Share Of Foreign Direct Investment Research Articles

Прямі іноземні інвестиції в Україну в умовах інтеграції до Європейського Союзу

The purpose of the article is to study the prerequisites for the inflow of foreign direct investment in Ukraine and the reasons that slow down this process, in particular in the context of EU integration, as well as to analyze the dynamics of foreign direct investment in Ukraine. The dynamics of foreign direct investment in Ukrainian economy in 2002-2022 were analyzed, with consideration of the reasons for their changes over the study period. Starting from 2013 and until 2016, the volume of investments declined rapidly, which was caused by political instability in the country and a number of other reasons; in 2020, the COVID-19 pandemic became a major challenge, which also had its extremely negative consequences for the economies of countries and investors, and in 2022, russia’s full-scale invasion of Ukraine led to a decrease in foreign direct investment from 6687 million US dollars in 2021 to 190 million US dollars in 2022. One of the main problems of the Ukrainian economy is the low return on investment and its inefficient distribution. An analysis of foreign investment by type of economic activity leads to the conclusion that the largest share of foreign direct investment goes to the developed economic sectors. The main factors that negatively affected the dynamics of foreign direct investment in different periods were investor distrust caused by the high level of corruption in the country, doubts about the fairness of the judicial system, monopolization of markets, and instability of the national currency; russia’s war against Ukraine (since 2014); the COVID-19 pandemic; russia’s full-scale invasion of Ukraine (since February 2022), which still continues. Ukraine’s European integration processes, along with reforms designed to accelerate these processes, as well as the end of the war in Ukraine, will help attract foreign direct investment aimed at recovering and developing Ukraine.

Capital flows to low-income sub-Saharan Africa: an exploratory review

PurposeThe purpose of the paper is to examine macroeconomic and institutional factors that influence capital flows to low-income sub-Saharan African (SSAn) countries. It analyzes capital flows in a disaggregated manner: foreign divert investment, portfolio equity and portfolio debt. There is a gap in the empirical literature in examining the factors that are important for various types of capital flows to low-income SSAn countries. Low-income SSAn countries attract very low levels of foreign investment compared to other developing economies in the SSAn region and other developing economies and this paper attempts to make a contribution in this area.Design/methodology/approachThis paper examines data on capital flows and that of various push and pull factors. Trends and dynamics of capital inflows and their macroeconomic and institutional drivers are analyzed for low-income sub-Saharan African countries. Such an analysis has not been fully explored for low-income SSAn countries.FindingsCapital inflows to low-income sub-Saharan Africa (SSA) have increased sevenfold since the 1990s, dominated by foreign direct investment (FDI). They overtook official development assistance and aid in the 2010s. Mozambique and Ethiopia attract the largest size of FDI compared to other low-income SSAn economies, with natural resources as key factors in the former. The largest share of FDI to low-income SSAn countries comes from other SSAn countries, mostly South Africa and Mauritius. Among macroeconomic push factors, capital inflows are more closely related to commodity prices, while the volatility index and global liquidity are also important. Among macroeconomic pull factors, trade openness and economic growth appear more closely related to capital inflows. The surge in capital inflows in the 2000s also followed the implementation of several regional trade and investment agreements in the region. The improvement in internal conflict in the 1990s and mid-2000s seems to have helped support the increase in capital inflows during that period. This institutional quality variable appears to more closely track capital inflows compared to other institutional quality indicators. There were also improvements in the investment profile, law and order, and government stability in the 1990s to early 2000s when capital inflows picked up.Research limitations/implicationsThis study focuses on low-income SSAn countries, which are less studied in the empirical literature and that face immense developmental needs that require foreign and domestic capital.Practical implicationsFindings of this paper can shed light to policy makers on the factors that are most important to help the region attract capital inflows and areas where further improvement is needed in the macroeconomic and institutional environment.Originality/valueThere is a gap in the empirical literature in examining the factors that are important for attracting capital flows to low-income SSAn countries. To our knowledge, this study may be the first to explore dynamics of capital flows against institional quality for low-income SSAn countries at a disaggregated level.

