Role Of Foreign Direct Investment Research Articles

Empirical study on the relationship between economic growth and implied carbon emissions in Western China's undertaking of international industrial transfer.

In the macro context of global climate change, given the profound challenges that the intensifying greenhouse effect poses to global ecological balance and sustainable economic and social development, the role of foreign direct investment (FDI) is increasingly acknowledged, particularly regarding its dual impact on the environment: while serving as a catalyst for economic growth, it might also exacerbate carbon emissions in host countries. This paper focuses on the panel data of 11 provinces and cities in the western region (excluding Xizang) from 2006 to 2021, calculates the implied carbon of foreign-invested enterprises in the western region, and explores the relationship between the implied carbon of foreign-invested enterprises in the western region and the economic development of the western region. The results indicate that from 2006 to 2021, the implied net carbon value of import and export trade of foreign-invested enterprises in the western region was greater than zero and roughly exhibited an upward trend year by year. FDI has an environmental deficit in terms of carbon emissions in the western region; FDI in the western region has a significant positive effect on the implied carbon emissions in import and export trade; The GDP of the western region has a significant positive effect on the implied carbon emissions of import and export trade. Therefore, this article puts forward corresponding suggestions from five aspects: policy incentives and regulatory constraints, technology research and innovation drive, clean energy development and resource recycling, international cooperation and regional linkage, and public awareness enhancement and cultural advocacy.

Factors Influencing Green GDP Growth in Southeast Asia: The Role of Foreign Direct Investment, Trade Openness, and Economic Development

Factors Influencing Green GDP Growth in Southeast Asia: The Role of Foreign Direct Investment, Trade Openness, and Economic Development

Investigating the factors affecting outward FDI of Vietnam: Does political index matter?

Considering the important role of foreign direct investment (FDI) in economic growth and integration, this paper seeks to thoroughly analyze the outward FDI pattern of Vietnam to its 15 major FDI recipients (accounting for approximately 94% of Vietnam's OFDI) using the gravity theory and a robust panel data approach for the comprehensive annual data over the period of 2007 – 2022. By determining the main destinations of Vietnam’s Outward FDI through the creation of social, economic, and political indices via the principle component analysis (PCA), the empirical results conclusively prove the positive impacts of the political index, social index, the existence of a common border, and accession to the WTO on the Vietnamese OFDI volume, while geographical distance is found to negatively impact the flow. As the main practical policy implications, issuing policies for sustainable economic growth, creating the novel strategy of FDI neighborhood policy, and fostering regionalism through FTAs (Free Trade agreements) are highly recommended.

The effect of shadow economy on foreign direct investment: Empirical evidence in emerging market economies 1988-2018

This paper aims to examine the effect of shadow economy on foreign direct investment (FDI) in emerging market economies (EMEs) starting from 1988 to 2018. The error-correction model (ECM) is applied to estimate the dynamic panel data in the short run model, and for the long run model, this study applied ordinary panel data approach to both the fixed effect model (FEM) and the random effect model (REM). This study considers the global financial crisis of 1998 by dividing the estimation into three periods, i.e., pre-crisis, post-crisis, and all periods. The results show that shadow economy had a significantly negative effect on FDI inward both in the long run and the short run during the pre-crisis period, while economic growth, trade openness, policy rate, population, and infrastructure had various significant effects on FDI inward. The long-run estimation revealed that economic growth, policy rate, inflation, and the human development index (HDI) were all significant factors. Only the exchange rate, as one of efficiency-seeking motives and macroeconomic factors, has a significant role in FDI in EMEs. This analysis suggests that policymakers need to consider shadow economy along with investor motives and macroeconomic variables to provide more FDI, while investors need to consider the country’s advantages that could potentially provide a rate on return on investment.

