Share Of FDI Research Articles

EFR Empirical Brilliance in Employment Strategies: Orchestrating Firm Stature, Exquisite Labor Proficiency, and Exponential Productivity in Confluence with Discerning Leverage and Enriched FDI Share

This study endeavors to scrutinize the veracity of Gibrat's law pertaining to the expansion of firms at the micro-level and explores the determinants of firms’ growth by employing datasets from emerging nations from 2004 to 2021. The study used panel unit root tests to scrutinize stationarity and system GMM to tackle endogeneity and unobserved heterogeneity. Overall, the findings of this study provide empirical support for Gibrat's law in the context of privatized banks in developing nations. Furthermore, the outcomes indicate that globalization and integration have posed considerable challenges for firms seeking to grow in developing countries that have implemented privatization policies. These conclusions suggest that certain elements, apart from size and sector growth, play a significant role in the evolution of a firm's growth trajectory. Nonetheless, the scope of this study is restricted to the evaluation of privatized banks in developing countries, and it does not delve into the specific methods of privatization utilized. Future research should explore diverse cohort sizes and expand the literature to address micro-level intricacies.

Transnational Trade and Economic Growth in Nigeria

The study investigated the impact of transnational trade on economic growth in Nigeria. To achieve the purpose of the study, transnational trade was disaggregated into: oil import, oil export, non-oil import, non-oil export, trade openness, foreign direct investment share of real gross domestic product and real effective exchange rate and regressed on economic growth proxied by growth rate of real GDP. Data on the variables above were sourced from the Central Bank of Nigeria statistical Bulletin and the World Bank database. The data were analysed using the Autoregressive and Distributed Lag (ARDL) approach due to the mixed order of stationarity of the variables. The results indicate that in the short run, non-oil export has positive and significant impact on economic growth while oil import and FDI share of real GDP have negative and significant effect on economic growth. The long run result shows that: oil import has direct and insignificant effect on growth while non-oil import, non-oil export, FDI share of real GDP and real effective exchange rate have negative and insignificant impact on economic growth. From the results the study concludes that transnational trade has serious implication on economic growth in the short run and less effect on economic growth in the long run in Nigeria over the period of this study. Based on these findings, the study suggests that policies should be geared toward increase in non-oil export, reduction in oil import, review of FDI inflow policies and trade liberalization as possible ways of improving the productive capacity of the Nigerian economy.

Moving Beyond Disappointment: India, FDI, and Sustainability

executive summary: This essay examines what lessons can be learned for sustainable finance from India's recent history of foreign investment. main argument India has not increased its share of FDI in recent years as much as has been hoped. Risks for FDI continue to be high, especially due to growing economic nationalism and flawed dispute resolution mechanisms. The destinations for the investment India receives are strongly shaped by the risk perceptions of foreign investors—they prefer the stock market, services sector, and projects with minimal upfront investment and no political exposure. This has hindered the government's attempts to mobilize investment into the manufacturing sector and has negative implications also for sustainable finance. Most green infrastructure projects in India, or those related to sustainable development, do not fit the risk profile preferred by foreign investors. Thus, judging by India's recent history with FDI, energizing sustainable finance into India will require deeper reform. policy implications • The Indian government will have to bring its actual regulation of foreign investment closer to its welcoming rhetoric to improve the climate for FDI. • To attract greater levels of investment, attempts to favor "Indian" companies over others in various sectors must end. • Dispute resolution mechanisms must be reformed to encourage FDI—both by expanding capacity in India's judicial system and by accepting international arbitration awards. • Sectors in India crucial to sustainable and greener development, such as renewable energy and green infrastructure, will need to be ring-fenced from political risk.

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.

Foreign Direct Investment and Domestic Private Investment in Sub-Saharan African Countries: Crowding-In or Out ?

This paper investigates the relationship between FDI and private investment in Sub-Saharan Africa (SSA), using a sample of 40 countries over 1980-2017. To disentangle short term from long-term dynamics, our empirical analysis is based on Pooled Mean Group (PMG), Mean Group (MG) and Dynamic Full Effects (DFE) models. We find that FDI has little effect on private investment in the short run but significant crowding-in effects in the long-run: a one percentage point increase of the share of FDI in GDP leads to a 0.29% rise in private investment, in the long run. Our results also show that FDI interacts with public domestic investment to boost these positive effects. Finally, we show that the impact of FDI on domestic private investment is stronger in non-natural resource exporting diversified countries as opposed to non-diversified commodity exporters.

