series Data of Zhejiang Province.

This paper aims to identify the relationship among energy consumption, FDI, and economic development in China from 1993 to 2017, taking Zhejiang as an example. FDI is the main factor of the rapid development of Zhejiang’s open economy, which promotes the development of the economy, but also leads to the growth in energy consumption. Based on the time series data of energy consumption, FDI inflow, and GDP in Zhejiang from 1993 to 2017, we choose the vector auto-regression (VAR) model and try to identify the relationship among energy consumption, FDI, and economic development. The results indicate that there is a long-run equilibrium relationship among them. The FDI inflow promotes energy consumption, and the energy consumption promotes FDI inflow in turn. FDI promotes economic growth indirectly through energy consumption. Therefore, improving the quality of FDI and energy efficiency has become an inevitable choice to achieve the transition of Zhejiang’s economy from high speed growth to high quality growth.

Вплив іноземного капіталу на економічний розвиток України

The article examines the of foreign capital on the economic processes that took place in Ukraine during 2000–2019 pp. Among foreign investors, Ukraine seeks to position itself as an investment hub, in which it is profitable to invest and develop business. In some places, the impression is that foreign investment is identified with a panacea that will enable Ukraine to reach the level of development of world leaders. At the same time, the study concluded that the efficiency and quality of FDI, portfolio investment and debt capital raises considerable doubts. For 2000 and 10 months of 2019, the total net inflow of direct, portfolio foreign investments and foreign loans to Ukraine amounted to $ 185.3 billion. USA. At the same time, such a large financial resource did not become a catalyst for structural changes in the economy and the development of high-tech production. Instead, the concentration of foreign capital in certain economic activities contributed to the consolidation of the raw material orientation of this country's economy and exacerbation of domestic economic problems against the backdrop of a large influx of speculative capital. Much attention is paid to the geographical structure of foreign investments and debt capital, which testifies to the significant influence of offshore jurisdictions on the activities of domestic businesses and the formation of their behavior. Offshore capitalization is a defining feature of national business, which has become one of the main causes of the distortion of the model of Ukraine's economic development. The article focuses on the need to improve public policy on attracting foreign capital in Ukraine. In particular, it is proved that the lack of proper control over the concentration of foreign capital in certain sectors causes significant imbalances, which, under the influence of other factors, exacerbate the crisis. In view of this, it is advisable at the state level to analyze the toxic impact of foreign capital on structural changes in the economy and its on the economic security of Ukraine. The article was prepared in the framework of R&D on Financial risks of doing business in Ukraine: non-financial corporations sector state registration No 0118U006088.

Environmental Degradation, Quality of Institutions and Tourism: New Evidence from Pakistan

This study explores the effects of tourism, quality of institutions and FDI on environmental degradation inPakistan for the two time periods i.e. 1996-2017 and 2000-2017. Quality of institutions is included in the time period2000-2017 which is adopted from world governance indicators but due to lack of the data it has not been included insecond time (1999-2017). To find out the relationship among given variables, Ordinary Least Square (OLS) regressionwas carried out, moreover, Breusch-Godfrey Serial Correlation LM test, Heteroscedasticity Test and HistogramNormality test were also applied to diagnose the econometric issues in the given models. The findings of the studyrevealed that tourism is significant and influential factor of environmental degradation in Pakistan. Similarly, foreigndirect investment is also contributing in environmental degradation but its effect is insignificant for both time periods.On the other hand, an inverse relationship is observed between quality of institution and environmental degradation.The outcomes of the study suggest that environmental degradation can be overcome by increasing the quality of theinstitutions. Moreover, the government initiatives to attract foreign tourists by introducing new visa policy, whichincludes; electronic visa, on arrival visa and opening new avenues for tourists (e.g. Kartarpur Corridor and CPECinitiatives etc.) will have tremendous impact on the national economy. However, environmental degradation is theoutcome of tourism, therefore, policy maker’s needs to consider the negative effects of tourism in addition to itspositive effects on the economy.

Environmental Degradation, Quality of Institutions and Tourism: New Evidence from Pakistan

This study explores the effects of tourism, quality of institutions and FDI on environmental degradation inPakistan for the two time periods i.e. 1996-2017 and 2000-2017. Quality of institutions is included in the time period2000-2017 which is adopted from world governance indicators but due to lack of the data it has not been included insecond time (1999-2017). To find out the relationship among given variables, Ordinary Least Square (OLS) regressionwas carried out, moreover, Breusch-Godfrey Serial Correlation LM test, Heteroscedasticity Test and HistogramNormality test were also applied to diagnose the econometric issues in the given models. The findings of the studyrevealed that tourism is significant and influential factor of environmental degradation in Pakistan. Similarly, foreigndirect investment is also contributing in environmental degradation but its effect is insignificant for both time periods.On the other hand, an inverse relationship is observed between quality of institution and environmental degradation.The outcomes of the study suggest that environmental degradation can be overcome by increasing the quality of theinstitutions. Moreover, the government initiatives to attract foreign tourists by introducing new visa policy, whichincludes; electronic visa, on arrival visa and opening new avenues for tourists (e.g. Kartarpur Corridor and CPECinitiatives etc.) will have tremendous impact on the national economy. However, environmental degradation is theoutcome of tourism, therefore, policy maker’s needs to consider the negative effects of tourism in addition to itspositive effects on the economy.

Sustainable Investment and its Relationship to Political Risk Reduction

This article explains the relationship between an investor proposing an investment which is considered “sustainable” to a potential host state and the reduction in political risk if the investment is accepted because of its sustainability. Also, if the investment is sustainable, within the concepts developed by such organizations as OECD, UNCTAD, Global Compact and International Finance Corporation of World Bank, there will be greater likelihood that such investment will be accepted by the proposed host state. The article then discusses assistance that home states often provide for outward foreign direct investment by their nationals, and why home states see this activity as beneficial to the home state. Host states that want to encourage inward foreign direct investment also have Investment Promotion Agencies whose role is to work with potential foreign investors to bring in desirable FDI. Investment facilitation as a global matter and the efforts of WTO to encourage FDI. The article also refers to the OECD Quality FDI Toolkit and its ongoing development.