Mediating Role of Foreign Direct Investment in the Relationship between Selected Socio-political Factors and Economic Growth in Kenya, Uganda and Tanzania

Mediating Role of Foreign Direct Investment in the Relationship between Selected Socio-political Factors and Economic Growth in Kenya, Uganda and Tanzania

Links between technological innovation, financial efficiency and environmental quality using quantile regressions: The role of foreign direct investment, institutional quality and natural resources

Policymakers and academics are interested in identifying mechanisms that promote environmental sustainability due to their relationship with climate change. This research evaluates the channels that transmit the effect of technology and financial efficiency on environmental quality. The relationship is moderated by real production per capita, foreign direct investment, natural resource rents, and institutional quality in the context of the Environmental Kuznets Curve. The research covers the 1996–2021 period for a sample of 88 economies classified into three groups according to the World Bank Atlas Method. We use second-generation cointegration techniques with structural breaks and quantile regression models. The findings offer sufficient evidence to conclude that the impact of technology and financial efficiency on environmental quality is heterogeneous throughout the distribution. Our findings suggest that technology is more associated with maximizing production than mitigating or restoring environmental deterioration. A policy implication derived from our research is to encourage the generation of carbon-free technology and promote financial efficiency in upper-middle-income countries to achieve environmental sustainability.

Sustainable Energy Usage for Africa: The Role of Foreign Direct Investment in Green Growth Practices to Mitigate CO2 Emissions

In line with Africa’s commitment to keeping up with the United Nations Framework Convention on Climate Change, achieving a sustainable future requires balancing economic growth with environmental sustainability. This study investigates the long-term impacts of foreign direct investment, economic growth, agricultural production, and energy consumption on CO2 emissions across 43 African nations from 1990 to 2021. Despite significant research on the individual effects of these factors, the combined influence on CO2 emissions remains underexplored. Addressing this gap, this study employs cross-sectional augmented distributed lag estimators (CS-DL and AMG) and updated estimation packages to effectively examine the relationships between variables. Our findings are as follows: firstly, economic growth and energy use was shown to have a significant positive influence on CO2 in the long term. Also, foreign direct investment significantly promotes CO2 emissions. Secondly, the causality test shows a unidirectional causal relationship between CO2 emissions and foreign direct investment. The test also revealed a bidirectional relationship between GDP and CO2 emissions, as well as between energy consumption and CO2 emissions. Again, a bidirectional causation was observed between agricultural production and CO2 emissions. Thirdly, the impulse response analysis shows that GDP will contribute more to emissions over the 10-year forecast period. This study also proposes policy implications to lessen CO2 across the continent and advocates for the judicious adoption of existing policy frameworks like the 2030 Agenda for environmental Sustainability.

Role Of Foreign Direct Investment In Indian Stock Market: A Critical Appraisal

Role Of Foreign Direct Investment In Indian Stock Market: A Critical Appraisal

The role of foreign direct investment in solving electricity poverty in Brazil

This paper conducts an empirical analysis of the relationship between Foreign Direct Investments and electricity poverty in Brazil in the period 1992–2021. With the opening up of the Brazilian economy in the 1990s policy makers expected that foreign investment would contribute to the development of the Brazilian economy. The impact of Foreign Direct Investment in the electricity sector is, nonetheless, a topic with scarce literature. Therefore, the current work to fill this gap is justified. We adopt an autoregressive distributed lag (ARDL) approach to investigate the short and long-run relationship between these variables. Our main result is that Foreign Direct Investment has a negative impact on electricity consumption in Brazil. Additionally, Foreign Direct Investment has a negative impact in terms of electricity access, at the time of the occurrence of the investment, which is compensated the year after. Private investments, have on the other hand, impacted electricity consumption positively. An implication is the need for compensatory public policies that can increase access to electricity for the poorest populations.