The share of FDI in the value added of innovative and other industries in Poland

PurposeThis study aims to examine the share of foreign direct investment (FDI) in creating the value added (VA) of innovative and other industries in Poland in 2004–2020.Design/methodology/approachIn terms of the empirical analysis of FDI stocks, their locations were divided into innovative and other industries. The differences in the creation of VA are presented by domestic and foreign enterprises. The impact of FDI stocks in individual industries on gross domestic product (GDP) changes was assessed using the vector error correction model (VECM).FindingsFDI from innovative industries generated approx. 7% VA of the Polish economy in the years 2004–2020. In 2009–2018, the share of VA of foreign enterprises in innovative industries in Poland showed a faster growth (by 5 pp) than in other industries. The results of decomposition confirm that the level of explanation of GDP by FDI in innovative industries is higher than in other industries.Research limitations/implicationsChanges in the classification of activities reduce the time series period available.Practical implicationsThis study explains the participation of foreign and domestic enterprises in creating VA. The results are useful to pursuing the national investment policy.Social implicationsThe economic results of domestic and foreign enterprises in the host country affect the economic growth and development and ultimately the socio-economic conditions of life.Originality/valueThis work provides some additional explanations for the inconclusive results of international research into the impact of FDI on GDP or the spillovers effects. Its usefulness concerns the detailed impact of FDI by industrial structures on GDP.

China’s high-tech exports in 2000—2020

The article examines the trends of China’s high-tech exports in 2000—2020, and identifies the main channels of technology acquisition by the Chinese economy. The main factors affecting China’s high-tech exports are high-tech imports, foreign direct investment in China, the country’s gross domestic expenditure on R&D, and the exchange rate. Meanwhile, technology imports, incoming foreign direct investment and China’s gross domestic expenditures on R&D are the channels of technology acquisition for the Chinese economy. Statistically significant correlation coefficients with the growth rate of the share of high-tech goods in PRC exports were obtained for the following indicators: the growth rate of the share of gross domestic expenditures on R&D in GDP, the growth rate of the share of high-tech goods in imports and the growth rate of the share of foreign direct investment in GDP. The important role of gross domestic expenditures on R&D in the development of China’s innovations should be recognized. R&D is actively applied in China in situations where it is difficult or impossible to access the necessary knowledge as part of participation in international technology exchange.

Does foreign direct investment stimulate the output growth of the formal economic sector in Vietnam: a subnational-level analysis

PurposeThis study focuses on the relationship between foreign direct investment (FDI) and economic growth of the formal sector comprising all foreign and domestic registered enterprises engaged in production of goods and services.Design/methodology/approachThis study uses a balanced longitudinal data set for the period from 2006 to 2014 from secondary sources in 63 provinces/cities of Vietnam. The generalized method of moments (GMM) estimation for a dynamic panel data model is applied.FindingsThe greater the share of FDI in capital resource, the more favorable the output growth in the whole formal sector. The FDI enterprises are more productive than domestic formal firms, and the output growth of FDI firms creates a positive spillover effect on the output growth of domestic firms.Originality/valueThe effect of FDI on economic growth is investigated at subnational level for the whole formal economic sector as well as the formal domestic firms. The domestic and foreign industrial agglomerations and the business environment are also examined.

Foreign direct investment in the Republic of Uzbekistan

Today, in the context of economic modernization, the role of the state in determining the priorities for the modernization of various industries and industries, structural reforms and investment policy remains. At the same time, the state is involved as a key reformer in solving existing problems and further improving the efficient allocation of investments. It should be noted that in ensuring the development of the country's economy, a positive fact is the high share of foreign direct investment in foreign capital. The increase in the share of direct investment in the structure of all foreign investments once again shows that a favorable investment climate has been created in the country.