Deglobalization of the World Economy and its Effects on the Western Balkan Countries

Abstract This paper analyses trends in three key aspects of economic globalization: international trade, foreign investment and global product chains. The paper points to downward tendencies of the world economic integration in all three segments. The paper finds that causes of these trends are not cyclical, but structural, that is, the process of deglobalization of the international market and transformation of the very foundations of the international economic system is underway. The paper also includes an empirical analysis of the potential effects of these changes on six economies of the Western Balkan. The multiple regression models reveal very strong statistic connection between these economies and the world economy trends. There are direct relations with global foreign trade and production, but inverse relation with FDI share in the world economy. That indicates significant challenges such as declining income and job losses, but also certain opportunities to reduce trade deficits and increase domestic production.

Does Improved Governance Lead to a Higher Share of FDI in Foreign Equity Investments?

AbstractWe investigate the relationship between a country's share of FDI in its foreign equity investments (FDI plus foreign portfolio investment (FPI)) and its governance quality relative to that of the investor's country. Poorly governed countries are often advised to improve their governance structures to attract FDI. Contrary to this prescription, we find that as the governance quality of poor‐governance host countries improves, FDI share of foreign equity investments declines, because of a relatively higher increase in FPI than FDI. Only after a sustained and meaningful improvement in governance quality, do low‐quality host countries reap the benefits of attracting greater FDI from investors in high‐quality countries.

Impact of Foreign Direct Investment on the Indian Economy

Foreign Direct Investment is an important instrument of economic development for developing countries. It provides a great drive for growth, after liberalization policy has been changed significant role in Indian economy. India is interested in increasing the FDI Inflows to earn more foreign exchange. This study investigate existence link between Foreign Direct Investment, Exports, Imports and Gross Domestic Product in the Indian economy. The objective of the study is to analyze growth and share of FDI, Gross Domestic Product, Exports and Imports and the relationship between FDI and Gross Domestic Product, Exports and Imports during the period from 1991 to 2015. The data are collected from Handbook of Statistics on Indian Economy 2016. This study analyse the index numbers, annual growth rate, averages, percentages, compound growth rate, simple linear regression and semi-log linear regression have been used.

Acquisition or direct entry, technology transfer, and FDI policy liberalization

This paper considers a number of symmetric multinational firms entering into a host country either directly or by acquiring local companies. The foreign multinationals strategically interact in both technology transfer and in the product market stage. Taking multinational firm competition into account implies that acquisition will more likely become the preferred mode of entry into the host country. This provides a possible rationale for the surge in the share of FDI taking place through mergers and acquisitions even in developing countries. Furthermore, we find that the level of the cost of technology transfer provides a possible rationale for the often observed pattern of investment liberalization. As the cost of technology transfer decreases, foreign multinational companies are first allowed to compete with local firms and in case of even lower cost of technology transfer, foreign ownership restrictions are also removed. Hence, we show that investment liberalization should go in tandem with host country policies that lower the cost of technology transfer.

The birth of edge cities in China: Measuring the effects of industrial parks policy

China's government has spent hundreds of billions of dollars to invest in new industrial parks with the intent of boosting the economic growth, by attracting new firms into the parks and also generating spillovers for the local economy. Do such place-based investments in capital raise urban productivity or is this another case of the powerful state misallocating capital in China? This paper measures the localized spillover effects of 110 parks built in eight major cities on firm productivity, wages, and local manufacturing employment growth. We find that the geographic spillover effect of parks is an increasing function of the park's overall human capital level, the FDI share, and its “synergy” with nearby incumbent firms (measured by Marshallian factors). Using geo-coded data, we document that the growth in local employment and wages stimulates nearby local housing construction and retail store openings. The rise of a new production sub-center causes the emergence of a suburban “consumer city”.