Complexity and FDI in market-dependent economies: The hidden effect of industrial offshoring

AbstractThis study examines the complexity in the Eastern European economies, with a focus on the role of foreign direct investment (FDI). Despite transitioning to market economies, these countries remain economically fragile and dependent. Their lower technological complexity and reliance on foreign capacity make them vulnerable. However, some countries like Austria and Poland demonstrate successful integration of production and innovation. The analysis shows FDI has a limited impact on developing complex knowledge but contributes positively to economic complexity. Results also indicate that in the long-term, economic and technological complexity does not lead to accelerated total factor productivity growth, contrary to complexity literature. Combining labour with innovation, safeguarding local industries, and prioritizing education and research are more effective approaches. The study clearly shows how Hungary is stuck in an “assembler trap.” It also finds that the gap between economic and technological complexity negatively affects liberal democracies.

The Role of Foreign Direct Investment on Ghana’s Economic Growth: A Durbin Watson Analysis

The Role of Foreign Direct Investment on Ghana’s Economic Growth: A Durbin Watson Analysis

FDI impact: catalyzing digital capabilities in host nations

PurposeThis study aims to investigate the impact of foreign direct investment (FDI) on national digital capability, specifically differentiating the impact between FDI greenfield and mergers and acquisitions (M&A). The research also investigates factors shaping digital capabilities, encompassing government transparency and absorptive capability, while exploring the mediating influence of absorptive capability in the FDI–digital capability relationship.Design/methodology/approachAn econometric model has been developed to examine the interrelationship between national digital capability, FDI inflows, national absorptive capability and government transparency. The data set encompasses 55 countries over a period of nine years (2013–2021). National digital capability data is derived from the well-established index published by the World Competitive Centre (WCC). The sources of the explanatory variables align with standard practices, drawing from reputable institutions (UNCTAD and the World Bank, among others).FindingsThe findings reveal a significant positive impact of FDI, particularly in greenfield investments, on national digital capability. Government transparency and research and development (R&D) investment are crucial factors contributing to digital capabilities. Additionally, the absorptive capacity, reflected by R&D investment, also emerges as a potential moderating factor, influencing the impact of FDI inflows on digital capabilities.Practical implicationsThe results recommend that policymakers and stakeholders should carefully consider the role of FDI, especially in greenfield investments, as a catalyst for enhancing national digital capability. The findings also underscore the significance of promoting government transparency and directing investments towards R&D to nurture digital capabilities. Moreover, understanding the mediating role of absorptive capability can inform strategies aimed at optimizing the impact of FDI on digital capabilities.Originality/valueThis study contributes uniquely to the existing literature by being the first to systematically explore the influence of FDI on national digital capability. Furthermore, it presents innovative empirical findings on the role of absorptive capability in enhancing the FDI impact on national digital capability, an area that remains relatively uncharted in current literature.

Do natural resources bestow or curse the environmental sustainability in Cambodia? Nexus between clean energy, urbanization, and financial deepening, natural resources, and environmental sustainability

The management and utilization of natural resources can either promote or hinder environmental sustainability. While they can provide the basis for renewable energy, sustainable agriculture, and conservation efforts, their extraction and use can also lead to environmental degradation, pollution, and depletion. This study examines the intricate relationship between natural resource rent (NRR) and environmental sustainability in Cambodia. Specifically, the study investigates the impacts of financial openness, institutional quality, financial deepening, and urbanization on this relationship. Employing both symmetric and asymmetric frameworks, the research assesses the explanatory power of these variables on environmental sustainability. Study implemented novel cointegration test offered by Bayer-Hancked and Makki, the long-run and short-run coefficients has derived through the implementation of augmented autoregressive Distributed Lagged (AARDE) and Nonlinear Autoregressive Distributed Lagged (NARDL). The study reveals the long-term association between NRR and environmental indicators, additionally the findings uncover both positive and negative correlations between NRR and environmental sustainability, emphasizing the challenge of managing natural resources effectively. Furthermore, the study highlights the potential adverse environmental effects of financial expansion, suggesting that increased investment in certain industries and higher consumption patterns may exacerbate environmental degradation. It also underscores the role of foreign direct investment (FDI) in promoting renewable energy technologies and sustainable practices, ultimately reducing CO2 emissions. Additionally, the study stresses the importance of institutional quality and transparent financial systems in encouraging sustainable practices and mitigating carbon emissions. It advocates for Cambodia to prioritize institutional strength and financial openness to achieve long-term environmental sustainability, while addressing the challenges posed by financial deepening and urbanization.