Cointegration and causality analysis between foreign direct investment, exports and economic growth in the republic of Croatia

The main objective of this paper is to analyze the causal relationship between foreign direct investment (FDI), exports, and economic growth in the Republic of Croatia for the period 2000-2020 and determine the implications of research results on corporate management. The management of the investment enterprise is usually interested in high returns, whereas the management of the recipient enterprise is interested in higher productivity, spillovers, and larger market share on domestic and international markets. Several methodological approaches, including unit root tests, cointegration tests, and Granger causality test, were used to assess the relationship between gross domestic product (GDP) growth rate, on the one side, and the share of FDI and total exports of goods and services in real GDP, on the other side. The results of cointegration tests indicated there is no long-term relationship between the real GDP growth rate, the share of FDI, and the share of exports of goods and services in real GDP. Based on the Granger causality test, it cannot be concluded that there is no causal relationship between the analysed variables. Finally, the paper discusses the implications of the conducted research for corporate management. The results indicate that managers are not discouraged by the fact that FDI is not correlated to economic growth, as investment decisions are determined by numerous factors and not primarily by the growth rate of a recipient country.

TECHNOLOGY TRANSFER AND MANUFACTURING PERFORMANCE: NIGERIA’S COINTEGRATION AND CAUSAL EVIDENCE

This paper investigates the long-run and causal relationships of technology spillovers on manufacturing performance in Nigeria using the share of Foreign Direct Investment (FDI) in gross fixed capital formation as a proxy for technology transfer for the period 1981 to 2019 in a Vector Error Correction Model (VECM). The FDI stock appears to be too low at less than 1% of capital formation to generate any significant positive spillovers on manufacturing performance, resulting in an insignificant negative long-run relationship and the absence of causal relationships. The size of the local market has the most significant positive long-run effect on manufacturing performance, and the causality for this effect is one-way from manufacturing. A one-way causality was also observed from manufacturing to income per capital, though the long-run effect was significantly negative. The paper concluded that FDI technology spillover is presently not a major factor in Nigeria’s manufacturing performance. This may be redressed with policies aimed at increasing FDI inflows, increasing the technology-learning capacity of local firms and their vertical integration with foreign firms, and the creation of national infrastructure for technology development and diffusion

An Analytical study of Contribution of Agriculture Sector in growth of Indian Economy

AbstractAgriculture sector referred as primary sector. it is very important for economic growth of any country. It emerged as an essential-growing sector within the world economy. This sector contributes huge part of Indian GDP and occupy first place in employment provider. 58% of India’s population is depends upon Agriculture. Gross Value Added (GVA) by agronomy, forestry and trawling was estimated at Rs. 19.48 lakh crore (US$ 276.37 billion) in FY20 (PE). GVA Growth in agriculture and related sectors stood at 4% in FY20. Essential agricultural commodities export for the April-September period of 2020 enlarged by 43% to Rs. 53,626 crore (US$ 7.3 billion) over Rs. 37,397 crore (US$ 5.1 billion) in the same period last year. Its respectable share in foreign direct investment (FDI) inflows similarly as in total exports makes it the engine of economic process. Keeping in higher than scene, the current study makes an analysis of agriculture sector in Indian economy. The study shows that agriculture sector has achieved incredible growth over the year in Indian economy. Besides, their contributions in value, employment and exports are rising significantly. To take care and accelerate the expansion & contributions of this sector & to develop it as a real engine of economic process.

Foreign Direct Investment and Financial Constraints: Firm-Level Evidence from Cambodia, Lao PDR, and Myanmar

Financial constraints have been a significant obstacle to firms operating in developing countries. Prior studies show that foreign direct investment (FDI) helps to ease credit constraints for domestic firms. However, they only account for horizontal FDI spillovers. This paper therefore investigates both horizontal and vertical FDI spillovers using firm-level data from Cambodia, Lao PDR, and Myanmar (CLM). The key findings of this paper are threefold. First, FDI inflows lessen the financial constraints faced by local firms through partnership or joint venture. Second, an increasing share of FDI in horizontally and vertically related industries raises higher credit constraints for domestic firms. Third, the crowding-out effect of FDI is not uniform across domestic firms of different sizes. Therefore, policymakers should be aware of these possible negative spillovers and formulate policy to maintain FDI inflows while also ensuring the growth and survival of domestic firms.