Analyzing Africa's Total Factor Productivity Trends

Using data envelopment analysis (DEA), the authors investigate the productivity changes of 42 African countries by computing the Malmquist productivity indices. Subsequently, the measured Malmquist productivity indices become the dependent variables of a pooled truncated regression. The point estimates of the Malmquist indices indicate that TFP improved at an annual rate of 1.97% over the period 1992-2007. The decomposition of TFP shows that the major contribution of TFP growth is technological progress. Nevertheless, technical efficiency also appears to be trending upwards. Therefore, these results suggest that contrary to the dominant view in previous studies, Africa's TFP since the early 1990s has been accompanied by positive technological change rather than stagnation. The second stage results suggest that improving the quality of human capital and FDI not only augments the quality of labor, but also indirectly improves TFP. Regression results also show that an increase in openness positively affects TFP growth as this facilitates adoption of more efficient techniques of production.

Attracting FDI in middle-skilled supply chains

Abstract While popular opinion often pictures FDI flowing in search of lowest-wage, lowestskilled activities in emerging markets, actual FDI to such countries increasingly addresses medium to high-skilled manufacturing sectors. Such FDI might be called “Quality FDI” that contributes to the creation of decent and value-adding jobs, enhancing the skill base of host economies, facilitating transfer of technology, knowledge and know-how, boosting competitiveness of domestic firms and enabling their access to world-wide markets, as well as operating in a socially and environmentally responsible manner. To attract such quality FDI, host countries need mindfully tailored policies. Recent research offers evidence for strategies in developing countries that successfully turned FDI into such quality FDI.

Correction to: Introduction to the Symposium: Attracting and benefitting from Quality FDI

In the original publication of the article, acknowledgements has been incorrectly published. It has been corrected in this erratum.

Introduction to the Symposium: Attracting and benefitting from Quality FDI

Introduction to the Symposium: Attracting and benefitting from Quality FDI

Innovation Oriented FDI as a Way of Improving the National Competitiveness

The main purpose of the paper is to accent the importance of the quality of FDI as a way of stimulation and encouragement the innovation activities in the host country. One of the benefits that come from the inward FDI is the possibility of transferring new technologies, but the most favorable benefits come from the possibility of using the inward location for development of new technologies. The FDI could have positive contribution to the qualitative improvement in the production structure of inward economy and to the competitiveness if they establish or settle their R&D activities in the host economy. Using the regression analysis the paper is trying to verify the interdependence between the FDI and expenditures for R&D of business sector as a way to influence or not to influence the innovation capacities in some target Western Balkans (WB) economies and Central European and Baltic (CEB) economies.

Corporate tax effects on the quality and quantity of FDI

This paper measures the relative importance of quality and quantity effects of corporate taxation on foreign direct investment. Quantity is affected if corporate taxes reduce the equilibrium stock of foreign capital in a given country. Quality effects arise if taxes decrease the extent to which investment contributes to the corporate tax base and the capital intensity of production. Depending on the sign of the quality effects, the detrimental welfare effects of corporate taxation are either mitigated or aggravated. We derive a number of hypotheses about how corporate tax changes may affect the quality of investment. Our hypotheses are then tested using data from a large sample of European multinationals. With regard to corporate tax effects on the corporate tax base, we find that quality effects account for up to 40% of the total effect. With regard to corporate tax effects on labour income, our results suggest that quality effects mitigate the negative quantity effect by nearly 60% (as corporate taxes strongly increase the labour intensity of production). An important implication is that governments should not exclusively care about the size of inbound FDI flows but also about their specific characteristics, i.e. their quality.

Foreign Direct Investment in China's Service Industry: Effects and Determinants

The degree of openness in the service industry has been greatly improved since China's opening up to the outside world in 1978. FDI in services has grown substantially and it can be expected that China's service industry will become the most attractive field to foreign capital. In this article, the status and problems of FDI in the service industry are analysed. Empirical analysis of the effects and determinants of FDI in services shows that a positive relationship between FDI in services and the development of China's services industry is not evident. The economic effect of FDI in services is dependent on the interaction mechanisms between FDI and the levels of human capital available, R&D capability and China's open-door policy. FDI in services is positively influenced by the degree of openness, market scale and cumulative FDI, while a high wage rate acts as a deterrent to inward FDI. The scale and quality of FDI in services should be improved by increasing domestic absorptive capability and opening the service sector further under the WTO framework.

Research on Grey Decision Model of FDI Pre-evaluation Index System

Nowadays, accelerating the transition from quantity to the quality of introduced FDI, and improving the quality of FDI are one of the most important ways to promote the economic growth, thus, how to comprehensively evaluate the quality of introduced FDI is a problem need to be solved. Suggest that it is proposed in this article the construct of FDI pre-evaluation index system from comprehensive welfare effect perspective, emphasizing “welfare effects” and “pre-evaluation”, to make whole evaluation index system comprehensive and rationality. Aiming at the fuzziness of the value of pre-evaluation index, we inherited the theories and methods of Grey System Theory into the Evaluation Decision Analysis, then built Grey Decision Model according to reliability engineering and achieve grey decision effectively and accurately by applying VB program. Finally, examples support that this method is feasible and credible to FDI pre-evaluation, that not only solve the problem of uncertainty and fuzziness, but also provide reliable guarantee to every region to make the change from attracting investment to selecting investment and FDI engineering management.