Do Trade Openness, Structure of the Economy and FDI Affect Energy Intensity in India? A Case for Including Energy Intensity as a Policy Parameter

This article examines the existence of a long-run relationship between energy intensity, trade openness, structure of the economy and FDI inflows in India from 1973 to 2013 using auto regressive distributive lag (ARDL) bounds test methodology. The results indicate that (a) there is a long-run cointegration among the analysed variables and (b) an increase in trade openness, share of services in gross domestic product (GDP) and share of FDI in domestic investments results in lowering energy intensity. The study also finds that the magnitude of impact of the share of industry in increasing energy intensity in India outweighs the combined energy intensity lowering impact of trade openness, share of services and share of FDI. The study validates tenets of the theory of heterogeneity of firms in international trade and pitches for including ‘energy intensity’ as a policy parameter in promoting ‘energy-frugal’ technologies via Make-in-India initiative, trade and FDI policies.

A Data Survey on International Capital Flows to Developing Countries

This paper examines the data on international capital flows to developing economies for the period 1970-2006. Besides the most aggregate group of all developing countries, developing world is categorised with respect to five regions (Developing Asia, Europe and Central Asia, Latin America and Caribbean, Middle East and North Africa and Sub Saharan Africa) and three income groups (upper middle, lower middle and low). The overall structure and defining features of the data are discussed with reference to the main data sources, span of time and cross-section units and the core variables of interest. Trends and developments in aggregate capital flows, equity (FDI and portfolio) flows and debt (long-term and short-term) flows are assessed. Growth and cyclicality of these flows, FDI share of gross domestic investment, foreign participation in domestic stock markets and cost and maturity structure of external borrowing are analysed.

CAPITAL ACCOUNT OPENNESS, POLITICAL INSTITUTIONS AND FDI IN MENA REGION: AN EMPIRICAL INVESTIGATION

(ProQuest: ... denotes formulae omitted.)1. INTRODUCTIONWhile global cross border capital flows have risen to reach nearly $6 trillion in 2004, only a small fraction (about 6.4 percent) flows to developing countries. Researchers cannot help but ask, doesn't capital flow from rich to poor as predicted by classical economic theory?Some academics and policy makers are seeking to provide a possible explanation for why? despite the surge in capital mobility over the last decade, FDI inflows to developed are much larger than those to developing countries. Addressing this question, an important strand of literature Kaminsky and Schmukler (2003), Kose et al. (2003), Campion and Neumann (2004) and Caprio et al. (2001) have paid special attention to the role of financial liberalization in absorbing FDI. They suggest that can attract more international capital flows by de-regulating activities in their domestic financial markets, liberalizing their capital account transactions and equity markets. Brafu-Insaidoo and Biekpe (2014) employ three explanations on how capital account liberalization affects capital inflows: Firstly, the removal or relaxation of restrictions on foreign ownership limitations can increase FDI inflows. Secondly, the de-regulation of offshore borrowing can attract more foreign private loan inflows through the removal of quantitative restrictions on overseas borrowing and the provision of tax incentives. Thirdly, the abolition of multiple exchange rate practices can enhance the foreign capital inflows by eliminating economic distortion, and reducing the uncertainties and the risks about exchange rates particularly during repatriation of capital or income from capital.Another body of literature (Chan and Gemayel, 2004; Onyeiwu, 2003; Daniele and Marani, 2006; Alfaro et al., 2008) have focused on the role of political stability and institutional quality in boosting FDI. They all suggest that low institutional quality is the leading factor in explaining the lack of capital flows from rich to poor countries. Recently, Asiedu and Lien, (2011) and Okada (2013) have examined the impact of institutional factors on the degree of association between capital control and FDI inflows show that financial openness improves FDI inflow only in with good institutional quality comparing to with poor institutional quality.In this paper, we try to give an explanation on the question why FDI does not flows from rich to poor countries by examining the role of interaction effect of financial openness and institutional quality in enhancing FDI in the MENA region. The MENA region is a particularly interesting example for this study, given that although most member have undertaken financial liberalization in the 1980's as part of the structural adjustment programs of the IMF and World Bank in order to promote FDI, it continues to attract a smaller share of FDI than all other regions except for Sub-Saharan Africa. Over the period between 2006 and 2010, the share of FDI inflows in the MENA region represented on average about 6.5 percent of the world's total FDI inflows, against 23.62 percent in East Asia and Pacific and 8.72 percent in Latin America and Caribbean. The Europe and Central Asia region have maintained the lion's share of global FDI flow (59 percent). This distribution is not only particular to this period or one year, but also of the whole previous decades (World Bank's World Development Indicators).The level of FDI inflows to MENA region is lower for two main reasons: The first one is related to the fact that multinational firms are unlikely to invest in with bad institutions even if these become more financially open. In contrast, if which have good institutions become more financially open, it is expected that international capital flows to these will increase. The second one is that, in the financially open countries, a perceived deterioration in its policy environment could be punished by the flight of capital out of the country. …