Factors affecting the green economy: the mediating role of foreign direct investment

PurposeThe objective of this study is to examine the various factors that exert an influence on the green economy. This study also investigates the impact of foreign direct investment (FDI) on the Malaysian economy, specifically focusing on its position as a mediator. This research also examines the correlation between FDI and its influence on the contemporary green economy.Design/methodology/approachThe authors employed quantitative methodologies and a self-administered survey to evaluate data and derive a definitive conclusion. The result was constructed using SPSS and SEM-PLS as the analytical software.FindingsThe study reveals that technological advancement, investment country and government policy significantly and positively affect the green economy, catalyse SDG goals and restructure the economy in better shape.Originality/valueThe current empirical research bridges the research gap in the context of technology advancement in government policy from emerging economies by exploring important factors, proposing their impact on the performance of the green economy, and empirically testing those hypothesized relationships. This study deciphers that FDI influences the green economy, where the investment country plays a significant role. Also, for a graphical presentation of this abstract, see the online appendix.

Navigating the climate challenges in Africa: Exploring the synergy and threshold effects of renewable energy and foreign direct investment on climate risk

Renewable energy is widely acknowledged as an essential response to climate change, which poses a severe threat to humanity and natural ecosystems. Drawing from the greenhouse theory of climate change and the pollution haven hypothesis, this study contributes to the literature by addressing three critical issues. First, we examine the effect of renewable energy on climate risk. Second, we explore the intervening role of foreign direct investment (FDI) on the renewable energy-climate risk nexus. Third, we determine the minimum threshold required for renewable energy to minimise climate risk. The analysis was based on 47 African countries and estimated using the generalised method of moments (GMM) and dynamic panel threshold regression techniques. The GMM technique is essential due to its ability to address endogeneity issues in the model. Also, the dynamic panel threshold technique is employed because it is built on the principles of GMM and provides an estimate of the threshold level and nonlinearities in the model. The empirical evidence presents a significant negative relationship, suggesting that renewable energy minimises the surge in climate risk in Africa. Second, the findings reveal that the weakening effect of renewable energy on climate risk is contingent on FDI. Third, the dynamic panel threshold results demonstrate that the minimum threshold required for renewable energy to reduce climate risk is 56%. Beyond this level, renewable energy presents a significant negative impact, implying that high renewable energy consumption lessens climate risk. Policy recommendations for boosting renewable energy consumption to alleviate climate risk have been provided.

Exploring the role of green finance in wind power development: using the nonparametric model

In the context of the “dual carbon” strategy, how to leverage green finance to promote China's wind power industry is a hot topic. Unlike existing literature, this article uses a nonparametric additive model to investigate the impact and mechanism of green finance on wind power development. Research has found that green finance has an inverted U-shaped nonlinear impact on wind power development, indicating that green finance has a more prominent contribution to the wind power industry in the early stages. Further mechanism research indicates that green finance affects the wind power industry through foreign direct investment and green technology innovation. Specifically, with the relaxation of foreign direct investment conditions in the energy sector, the role of foreign direct investment in promoting the wind power industry more prominent in the later stages. In the early stages, government support was greater, and green technology patents grew rapidly, driving green technology innovation to have a more significant impact on the wind power industry. In addition, the impact of fiscal decentralization, wind power prices, and environmental regulations on the wind power industry also exhibits significant nonlinear characteristics. This article helps to comprehensively understand the mechanism and impact of green finance on wind power development, and provides a reliable basis for optimizing green finance policy and effectively promoting wind power.