CONCEPTUAL FOUNDATIONS OF FINANCIAL SUPPORT FOR INCREASING THE INNOVATIVE COMPONENT OF UKRAINE’S INTERNATIONAL COMPETITIVENESS

Abstract. The article describes the dynamics of Ukraine’s position in the Global Innovation Index for 2015—2019. It is revealed that the domestic economy has a high educational and scientific potential, is able to produce various innovations in the form of ideas, scientific developments, patents; the bottlenecks of Ukraine in the state of innovative development are the state of cluster development, the share of foreign direct investment in GDP, the online service of the government, the use of information and communication technologies, the availability of joint agreements on strategic alliances, the state of domestic lending to the private sector, the export of goods of the creative economy, the volume of microfinance loans, the presence of firms offering formal training, the state of cooperation between universities and production, agreements with venture capital. It is proved that the problem of improving the financial mechanism for ensuring innovation processes in the economic system of Ukraine requires a priority solution. Developments on increasing the innovative component of increasing Ukraine’s international competitiveness are impossible without adequate financial support. The article examines the foreign experience of state support for innovation activities. It is revealed that in developed countries — the world’s leading innovation leaders, public policy provides for direct funding of scientific research and through tax measures encourages private sector R&D spending. The concept of financial support for increasing the innovative component of Ukraine’s international competitiveness, which should be implemented at the strategic, tactical and operational levels, is proposed. To ensure a sustainable level of international competitiveness of the country through increasing the innovation component, it is important to implement a system of measures to monitor threats even at the stage of their origin and prevent the spread of their negative impact. Therefore, the methods and tools for implementing the proposed concept contain components of threat prevention: economic (tax incentives; transfers ;direct budget investments; grants; concessional lending; cooperation with foreign institutions, etc.), organizational (development of innovative infrastructure; consulting assistance; personnel support; creation of clusters using the potential of education, business, government, public; creation of regional clusters with innovation and industry production, etc.), institutional (techno parks, business incubators, analytical centres, etc.), regulatory (strategies, concepts, plans, programs) and social levers (conducting business trainings, implementing joint social projects, etc.). Keywords: innovation, Global Innovation Index, financial support for innovative development, international competitiveness, cluster. JEL Classification O11, O19, O16, O33, E62, F20 Formulas: 0; fig.: 2; tabl.: 2; bibl: 16.

Effects of China’s market-oriented economic reform, FDI inflows on electricity intensity

China’s reform and open-up policy has been implemented since 1978 that have reshaped China from many aspects. On the road to economic transformation from planned economy to market-oriented economy, foreign direct investment (FDI) has been regarded as a kind of ‘power engine’ in China’s economic growth. Based on the provincial panel data from 2000 to 2017, this paper contributes to conduct the impact of China’s market-oriented economic reform, foreign direct investment (FDI) on electricity intensity. The progress of China’s market-oriented economic reform was measured by NERI index (degree of marketization) developed by National Economic Research Institute Reform Foundation. We then construct a new set of indicators of FDI to measure its quantity and characteristics, which are the degree of FDI participation in host country, technological level of FDI, import-oriented foreign-invested enterprises and share of FDI invested in manufacturing sector. Meanwhile, in order to examine the degree of marketization on electricity intensity, the whole sample was divided into coastal and inland groups based on their development stage. The findings concluded that marketization is an important determinant in decreasing China’s electricity intensity. FDI can be a source of innovation that promotes energy efficiency in manufacturing sector. The high degree of FDI participation in host country will hinder the improvement of energy efficiency. While in general, it has the potential to advance energy efficiency with the progress of China’s marketization. The high-quality of FDI symbolized by technological level is an important contributor in improving energy efficiency, and its effect in China’s inland area is significantly greater than that in the coastal area. Trade liberalization shows a reverse impact on electricity intensity in coastal area and inland area. The investment in environmental pollution control has no significant impact in decreasing electricity intensity. As expected, the expansion of secondary industry will increase energy consumption per unit of GDP.