Urban Agglomeration and Local Economic Growth in China: The Role of New Industrial Parks

China's government has spent hundreds of billions of dollars to invest in new industrial parks with the intent of boosting the productivity of new firms attracted to the parks and to generate spillovers for the local economy in order to accelerate economic growth. Do such place based investments in capital raise urban productivity or is this another case of the powerful state misallocating capital in China (see Hsieh and Klenow 2009)? We measure the localized spillover effects of 110 parks built in eight major cities on firm productivity, wages, and local manufacturing employment growth. We find that the geographic spillover effect of parks is an increasing function of the park's overall human capital level, the FDI share, and its synergy with nearby incumbent firms (measured by Marshallian factors). Using geo-coded data, we document that the growth in local empolyment and wages stimulates nearby local housing construction and retail store openings. The rise of a new production sub-center causes the emergence of a suburban consumer city.

FDI and Bangladesh : A Study of South Asian Territories

Foreign Direct Investmentplays a crucial role in the economy of developing countries like Bangladesh through accelerating Gross Domestic Product (GDP), export and domestic investment followed by overall economic growth. The present scenario of FDI in Bangladesh in not still satisfactory enough but given the availability of abundant resources, skilled and cheap labor forces, a stable political atmosphere, effective monetary and fiscal policy, improvement of infrastructure and long term strategic planning to stimulate FDI might be able to make the condition favorable to attract foreign investment in Bangladesh. South Asian countries need to improve their domestic investment, exports and infrastructure facilities, along with more foreign investment, to achieve higher growth. This report analysis of FDI flows to south Asian countries reveals that there has been an increasing trend of FDI into South Asian countries. Findings analysis suggest that FDI has a positive impact on export growth through its positive spillovers for South Asian countriesFDI in South Asia is mostly concentrated in manufacturing and services. Despite some policies reforms, Bangladesh could not attract handsome flow of FDI as yet. Furthermore, the lion’s share of FDI is being repatriated. The main focus of this paper is to reveal how attractive the position of Bangladesh in south Asian countries. We find from the report that Bangladesh hold the second position in FDI but not in attractive position. The paper also analyses the problems and prospects of FDI in Bangladesh. The study also provides some remedies to solve the problems.

Do Countries Take Away the FDI Share of their Neighbors? Empirical Evidence from the FDI Inflows to Pakistan, China, India and Iran

We empirically test whether neighbouring countries compete for and take the FDI inflows of each other. Using time series data for the years 1991-2013, the impact of the FDI inflows to the neighbouring countries of Pakistan (i.e., China, India, and Iran) on the FDI inflows to Pakistan was tested. We found that the FDI inflows to China has a negative impact on the FDI inflows to Pakistan while the FDI inflows to India has a positive impact on the FDI inflows to Pakistan, whereas the impact of FDI inflows to Iran on the FDI inflows to Pakistan is insignificant. Further, trade openness and GDP growth were found to have a significant and positive impact on the FDI inflows to Pakistan. The study also found the existence of long run relationship between the FDI inflows to Pakistan, India, China and Iran. The empirical findings of the study suggest that policies made in isolation based on country specific FDI determinants will have less significant results as compared to policies made on the relative FDI attractiveness score. The ultimate impact of agglomeration of policies will helps in sustaining sustainable economic growth and development as well as improves largely society welfare of the neighbouring countries.

Robust determinants of OECD FDI in developing countries: Insights from Bayesian model averaging

In this paper, we examine the determinants of outward FDI from four major OECD investors, namely, the US, Germany, France, and the Netherlands, to 129 developing countries classified under five regions over the period 1995–2008. Our goal is to distinguish whether the motivation for FDI differs among these investors in developing countries. Rather than relying on specific theories of FDI determinants, we examine them all simultaneously by employing Bayesian model averaging (BMA). This approach permits us to select the most appropriate model (or combination of models) that governs FDI allocation and to distinguish robust FDI determinants. We find that no single theory governs the decision of OECD FDI in developing countries but a combination of theories. In particular, OECD investors search for destinations with whom they have established intensive trade relations and that offer a qualified labor force. Low wages and attractive tax rates are robust investment criteria too, and a considerable share of FDI is...