Good Governance and Tourism in South Asian Emerging Economies: The Mediating Role of Foreign Direct Investment

This study examined the role of good governance in promoting tourism in emerging South Asian countries and also tested the mediating role of foreign direct investments (FDI). The study used panel data collected from seven South Asian countries from 1996 to 2018. Panel data regression models were estimated to test the research hypotheses. The results showed that the country’s good governance has a positive and significant influence on tourism receipts and arrivals. Moreover, the mediation analysis results supported that foreign direct investments mediated the relationship between good governance indicators like government effectiveness, political stability, voice and accountability, and control over corruption and tourism. Based on the results, the study proposed the governance-led FDI and FDI-led tourism hypotheses, the study’s main contribution. The study has implications for the government regulatory agencies relating to governance, tourism departments, foreign prospect investors, and policymakers.

The role of foreign direct investment in east and Southeast Asia: Evidence before and after 2009 global financial crisis

This research investigates the influence of Foreign Direct Investment (FDI), domestic physical stock, and the human capital index on labor productivity across 17 East and Southeast Asian economies. In the period from 1980 to 2009 (pre-global financial crisis), the study reveals that, initially, FDI stock independently contributes little to productivity. It underscores the necessity of specific human capital thresholds for FDI to enhance productivity by facilitating technology diffusion from source to host economies. While most economies in our sample surpass these thresholds, Cambodia, Laos, and Myanmar do not, indicating unexploited potential for productivity enhancement via FDI. In the post-2009 era, following the financial crisis, FDI emerges as the primary driver of labor productivity in these economies, rendering the previously mentioned human capital thresholds less critical across all 17 economies. The study also observes a significant, mutually intensifying crowding-out effect between FDI stock and domestic physical capital, which notably escalated around the 2009 financial crisis. Despite this, the influence of FDI stock on labor productivity substantially surpasses that of domestic physical capital, especially after 2009. These insights underscore the critical need for policymakers to strategically balance the influx of foreign investment with domestic capital investment to optimize economic growth in the aftermath of the 2009 crisis.

Unveiling the green horizon: A bibliometric analysis of global foreign direct investment research and its emphasis on climate change

Foreign direct investment (FDI) promotes economic growth of a country in multiple ways by setting up industries, infrastructure, and power plants, and such activities usually accelerate climate change by raising greenhouse gases (GHG) emissions. While the research on the role of FDI in promoting economic growth has gained widespread attention, it remains largely unclear how much global FDI research focuses on climate change activities. To fill this gap, a global scale bibliometric analysis was conducted to quantify published research on FDI, including the share dedicated to climate change. Global FDI research was heavily focused on non-climate change issues contributing 85% share in publications (13,835 publications) and 78% in citations (3,70,000 citations) and minimal attention was paid to FDI research relevant to climate change (2438 publications, 1,07,478 citations). Even with less publications, the research impact (RI; citations pre document) of FDI-climate change studies was 62% higher than non-climate change studies. Global FDI research was mainly concentrated in a few countries, with only 15 countries publishing approximately 75% of FDI research. China, USA, and UK combined produced approximately half (47%) of the global FDI research. The institutions and funding agencies from China, USA, and UK contributed greatest number of FDI publications and collaborated widely with rest of the world. However, China, Pakistan and Turkey produced 57% of global publications on FDI-climate change. Though developing countries are the major recipients of FDI and are most vulnerable to climate change, but their contributions towards climate change research were minimal. The most recent (2019–2023) topic trends for FDI research were green finance, renewable energy, economic growth, trade, and FDI. However, the recent topic trends for FDI-climate change research were green finance, clean energy, FDI, carbon emission, and carbon dioxide emission. FDI and climate change activities are generally positively correlated. Therefore, global research should upsurge its focus on FDI related climate change activities in order to find ways to improve economies sustainably without damaging environment.

The role of foreign direct investment in technology development in Vietnam

The role of foreign direct investment in technology development in Vietnam