Transformation of the Global Financial System in the First Two Decades of the Twenty-first Century

The article analyzes the changes that have occurred in the global financial system in the XXI century. Moreover, the study covers the global financial system in its integrity as a combination of different financial markets and international financial institutions. Based on the analysis of statistical data, it is shown that the global economic and financial crisis of 2007-2009 led to a reduction in international capital flows, a change in their structure (towards an increase in the share of foreign direct investment) and a decrease in cross-border financial activity. In the post-crisis period, government debt and equity markets developed relatively more dynamically, while banking activity was restrained, including as a result of intersectoral arbitrage caused by international financial system reforms. The process of reforming the global financial system has reduced risks in certain segments of the global financial market (banking services markets, over-the-counter derivatives), but retained relatively less regulated segments that may be subject to risks of financial shocks. Changes in the global financial architecture have led to the formal involvement of emerging markets in the process of reforming the global financial system (through the Group of 20) and to some strengthening of the supranational component of regulation. However, in general, the interests of countries with emerging markets both in the reform processes and in the construction of the global financial architecture are not fully taken into account.

Foreign Direct Investment and Developing Countries Participation in Global Value Chains (GVC)

Could foreign direct investment (FDI) contribute to improving developing countries’ participation in global value chains (GVC)? This is the main issue addressed in this paper. Indeed, FDI seems to be, at least theoretically, a mean to speed up developing countries' participation in GVCs in a number of ways. This paper brings the empirical proof of this intuition using an error correction panel model on 44 developing countries between 1990 and 2018. Our results show that the value of the investment is a more significant indicator than the share of FDI in GDP in developing countries. The more FDI developing countries earn the better is their participation in GVC.

Foreign Direct Investment in Volgograd Region: Distribution and Role in the Economy

Foreign direct investment (FDI) has played a key role in the efforts to achieve a sustainable economic growth and high social and economic indicators in many countries and regions of the world. The paper focuses on the analysis of the role of foreign direct investment in the economy of Volgograd region. The author uses the comparative analysis, historical and statistical methods, and correlation analysis. The analysis of the indicators of 2011–2019 shows a small share of foreign direct investment in the gross regional product in Volgograd region in comparison with the Russian Federation, and insufficient provision of regional economy with labour resources. The comparison shows a discrepancy between the real needs and sectoral distribution of foreign direct investment in the regional economy. The research on the country and type composition of FDI in Volgograd region reveals some positive trends. The share of investments in the form of capital in comparison with the share of debt capital has increased; the share of off-shore foreign direct investment has decreased. The correlation analysis reveals a moderate or weak relationship between foreign direct investment and key economic indicators of Volgograd region, i.e. gross regional product, employment rate, average monthly income of the population, depreciation of fixed assets and labour productivity. The results show the need to develop special measures to maximize benefits from the cooperation of regional businesses and foreign investors in Volgograd region.

The Overland Silk Road: China's Energy Cooperation with Central Asia in the Context of Industry Competition

This article provides an analysis of China's energy cooperation with Central Asia in the context of competition between geopolitical actors. Using historical narrative analysis methods to unfold the dynamics of the interactions between the actors, the author presents a case study of Kazakhstan's energy industry. This study could offer broader implications as the country attracted the lion's share of foreign direct investment in Central Asia, including investment from China within the Belt and Road Initiative. The analysis suggests that Central Asian states benefited from the competition between global actors as they diversified their export routes, which strengthened their political and economic independence. In the end, Central Asian states and energy consumers developed energy cooperation networks in the same area where the ancient Silk Road crossed the Eurasian landmass. Concerning the theoretical implications, this article highlights to the usefulness of applying both realist and liberal frameworks of international relations theory in tandem.