The impact of FDI inflows on real GDP in Estonia: Evidence from a cointegration approach and causality test

Theoretically, it is believed that FDI is a principal factor supporting and accelerating economic enhancement of an economy over the years. FDI boosts the productivity of host countries and promotes economic development, as FDI may not only provide direct capital financing, but may also create positive externalities via the adoption of foreign technology and know-how. In this paper we focus our attention on Estonia, as a (former) transition economy. Estonia stands out as one of the most successful ones in terms of economic growth and institutional changes among former command economies, as in less than two decades Estonia has been able to build functioning market-economy-institutions virtually from scratch and has joined the European Union (EU) and the Euro-zone. This paper, using cointegration methodology for the period of 1994:Q1-2013:Q2 focuses on the causal relationship between FDI and real GDP in Estonia. The real GDP data is obtained from Eurostat (2005 = 100) while the FDI data is obtained from the Bank of Estonia. Exploring the cointegration test is done through two methods: the residual-based test of Engle and Granger (1987) and Johansen’s methodology. The cointegration tests require that series to be integrated of order one. For this reason we first test for the existence of a unit root using Augmented Dickey Fuller unit root test (ADF, 1979, 1981), and Kwiatkowski et al . (KPSS, 1992). We further investigate the causal relationship using Granger Causality analysis and Vector Error Correction Model (VECM). The stationarity tests show that the variables are integrated of order 1, confirming that FDI and GDP are not stationary. The Engle-Granger method shows that FDI and real GDP are not cointegrated. Continuing with Johansen Cointegration Test, which is more generally applicable than the Engle-Granger method, the findings indicate that both the real GDP and FDI series are cointegrated, hence, the variables have long term relationship in that they will not deviate arbitrarily from each other and that their deviations from long run equilibrium path are corrected. Finally, Granger Causality test provides evidence that GDP does respond to changes in FDI in the long run but not in the short run, besides FDI does Granger cause real GDP. Our findings demonstrate that FDI can be very useful for Estonia, and it will be interesting to examine whether such findings are essentially due to large share of FDI in the banking sector and/or due to large share of FDI from high-income countries.

Knowledge Spillovers, Absorptive Capacities and the Impact of FDI on Economic Growth: Empirical Evidence from Transition Economies

In this paper we employ econometric analysis to investigate the impact of FDI and the related externalities on economic growth in transition economies. We contribute to recent literature by using more reliable measure of FDI while also depicting the character of FDI and related knowledge spillovers, as well as by examining the importance of technological and innovative capabilities in explaining the growth performance among transition economies, not previously studied. Overall, the results of our empirical analysis seem to render support to the hypothesis that FDI contribute to economic growth predominantly through knowledge spillovers, and that the higher level of technological development proxied by government and business R&D expenditures is associated with better growth performance among transition economies. Essentially, by the way we measure FDI in this analysis (i.e. the share of FDI in the manufacturing gross value added) and in the view of the integrated framework in which we study the relationship between FDI and economic growth, allows us to stipulate that the positive impact of FDI on economic growth is associated with more knowledge-capability and efficiency-seeking FDI.

Distribution of Foreign Direct Investment in Indian Regions: A Trend Analysis

Concentration of FDI in a few selected states reflects the location preference of the foreign investors to do business in India. States like Tamilnadu, Maharashtra, Karnataka and New Delhi are getting a significantly higher FDI than the rest of India. The concentration of FDI in these states is an old affair and they compete among themselves to be investors' preferred regions in future. This paper takes an attempt to find the volatility in the FDI inflow and the trend of FDI inflow to the Indian states and then to forecast the FDI inflow to these regions. The results show that the FDI inflow among the Indian regions do not have identical volatility and trend and there is a significant difference in the volatility of FDI inflow during pre-recession and post-recession period of the Indian economy. The region with high volatility in the pre-recession period can't continue to maintain as a preferred location during the post-recession period. Whereas the region with a low volatility in the pre-recession period is able to collect a higher FDI in the post-recession period and thus promoted to a higher rank. Similarly, regions like Mumbai, New Delhi are projected to lose share of FDI in the country where as Bangalore, Chennai and Ahmedabad may get a higher share of FDI inflow.