CONCEPTUAL BASES OF ECONOMIC SECURITY OF THE REGION IN THE CONTEXT OF THREATS ASSOCIATED WITH THE INTENSIFICATION OF INFORMATIZATION PROCESSES AND IT SPHERE DEVELOPMENT

The article identifies threats to the economic security of the region, which arise as a result of the introduction of information technologies in the economic activity and management of enterprises and organizations (use of pirated software; targeted virus attacks; spyware in the face of aggravated Russian-Ukrainian confrontation; development of electronic business and expansion of the territorial boundaries of regional markets). It is proved that the features of the formation and development of the IT sector in the region also fill with new content the concept of threats to the economic security of the region (simplified taxation system; increasing the shadow economy of the regional economy; social differentiation of society; low demand for IT products in the domestic market; human capital and education; intellectual migration; the lion's share of foreign direct investment in total investment in the IT sector; foreign economic activity). In order to prevent a fall in the level of economic security in the region, it is proposed to continuously monitor the identified threats from certain sources and identify new ones. The conceptual bases for building a mechanism to ensure the economic security of the region are considered and its constituent elements are defined. It covers the economic, organizational, administrative, regulatory, institutional, social tools, methods and levers of security formation. Established the most important guidelines for its operation - safety indicators and their threshold values. The mechanism operates at the strategic (elimination of contradictions or their localization or weakening), tactical (eliminating the very threats or preventing their influence) and operational (eliminating the consequences of threats) levels. The implementation of the proposed mechanism, which performs protective, regulatory, preventive, innovative and social functions, will create the basis for a secure information and technological development of the regional economy and reduce the territorial differentiation of regions in terms of information and technological threats.

Estimating the scale of profit shifting and tax revenue losses related to foreign direct investment

Governments’ revenues are lower when multinational enterprises avoid paying corporate income tax by shifting their profits to tax havens. In this paper, we ask which countries’ tax revenues are affected most by this tax avoidance and how much. To estimate the scale of profit shifting, we begin by observing that the higher the share of foreign direct investment from tax havens, the lower the reported rate of return on this investment. Similarly to the United Nations Conference on Trade and Development’s World Investment Report 2015, we argue that the reported rate of return is lower due to profit shifting. Unlike the report, however, we provide illustrative country-level estimates of profit shifting for as many countries as possible, including low-income ones, which enables us to study the distributional effects of international corporate tax avoidance. We compare estimated corporate tax revenue losses, relative to their GDP and tax revenues, of country groups classified by income per capita and we find that there are almost no statistically significant differences across these groups. Furthermore, we compare our results with four other recent studies that use different methodologies to estimate tax revenue losses due to profit shifting. In the first such comparison made, we find that most studies identify some differences across income groups, but the nature of these differences varies across the studies.

The Dynamics of Foreign Direct Investment in Albania. Comparison with the Western Balkan Region

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Study of FDI Trends and Patterns in BRICS Economies during the Period 1990–2015

There has been a sea of change in foreign direct investment (FDI) patterns over the last two decades. One of the significant developments has been the developing economies and frontier nations garnering significant attention of foreign investors. Regions like developing Asia have been successfully commanding a huge share of FDI inflows. However, it has been observed that FDI patterns are quite skewed in nature in terms of sector and region-wise economic groups, such as Asia-Pacific Economic Cooperation (APEC); Transatlantic Trade and Investment Partnership (TTIP); Brazil, Russia, India, China and South Africa (BRICS); and Regional Comprehensive Economic Partnership (RCEP). Of these, BRICS nations are recognized as the most developed among the emerging economies. This research article is an attempt to examine the trends and patterns of FDI flows in BRICS economies during the period from 1990 to 2015. The study shows that developed markets are still considered to be drawing the lion’s share of FDI, claiming the top slots in global FDI inflows. But high-performing emerging and frontier markets can continue to attract FDI inflows if they have investors’ preferred market characteristics. Also there is a lot of unpredictability in the global FDI flows, indicating challenges and opportunities for both global business executives and countries seeking to promote investment. It is thus imperative that policymakers eliminate hurdles to FDI inflows and increase the absorptive ability to earn optimum positive results.